Canada gets boost from ArcelorMittal sale of Labrador Trough stake
Labrador Trough stake sale puts country on par with Australia and Brazil as source of shipments
The US$1.1 billion purchase of a stake in ArcelorMittal's Canadian iron-ore unit by China Steel and Posco increased interest in Canada's ability to meet Asian demand for the steelmaking raw material.
Champion Iron Ore Mines, Alderon Iron Ore and Labrador Iron Mines surged on Wednesday in Toronto after Taiwan's China Steel and South Korea's Posco led a group that agreed to buy 15 per cent of ArcelorMittal Mines Canada.
The deal, the second-biggest in the Canadian iron-ore industry, gave the Asian steelmakers' group access to deposits generating about 40 per cent of the country's production of the commodity, Luxembourg-based ArcelorMittal said on its website.
"It shows you that Canada is an important iron-ore producer and you've got foreign buyers demonstrating an interest in the product that we have, the infrastructure and the risks involved in operating here," said Wojtek Nowak, an analyst at Fraser Mackenzie.
Canada is positioning itself as a source of shipments to compete with Australia and Brazil, the world's two largest exporters of iron ore. Canada's Champion, Alderon and Labrador Iron plan to capitalise on the country's supply of skilled labour and its lower political risk compared with rival iron-ore regions such as West Africa.
ArcelorMittal, Champion and Alderon have projects in the Labrador Trough, a geological region straddling northern Quebec and neighbouring Labrador.