Nunatsiaq Online
NEWS: Nunavik March 21, 2011 - 9:29 am

Iron rush set to start in Nunavik

Mines will depend on new infrastructure under Plan Nord

JANE GEORGE
Lac Otelnuk, located between Kuujjuaq and Shefferville, is said to be one of the 15 top iron deposits in the world, but its development depends heavily on what Plan Nord delivers in terms of infrastructure. (IMAGE/ADRIANA RESOURCES)
Lac Otelnuk, located between Kuujjuaq and Shefferville, is said to be one of the 15 top iron deposits in the world, but its development depends heavily on what Plan Nord delivers in terms of infrastructure. (IMAGE/ADRIANA RESOURCES)
Adriana Resources now has a small camp at the shores of Lac Otelnuk, but this could quickly change if the project to build an $8.5 billion iron mine moves ahead. (PHOTO/ADRIANA RESOURCES)
Adriana Resources now has a small camp at the shores of Lac Otelnuk, but this could quickly change if the project to build an $8.5 billion iron mine moves ahead. (PHOTO/ADRIANA RESOURCES)

There’s a good reason Quebec’s Plan Nord scheme includes the development of $1.2 billion worth of roads, ports and other infrastructure for Nunavik over the next five years.

Mining companies are gearing up to develop iron deposits along Nunavik’s Labrador Trough, which stretches deep into the region, south from Ungava Bay.

But to do that, they need a way to move the ore to markets — in China.

Within five years, Adriana Resources wants to start building an iron mine at Lac Otelnuk.

Chinese developers behind this project, about 200 kilometres south of Kuujjuaq, are ready to plunk down billions of dollars to make sure they can mine there.

Adriana’s $8.5 billion joint venture project with China’s Wuhan Iron and Steel Co. Ltd. wants to produce 50 million tonnes of iron a year for up to 100 years.

For this, they need an 850-km railway line from Lac Otelnuk to Sept-Iles — as well as major improvements to the port there.

“The Inuit people want rail and roads, and power—but the issue in the past has been that there has to be a commercial rationale for development,” Allen J. Palmiere, president and CEO of Adriana, told Canadian Business earlier this year.

“The entire population in the area is only about 40,000, and it has been hard to see how those people can support the massive cost necessary to develop the infrastructure. Our mine, by virtue of the size and location would provide one of the catalysts for Plan Nord—and both the government and the Inuit are supportive.”

Earlier this year Adriana announced its joint venture agreement with a unit of China’s Wuhan Iron and Steel Co Ltd..

Under this deal, WISCO will pay $120 million for a 60 per cent stake to develop the Lac Otelnuk iron ore property and help with future financing costs.

WISCO will also receive shares representing another 20 per cent stake in Adriana though a private placement.

And WISCO will pick up 70 per cent of the billions needed to build the mine, which is expected to create 2,000 jobs in Quebec.

Chinese steel mills, which consume most of the world’s iron ore production, have been keen to invest in iron projects, to allow them to better control iron prices, which have recently risen to near record highs of over $170 a tonne.

Globally, iron is the most used of all metals. Its relatively low cost and high strength make it indispensable, especially in vehicles, the hulls of large ships, and structural components for buildings.

Steel is the best-known alloy derived from iron.

A fact sheet on the Lac Otelnuk deposit, which contains reserves of at least 4.29 billion tonnes of iron ore, calls the deposit “the largest iron ore deposit in Canada” and one of the 15 largest in the world.

But to mine Lac Otelnuk, Adriana will have to find a way to ship the ore out of Lac Otelnuk, which lies about 170 km north of Schefferville, which once served as a centre for the iron mining and processing operations of the Iron Ore Company of Canada.

But Lac Otelnuk isn’t the only iron project that may move into production in Nunavik.

As the demand for iron and other metals increases, development plans for many known deposits in Nunavik, which couldn’t be economically mined in the past, have now been dusted off and are being examined again.

A company called Oceanic Iron Ore. has taken over iron-rich deposits located near Aupaluk and Kangirsuk, owned previously by companies with ties to Dubai in the United Arab Emirates.

The deposit’s reserves also contains more than a billion tonnes of iron, says a technical report on the “Ungava iron property,” prepared by Micon Intl. last October.

“Ungava Iron property contains several significant, historically identified, undeveloped iron deposits,” it said.

“None of the historical iron deposits making up the current Ungava Iron property contain any mineral resource conforming to modern reporting standards. However, the potential for iron resources contained within the property is considerable. The resources could be determined with a modern exploration, drilling and metallurgical testing program”

The locations of the property’s iron deposits range from the Roberts Lake area north of Kangirsuk to Morgan Lake areas, about 50 km from both villages, near Hopes Advance Bay in the south, only about 10 km from Aupaluk.

This year the company plans to spend $4.2 million on drilling, assaying and metallurgical testing at Hopes Advance.

Iron has a past in Aupaluk.

In the 1960s, an iron mine closed down not far from the location of the original community of Aupaluk.

But, during negotiations leading up to the James Bay and Northern Quebec Agreement in 1975, Quebec wanted to reserve the mine site as “category three” lands, where there could be mining under the James Bay and Northern Quebec Agreement.

Inuit living in “Old Aupaluk” were encouraged to move to the site of the present-day community, with promises that Aupaluk would become the administrative and transportation centre of Nunavik.

That didn’t happen, and the population of the community now stands at about 150.

So if a mine some day sets up shop nearby Aupaluk, it would likely dwarf the tiny community.

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