CN suspends feasibility for rail link to Quebec/Labrador iron ore range
by Greg Klein
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The Labrador Trough might hold some of the world’s largest undeveloped iron ore resources. But is the market ready? That’s a question some people are asking as CN TSX:CNR shelves a feasibility study to build what might have been a $5-billion, 800-kilometre rail line to the isolated Quebec/Labrador iron ore range.
CN formally announced the decision February 12, citing “current market realities.” The rail giant added that “mine construction schedules and diverging needs for each specific individual project will make it difficult to obtain the critical volumes of iron ore necessary.” Also a factor was “the decision by some miners in the region not to join the group of mining companies supporting the CN infrastructure project.” The study was originally scheduled for release in May.
It began last August under a partnership of the continental railway, pension/insurance fund manager Caisse de depot et placement du Quebec and a group of mining companies.
In separate February 12 announcements, two of those companies announced they were unaffected by the suspension. Referring to its Taconite project straddling the Quebec/Labrador border, New Millennium Iron TSX:NML stated the “base case for product transportation is through a ferroduct and does not depend on a new rail line.”
The project’s KeMag deposit pre-feas suggests pumping concentrate along a 700-kilometre slurry ferroduct to the St. Lawrence port of Sept-Iles. “Slurry transportation is being used in many iron ore projects located in Brazil, India and Australia because of its low-cost advantage compared to rail transportation,” the company states. “This has the potential to make KeMag the lowest-cost pellet producer in North America.”
The region also has a second, private rail line operated by the Cartier Railway Company, a subsidiary of ArcelorMittal. The 420-kilometre route connects the company’s Mont-Wright operation with Sept-Iles.
The 415-kilometre QNS&L Railway links Labrador City with Sept-Iles. Although it’s owned by the Iron Ore Company of Canada (itself owned 58.7% by Rio Tinto and 26.2% by Mitsubishi), Alderon president/CEO Tayfun Eldem emphasized that the QNS&L is “a common carrier that operates with the legal obligation to accommodate third-party traffic. It currently has ample surplus capacity and runs within 15 kilometres of the Kami property.”
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