Operating Internationally
New Market Environment Impacting Mining
Developpers
And Coomunities
Mining and Society in the Arctic, Sisimiut, June 2015

Operating Internationally: New Market Environment Impacting
Mining Developpers and Communities
 Part I
Collapse of the International Iron Ore
Market
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
PART II
 WHAT IS THE RESULT OF ALL THIS ??
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
The case of 4 small mining towns in Canada
 Schefferville: population 1300
 Labrador city/Wabush: population 9000
 Fermont: population 3000
 Wabush Mine/Labrador Iron ore
mine/Bloom lake mine
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
The case of 4 small mining towns in Canada: A
Social Disaster for the Communities

Schefferville: population 1300


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Labrador Iron Ore Mine bankrupted
160 direct jobs lost
100 indirect jobs lost

Labrador city/Wabush: population 9000

Fermont: population 3000






Cliff’s Wabush Mine definitive shut down
500 direct jobs lost
500 indirect jobs lost
Cliffs Bloom Lake Bankrupted
400 direct jobs lost
400 indirect jobs lost
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
 Social Disaster
 Workers loose salaries
 Cannot find other employement since the only
employers were the mines;
 Workers end-up with no jobs, no benefits.
 Contractors who carry the debt of heavy equipment
cannot sell them;
 Value of Homes fall to almost nothing
 Home cannot be sold
 Families must leave the towns and relocate elsewhere
with no revenues/children change schools
 Families break
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
NOT ONLY ACTIVE MINES WERE SHUT DOWN, BUT 3
MAJOR IRON ORE MINES PROJECTS IN THE SAME AREA
ARE DELAYED INDEFINITELY.
HOPES AND DREAMS OF FURHTER ECONOMIC AND SOCIAL
GROWTH ARE LOST:
 NEW MILLENIUM IRON ORE PROJECT (TATA Steel)
 23 Million tpa/25 Billion DKK
 ALDERON IRON ORE PROJECT
 8 Million tpa /6 Billion DKK
 WISCO IRON ORE PROJECT (Wuhan Iron & Steel Co.)
 50 Million tpa/60 Billion DKK
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
WHY ?
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Iron ore price 2011: $US 190/tonne
Iron ore price 2013: $US 114/tonne
Iron ore price 2015 : $US 50/tonne
Production cost per tonne iron ore (Cash cost)
 Wabush Mine: $US 137/tonne
 Bloom Lake Mine: $US 94/tonne
 Rio Tinto: $US 20/tonne
 BHP: $US 24/tonne
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
 What is the Trend
 April 13th 2015, CITYGROUP forecast: Iron
ore price falling below 40 $US/tonne for
the rest of 2015.
 Moody’s forecast: $US 40/t to $US50/t
through 2016
 April 16th 2015, Goldman Sachs forecast:
 52 $US/tonne in 2015
 40 to 44 $US/tonne in 2016 – 2017
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
OVERSUPPLY
 WHILE IRON ORE PRICES COLLAPSE, AND
CHINESE DEMAND FALLS, THE BIG 3 RIO
TINTO/VALE/BHP KEEP INCREASING IRON ORE
PRODUCTION CAPACITY



RIO TINTO TARGETS IRON ORE PRODUCTION TO 330
Million tonnes in 2017 from 290 Million tonne current.
VALE IS PLANNING TO CRANK UP PRODUCTION FROM
CURRENT 330 Million tonnes to 450 Million tonnes by
2018
BHP to achieve 275 Million tonnes by 2017
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
 CAN WE DO SOMETHING ? OR JUST
LET THE MARKETS DECIDE THE LIFE OF
COMMUNITIES ?
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
 A POSSIBLE BUSINESS MODEL WHERE THE
STATE CONSIDERS:
 That Mining Development is Essential platform
for Economic Growth and Diversification
 Mining = Construction activities
 Mining = Manufacturing
 Mining = Services
 Mining = Support to Social Development and
Culture
 Mining = Transport, Telecommunications
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities
 The Province of Quebec, Canada, has
considerable mineral resources.
 Based on previous considerations, the
Province made a choice to strongly support
mining development.
 The Province is a mine owner: apatite mine in
joint venture with Norway YARA Company.
 The Province has created a mining fund 5
billion DKK for direct investment in mining
projects.
Operating Internationally
New Market Environment Impacting Mining Developpers
And Communities