Zijin Mining to take 9.9% stake in Montage Gold
As part of the deal, the Lundin Family Trust also agreed increase its stake in the company from 17.7% to 19.9%.
Financial Post mining writer Peter Koven discusses why a perfect storm of factors has conspired to make Canada the next great producer of iron ore — with help from the world’s largest customer of raw materials — China.
With China’s helping hand, Canada is poised to be a major player in iron ore for the first time. Chinese money is pouring into greenfield iron ore projects in the Labrador Trough, paving the way for a huge increase in Canadian production and a transformation of the local economies in Quebec and Newfoundland and Labrador.
“I wouldn’t be surprised to see Canada at 120 or 140 million tonnes a year of seaborne production down the road,” says Allen Palmiere, chief executive of Adriana Resources Inc., which just struck a partnership with a Chinese steel producer.
While Canada is among the world leaders in production of most major resources — oil, copper, gold and potash among them -it has never been a serious player in iron ore, currently the biggest driver of the bulk commodity trade.
Canada produces fewer than 40 million tonnes of iron ore a year right now for a seaborne market that’s bigger than one billion tonnes. Brazil and Australia dominate it with their vast deposits.
With prices reaching unprecedented highs of about US$200 a tonne on surging demand from Asian steel companies, there has never been a better time to get into this space, and a group of Canadian companies is now pushing a new generation of iron mines into development. In fact, a couple of new iron ore companies will hit the public markets in the coming weeks.
These companies hold deposits with a lot of potential, but they require many years and huge amounts of capital (in some cases billions of dollars) to get into production.
That is where China comes in. Chinese steel companies are desperate to secure new iron ore supply and rely less on the “big three” producers (BHP Billiton Ltd., Rio Tinto Ltd. and Vale SA). In recent weeks, there have been a flurry of Chinese deals with Canadian juniors, and more are expected.
