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Tata Steel has postponed its decision on development of its second iron ore project in Canada until 2016. The project revolves round two taconite (inferior quality iron ore) deposits in sub arctic eastern Canada.
Tata Steel’s Canadian exploration partner New Millennium Corporation recently said that as the current macro-economic situation poses challenges for development of the taconite project, they were re-visiting the terms of their original agreement of 2011.
It said, “As part of this review, Tata Steel will consider current, or potentially future, participation in NML’s recently announced alternative development approach to its taconite properties. The parties intend to conclude a definitive agreement during the first quarter of 2016 subject to the respective Board approvals of the parties.”
Tata Steel retains the option to participate in the development of one or both the deposits called LabMag, and KéMag.
The jointly undertaken techno-economic viability study of the project was ready early last year. However, both the companies had not taken the investment decision for development of the mines as the iron ore prices declined below estimated cost of production of fines of around US $52 a tonne.
While feasibility study benchmarked the product prices based on a long-term price forecast of $103 a tonne (62 per cent iron content fines CFR North Chinese ports), the current price is ruling at about $48 a tonne.
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