TORONTO Cliffs Natural
Resources Inc. believes its delayed Black Thor chromite project
should still yield pricing viability in the long term despite
recent drops in ferrochrome prices.
"Pricing should be pretty strong
over the next decade or so," Bill Boor, Cliffs senior
vice president for global ferroalloys, told AMM at the
Prospectors and Developers Association of Canada (PDAC)
convention in Toronto.
"From a demand perspective, the
stainless steel markets, which drive ferrochrome, lag the
carbon steel markets, so we have a good outlook for growth in
stainless demand in all the typical places, like China," he
said. "On the supply side, its very much a story of the
cost curve, and with whats going on in South Africa and
other places with costs going up due to overcapacity,
were expecting the cost curve to shift up
Boor said these fundamentals
should underpin strong ferrochrome pricing for the Black Thor
project, even though high-carbon ferrochrome prices have
declined to about $1.01 to $1.05 per pound currently from as
high as $1.32 to $1.41 in April 2011.
"Pricing is always the ultimate
bet on a project like this. But our view is that the cost curve
is shooting up, and that even with the prices weve seen
in the last few months or last year, this is a profitable
project," he said.
Boor acknowledged that the
project is currently experiencing "challenges and some
uncertainty." Cliffs president and chief executive officer
Joseph Carrabba said during a conference call in mid-February
that the company "cannot predict how quickly the definitive
agreements will be in place allowing the project to continue"
due to "stalled dialogue with the government" (
amm.com, Feb. 14).
Boor said that the company would
meet with Ontario and federal government representatives at the
PDAC convention to further the project, but he reiterated the
companys refusal to put a schedule on Black Thors
"Were getting so close to
a feasibility study. When its in hand, well have a
very clear plan for the execution of the project. To speculate
before we finish that study doesnt feel right to us," he
Boor also said that calls from
Ontario officials to provide funding assistance for the project
only on the condition that the mined ferrochrome ores stay in
Canada in order to support the local stainless industry were
"Were building, by
industry standards, a very large ferrochrome processing
facility. Its as aggressive a move in the market as we
can get comfortable with," he said. "This project has a huge
infrastructure component that drives capital costs up, and the
ferrochrome production alone cant support all of that
infrastructure. So we need the second source of revenue, which
is the ability to export concentrate."