by Mark Cardwell
The Port of Sept-Îles will likely fall a few million tonnes short in 2019 of its all-time annual record of 35 million tonnes for volume handled.
But that record will fall in 2020 and in the years that follow, top port officials say, now that the multiuser dock in the Pointe-Noire sector is fully operational.
“It’s running smoothly and efficiently,” says Pierre Gagnon, President & CEO of the Port of Sept-Îles since 2002. “We’re happy and proud of this new world class asset that will help the port and the iron ore industry to grow in the future.”
In operation since March 2018, the 400-metre-long dock notably features two shiploaders with a combined capacity of 16 thousand tons an hour – a rate that allows a cape-size vessel to be filled with iron ore in a single day.
These loaders, which are the largest in North America, have proven their reliability since start up. The 10 MT mark was already reached in August after only 16 months of operation. “That was a big milestone,” says Gagnon.
For Gagnon, the new multiuser dock, together with the recovery in world iron ore prices and the advent of several new and revitalized mining projects in and around the Labrador Trough, have created a perfect storm of conditions for his port facility.
“It’s amazing what is happening here,” says Gagnon. “The spirit of cooperation and the positive market outlook has energized everyone. We’re looking forward to bigger things.”
Since the 1950s, when iron ore started being mined in the Labrador Trough and shipped south to Sept-Îles via the Quebec North Shore and Labrador Railway from Shefferville and later, the Wabush area near Labrador City, the mineral has been both the backbone and life blood of the port and the city that surrounds it in Quebec’s North Shore region.
Iron ore accounts for more than 90 percent of the volume of cargo that is handled in the port of Sept-Îles each year, providing an annual economic impact of $1 billion and nearly 4,000 direct and indirect jobs in the region.
Iron ore coming from the region remains a small player on the world stage, accounting for only 2-3 percent of world supply. The iron ore mined from the Labrador Trough, however, is among the highest quality in the world.
That quality has driven recent demand from steel-making companies and countries like China, which buys 60 percent of all minerals in the world but has brought in policies aimed at reducing greenhouse gas emissions in their steel production industry, which blend the Canadian ore with lower-quality material from world-leading producers like Australia and Brazil.
Blending helps to produce better steel products with less pollution.
In addition to the popularity of blending, which Gagnon says provides “a nice bump” in the revenues of four important iron ore producers and shippers at the Port of Sept-Îles – IOC/Rio Tinto – Québec Iron Ore, a subsidiary of Champion – Tacora – and Tata Steel Minerals Canada; he says several recent and imminent developments have set the stage for a major upswing in the Port’s fortunes in the immediate and near future.
Currently, only Québec Iron Ore is using the multiuser dock at Pointe-Noire terminal.
Montreal-based Champion is a producing iron development and exploration company that is focused on developing its flagship asset – the Bloom Lake iron ore property in the southern end of the Labrador Trough.
Champion bought the site from Cliffs Natural Resources for the fire-sale, bargain-basement price of CA$10.5 million in April 2016.
Cliffs had paid Consolidated Thompson Iron Mines US$4.9 billion for the property in 2011.
Champion then invested roughly $300 million to reopen the mine and began shipping product in early 2018.
“They took a risk, but it has paid off handsomely,” says Gagnon. “Iron ore prices were low when they bought the Lake Bloom property. But now they’ve bounced back, which is great for Champion.”
Gagnon says the same about the investment made in the Labrador Trough by new Minnesota mining company Tacora.
Tacora bought Cliffs’ Wabush mine for $1 million. It too invested $300 million to get the property up and running.
Buoyed by a ten-year offtake deal with Cargill for 100% of its production to supply high-quality iron ore for blending with lower-quality ores from Asia, Tacora has also succeeded in resuming production of iron ore concentrate from the Wabush mine this summer.
The first shipment to market left the port of Sept-Îles in late August.
Another Port partner – Alderon – is expected to soon announce funding for another mine in Labrador City.
Other miners involved with the multiuser dock – notably Tata, which is a New Millenium partner – will continue in their efforts to ramp up production at iron ore properties in Schefferville and elsewhere.
Though Gagnon credits the doubling of world ore prices since 2015 as the main stimulus for the regain of interest and investment in the development of these mining projects, he is also quick to acknowledge the critical structuring efforts of the Quebec government in the port’s Pointe-Noire sector.
The government notably created a limited partnership corporation in 2016 called Société Ferroviaire et Portuaire de Pointe-Noire -or SFP Pointe-Noire – that spent $68 million to buy Cliffs’ assets next to the multiuser dock.
Those assets include a 38-km railway that links the main railroad from the North and Labrador to Pointe-Noire, an iron ore pellet plant with a nominal capacity of 6 MT, ship loading and unloading equipment, storage areas near the port facilities, both brownfield and greenfield industrial lots that are strategically located near the port, rail and hydropower infrastructure, plus rolling, handling (transhipment) and storage equipment.
For years Cliffs had been reluctant to allow other mining companies to use those facilities, blocking access to the multiuser dock and clouding the original vision developed by the Port in 2012 of sharing the facility for the benefit of all companies.
That vision is now acknowledged, Gagnon says, thanks to long-term signed agreements between the Port and SFP Pointe-Noire to allow several mining companies the shared use of the dock, the railway and the handling and storage facilities for shipping.
“It’s a game changer,” says Gagnon. “Thanks to the Quebec government’s active involvement, we’ve created a more positive business environment and a more efficient way of sharing our world-class bulk facilities to support the development of the tremendous resources and opportunities we have here.”
The multiuser approach, he adds, breaks with the traditional approach that defined iron ore mining and shipping on the North Shore since the 1940s, when IOC began its operations in Schefferville.
For decades, two iron ore giants – IOC and Quebec Cartier Mining, which had facilities in Gagnon ville and Mont Wright – dominated the field, with each company working in a separate silo and using its own infrastructure.
“Now many smaller companies can develop their projects without having to spend hundreds of millions of dollars to all they need to exploit their assets like railroads, storage and handling facilities,” says Gagnon.
Alderon, he notes, was obliged to spend $1.4 billion in capital costs in 2014, including $180 million to build a storage area near the multiuser dock when Cliffs refused to share its facility. They are now able to lower the capital intensity of their project by using the SFP Pointe Noire assets.
“Joint participation in infrastructure capital costs and sharing their operating costs greatly reduces the cost of getting product to market,” says Gagnon. “It gives the industry more flexibility.”
For Gagnon, who was born and raised in Sept-Îles and worked for Quebec Cartier Mining (later acquired by ArcelorMittal) until joining the Port, both the realisation of the multiuser vision and the coming on line of the 50 MT annual capacity of the world class multiuser dock mark the beginning of a new chapter in the development of the Port of Sept-Îles.
“In the iron ore industry, you have to be in a robust position in order to achieve the economies of scale that allow you to compete with world production giants like Australia and Brazil,” says Gagnon. “To get that amount of volume requires massive equipment and infrastructure. Many thanks for the trust of our users, and the commitment of all our team for making this multiuser vision a reality and for delivering a strategic asset to the Canadian iron industry which will allow it to be competitive in a global market”.