* Developer Baffinland needs project certificate, water
* Massive infrastructure needed to make mine a reality
* Iron ore prices falling on slower demand from China
By Julie Gordon
TORONTO, Dec 3 Canada, hoping to spur economic
development of its far north, has approved the construction of a
massive iron ore mine in the Arctic territory of Nunavut that
could help top steelmaker ArcelorMittal reduce its
dependence on outside suppliers.
The open-pit Mary River project on remote Baffin Island was
approved on Monday by the Minister of Aboriginal Affairs and
Northern Development, based on the recommendation of the Nunavut
Impact Review Board.
"It's a game changer for Nunavut and particularly for Baffin
Island," said Minister John Duncan.
The project "will bring infrastructure and much economic
activity and many jobs to the area and, of course, revenues to
government and to the Inuit organization," he said, referring to
the Inuit aboriginals in the region.
That said, Mary River - which could to produce at least 18
million tonnes of iron ore a year over a 21-year mine life - is
still years away from production, if it ever gets off the
The project needs its project certificate and a water
license before work can proceed.
Baffinland Iron Mines Corp, the ArcelorMittal subsidiary
developing the mine, also needs to finalize an impact benefit
agreement with the local population.
"This is very much a transitional point for us from the
environmental assessment phase to the regulatory permitting
phase," said Baffinland spokesman Gregory Missal. "It is a long
process but we're getting there."
Once all the pieces are in place, Baffinland will turn to
its shareholders to make the call on whether construction will
go forward. Arcelor holds a 70 percent stake in the company,
with Iron Ore Holdings LP owning the remaining 30 percent.
Considered one of the richest undeveloped iron ore deposits
in the world, permitting the Mary River project has already
taken nearly five years. It is expected to cost some $4 billion
to build, including related infrastructure.
ArcelorMittal, which gained control of the rich project
after a contentious bidding war in 2011, had been building up
its iron ore division in an effort to reduce its dependence on
top miners such as Vale SA, Rio Tinto and BHP
The company is also in the midst of an expansion at its iron
ore projects in the province of Quebec.
Benchmark iron ore prices have tumbled in recent months,
reflecting slower demand in China, the world's largest
steel-consuming nation. That has prompted miners around the
world to scale back on expansions and shelve higher-cost
ArcelorMittal is in exclusive talks with South Korean
steelmaker POSCO over the sale of a 15 percent stake
in ArcelorMittal Mines Canada, which operates the Quebec
projects, a source who has knowledge of the matter told Reuters
Situated above the Arctic Circle, Mary River is one of the
most isolated mining projects in the world. Temperatures at the
site regularly dip below minus 30 degrees Celsius, and there is
24-hour darkness from November to January.
Critics of the project say the mine is simply too ambitious
to work in such an inhospitable environment.