Sioux Lookout could get a huge economic jumpstart if a proposed $3.77-billion open-pit iron mine and mill operation in northwestern Ontario comes to fruition.
While North American steel demand has been sluggish and iron ore prices have reached historic lows, Armando Plastino, CEO of Rockex Mining, insists his company is better able to ride the troughs of the cyclical steel industry with its hot briquetted iron (HBI) operation.
“Every iron ore product is tied to steel
pricing. We think HBI will be a lot more insulated and we’ll be
able to market it to electric steelmakers. They do better through the
cycle than the integrated producers.”
Thunder Bay-based Rockex
recently updated its plans for a proposed $3.77-billion mine and mill
project, centred on its Lake St. Joseph project and the Eagle Island
iron deposit, located 100 kilometres northeast of Sioux Lookout.
The company has unveiled a new preliminary economic assessment (PEA) with an updated resource estimate identifying almost 1.3 billion tonnes of indicated ore at a grade of 28.38 per cent, enough for a 30-year mine life.
Other satellite deposits nearby could potentially offer up 400,000 to 500,000 more tonnes.
Algoma Steel (now Essar Steel Algoma) in Sault Ste. Marie, Plastino’s former employer of 39 years, staked all the claims and once had plans to advance it in the early 1960s in partnership with Dofasco.
“This PEA suggests we have a very financially viable project,” said Plastino, with a three to four-year investment payback of 19.5 to 22.5 per cent.
The company, with the Town of Sioux Lookout, was planning a major media event and webcast in the community on Nov. 3.
To raise the project’s international profile, Rockex brought aboard Danieli of Italy last summer, a global leader in supplying steel mill technology, to help Rockex market the project toward securing a deep-pocketed development partner to advance the project.
That could come in the form of a major international steel producer seeking to secure a supply of raw material through an off-take agreement.
Plastino is well acquainted with Danieli, which designed and built Essar’s direct strip production complex in Sault Ste. Marie during the late 1990s.
“They (Danieli) have extensive contacts in steel,” said Plastino.
In exchange, Danieli would be the chief supplier for the HBI plant at a processing location to be located somewhere near Sioux Lookout.
What outside investment interest there is remains in the tire-kicking stage, Plastino said.
“We have our PEA in the hands of a lot of potential strategic partners. We know they’re looking, reading and we know they’re interested.”
Hot briquetted iron comes in a compact brick form, two to three inches long, containing iron content of 94 per cent. It’s regarded as a cheaper and more readily available substitute for scrap metal, which is recycled for use in the steel making process.
Plastino said the market for conventional iron ore pellets – which are poured into blast furnaces like at Sault Ste. Marie – is gradually shrinking.
The newest and best technology in modern steelmaking is electric arc furnaces, and the amount of steel production made through this process is growing, he said.
Those mills are fed mainly with scrap metal with some nickel and copper residuals. “HBI is a good substitute,” said Plastino.
Preliminary plans call for a crushing plant and concentrator to be situated at the mine site. The company is contemplating moving the concentrate by slurry pipeline to a location near Sioux Lookout for pelletizing and conversion into HBI.
The HBI plant would be capable of producing 4.3 million tonnes annually.
At Sioux Lookout, Plastino said there are adequate natural gas pipeline, power and rail connections, although upgrades would be in order.
The next step for the project is to advance it to the feasibility study stage within the next four six months, and complete all the detailed engineering to present to a potential partner.
Finishing that study would take 12 to 14 months.
