Rio Tinto’s Q2 iron ore shipments miss after May train derailment
The world's largest producer of iron ore shipped 80.3 million tons of the steel-making commodity in the quarter.
Workers and local businesses hoping for a re-opening of Wabush Mines will be disappointed to learn that a deal to purchase the facility has been scuppered.
The iron ore mine in western Labrador was closed in fall, 2014 by owner Cliffs Natural Resources (NYSE:CLF), a victim of low iron ore prices. Around 500 workers lost their jobs, with a handful left on to handle care and maintenance.
In April, the gloom and doom over the small mining town of Wabush was temporarily lifted, when it was revealed that an American buyer, Virginia-based ERP Compliant Fuels, had submitted a bid to Cliffs. ERP co-owner Tom Clarke went so far as to tell the CBC that due to the upswing in the iron ore market- the price hit a 16-month high of $68.70 a tonne in mid-April – the mine could re-open by early 2017 and bring with it between 300 and 400 jobs.
Observers thought that Wabush Mines could have a similar fate to the Bloom Lake facility, which Cliffs sold to Quebec Iron Ore Inc., a subsidiary of Champion Iron Ltd., (TSX:CIA) for $10.5 million. Bloom Lake is in northeastern Quebec.
Hopes however were dashed last week, when ERP said it wouldn’t take on the iron ore operation.
“We wish to advise you that the potential purchaser has advised that it will not proceed with the transaction,” says a letter to the parties involved, made public Thursday.
The mine closure will now be subject to the Companies’ Creditors Arrangement Act, which is applied where companies that owe more than $5 million. For Wabush, it means the mine’s assets will be liquidated:
“Accordingly, the CCAA Parties, in consultation with the monitor (FTI Consulting Canada Inc.), are in the process of analyzing liquidation offers and will endeavour to negotiate definitive agreements, subject to court approval for the liquidation of the equipment at the Wabush Mine and sundry other assets,” the letter states.
Before it closed, Wabush Mines was Canada’s third largest iron ore operation, with an annual capacity of 6 million tonnes. Mining there began in 1965, at the Scully Mine, with iron concentrate railed to a pelletizing facility in Pointe Noire, Quebec, for shipment to Europe and throughout North America.
3 Comments
Mike Failla
Not to worry the Chinese will step in a scoop it up.
Altaf
Indians (Tata) also got stuck up in one such project in Canada. For iron ore to make any sense half the way around the globe, it has to be integrated plant (mine, pelletization and all in one place) and shore based.
If ore is to be mined in the middle of no where and to be shipped by train to another middle of no where to be pelletized and again to be shipped by train to port, the cost will be many times that of Brazilian or Australian ore.
One logical step is to convert mine produce to pig iron at site and export to China.
Former Staff
The mine is done. Cliffs stole millions in pensions and owes millions more in environmental work to the Province. This ship has sunk.