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2018 JANUARY IN REVIEW

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Vol:107.No:01

1912-2

018

What's Ahead for Iron Ore in 2018 P 06

ARCELORMITTAL'S MERGERS & GROWTH SPURTS P 10

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2 | SKILLINGS MINING REVIEW January 2018

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...From the Editorial Desk JANUARY 2017 VOL.107. NO.01

ERP Ships Iron Ore

T

he new version of the bankrupt

M agnetation

operations

shipped three trainloads of iron ore to customers, including

Skillings Mining Review publishes comprehensive information on global mining, iron ore markets and critical industry issues via our monthly magazine, weekly E-newsletter, annual mining directory and real time website.

PUBLISHER CHARLES PITTS chas.pitts@skillings.net MANAGING EDITOR JOHN EDWARD john.edward@cfxnetwork.com SENIOR SALES MANAGER STAN SALMI stan.salmi@skillings.net SALES REPRESENTATIVE, CANADA RON SANDERSON ron.sanderson@cfxnetwork.com CONTRIBUTING EDITORS SARAH HART KATIE SIMS DAVID WILSON CAROLINE DAVIS ART DIRECTOR MO SHINE mo.shine@cfxnetwork.com CIRCULATION & SUBSCRIPTIONS Subscriptions@skillings.net SALES & MARKETING CHRISTINE MARIE advertising@skillings.net

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Mexican

steel mill

and other concentrate that was shipped from the company's

Reynolds,

concentrate from near

Ind., pellet

Grand Rapids

to a

plant.

It's good news for Tom Clarke, ERP owner, and his efforts because it's the first revenue for the company after sending millions of dollars to revive the operations. It will be mid-summer or later before ERP's pellet plant in Indiana is refurbished to comply with federal air-pollution rules.

Clarke hopes to have the Grand Rapids-area mining and concentrating operations up and running this summer, ready to ship ore to Indiana.

Pellets made in Indiana will go to make pig iron in Lorain, Ohio, in a deal with Republic Steel, Clarke has said. Clarke, who made his first millions in health care, also owns eight coal mines in the U.S. and Canada.

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January 2018 SKILLINGS MINING REVIEW | 3

IN THIS ISSUE

WHAT'S AHEAD FOR IRON ORE IN 2018

P 06

U.S.-FLAG GREAT LAKES FLEET $65 MILLION TUNE-UP

P 12

GLOBAL IRON ORE EXPLORATION & P 10 MINING PROJECTS COMMENTARY

MINING SAFETY

ERP Ships Iron Ore ....................................................03

Key Areas for

COVERSTORY

Mine Safety & Resources..........................................18

What's Ahead for Iron Ore in 2018.............................06

SHIPPING

IRON ORE

U.S.-Flag Great Lakes Fleet $65 Million

Global Iron Ore Exploration

Tune-Up.......................................................................12

& Mining Projects......................................................14

STEEL

Vale(d) Promise to Re-open Mine.............................19

Chinese steel mills win domestic

Polymet Progressions................................................19

iron ore pricing...........................................................05

Mesabi Metallics Year

Arcelormittal's Mergers &

of Interest Continues.................................................20

Growth Spurts ...........................................................10

IRON RANGE REGION

Steel Production Costs

Mineral Leasing Interest Picks Up............................11 Statistics.............................................................. 22/23

4 | SKILLINGS MINING REVIEW January 2018

& Iron Ore Prices.........................................................13 Mining People............................................................ 21

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STEEL

Chinese steel mills win domestic iron ore pricing

C

hinese steel mills win domestic iron ore pricing .

Chinese

s t e e l m a k e r s h av e

succeeded in a push to include domestic iron ore price indices in some

2018

annual supply contracts with global miners, industry sources said, as the world’s top buyer boosts its clout over pricing of major commodities.

Industry insiders claim that BHP Billiton has agreed with two leading Chinese steel mills to include the Chinabased Mysteel price index alongside the Platts index for contracts for the new

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fiscal year. Fortescue Metals Group, the world’s fourth-largest iron ore miner, has also agreed to include price indices published by Mysteel and local rival Custeel in price setting. The move marks a major step in the evolution of iron ore pricing after the industry

abandoned decades-old closed door talks between miners and steelmakers in 2010 in favor of a daily price index.

While it’s not expected to have a big impact on prices, the move will boost the confidence of Chinese buyers in that prices reflect domestic demand and is in line with China’s desire to increase its influence over commodity pricing.

Steelmakers and miners currently price annual contracts against benchmark indices set by agencies outside China, mainly S&P Global Platts based on its assessment of the market.

January 2018 SKILLINGS MINING REVIEW | 5

COVERSTORY

WHAT'S

AHEAD FOR IRON ORE IN 2018

2018 is going to be a rough ride ore, in line with the world's most significant exporter, which warns that the commodity may be slammed as investors and users navigate the cross-currents thrown up by China and Taiwan suppliers with efforts to manage material production and rising global mine production.

While prices will average $52 a metric ton over the full year, they may be higher in the first half as China relaxes curbs on steel output, aiding demand, before easing in the second. This past year, benchmark prices averaged $71 after trading between almost $95 and above 50 dollars.

T

2018

demand.

steel output in China. Iron ore miners including BHP Billiton Ltd., Rio Tinto Group and Vale SA, as well as users and investors are weighing the impact of unprecedented steel supply curbs in China, which were imposed by policy makers this winter to battle pollution.

Beyond the first six months, the price is set to drop on growing supply from low-cost producers and weaker

While the clampdown has resulted in an initial drop off in steel output, that’s expected to reverse with a

he

i ro n o r e p r i c e i s

expected to experience some ongoing volatility early on

as the market responds to uncer tainty regarding the impact of winter production restrictions on iron ore

6 | SKILLINGS MINING REVIEW January 2018

vengeance when the curbs are relaxed in spring. The new rules have also aided consumption of less-polluting, highergrade ore, a trend that the department expects to persist. It is likely that there will be robust growth in steel production and iron ore demand after the winter production restrictions are lifted, according to projections for free-onboard prices.

Rio Tinto Group forecasts its iron ore shipments will remain flat this year or rise by 3 percent at most, reinforcing market sentiment that a wave of new supply is turning into a trickle. The world’s second-largest exporter expects

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shipments from Western Australia of between 330 million metric tons and 340 million tons in 2018, the company confirming guidance published late last year. That compares with 330.1 million metric tons recorded last year.

Top exporters clearly haven’t pushed the envelope too hard and are showing restraint over additions to supply. Even as they build cash piles amid higher metals prices, the biggest mining companies are reluctant to commission new operations that’ll deliver any major expansions.

As China manages its mammoth steel industry, iron ore supplies will go on rising. Australian exports will jump to 880 million tons this year and 894 million next year, from 834 million in 2017, the department said, while Brazilian cargoes rise to 400 million tons this year and 424 million in 2019 from 384 million last year.

been steadily reducing its exploration and mining expenses by maximizing the productivity of major mines.

In third-quarter 2017, the company's iron-ore ore output touched a record high, rising roughly 3.3% year over year.

The upswing stemmed from the robust ramp-up of the company's S11D mine in the Northern System. The company also reaffirmed its long-term target to produce 400 million tons of iron ore per year.

On the back of the liability management program, Vale has been its lowering its debt burden. Despite these robust growth drivers, the concern remains that headwinds in the mining industry might hamper Vale's revenues and profitability in the quarters ahead.

In order to maintain competency, Vale makes costly investments to maximize the output and minimize productivity expenses. Additionally, an oversupply situation in the mining market is expected to hurt Vale's near-term results. As China manages its mammoth steel industry, iron ore supplies will go on rising. Australian exports will jump to 880 million tons this year and 894 million next year, from 834 million in 2017, the department said, while Brazilian cargoes rise to 400 million tons this year and 424 million in 2019 from 384 million last year.

Over the same period, China’s imports will remain flat as Europe, India and South Korea buy more, according to industry forecasts. The outlook that iron ore will hold firm

Vale's shares have rallied 17.1%, in line with the growth recorded by the industry. Further inflation in the price of this major steel-making component will be beneficial for mining giants in addition to Vale; BHP Billiton Limited BHP , Rio Tinto plc RIO and Kumba Iron Ore Limited KIROY . In sync with this, the company recently (December 2017) announced that it will soon divest the Vale Fertilizantes business to The Mosaic Company. Moreover, Vale has

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January 2018 SKILLINGS MINING REVIEW | 7

COVERSTORY

in the opening months before easing off in the second half appears to be the consensus. However, Goldman Sachs Group Inc. is more bearish, citing increasing global supplies and risks of steel production topping out in China.

There remains conflicting forces influencing the iron ore price.

Essar Steel has received the 'Consent to Establish' from the State Pollution Control Board (SPCB) here for its Ghoraburhani-Sagasahi iron ore block.

It was the first iron ore mine to be auctioned in India. Essar Steel won the block with about 100 million tonnes deposits, outbidding strong contenders like Tata Steel and Jindal Steel & Power Ltd ( JSPL).

The pollution board has given the 'Consent to Establish' under Section 25 of Water (Prevention & Control of Pollution) Act, 1974 and Section 21 of Air (Prevention & Control of Pollution) Act, 1981. The approval is for production of run of the mine iron

ore of capacity 7.16 million tonnes per annum (mtpa), crushing and screening plant and iron ore beneficiation plant of 6.7 mtpa. The 'Consent to Establish' is seen as a precursor to the grant of

'Consent to Operate' order by the pollution watchdog. This order is subject to grant of all other statutory approvals by the Government of India and the state government. The order is valid for five years during which Essar Steel is required to commence mining activities. But, Essar Steel currently admitted under National Company Law Tribunal (NCLT) and facing insolvency proceedings, cannot develop the iron ore mine till the resolution process is completed.

The company, however, can apply for the statutory clearances. The mining plan for the block has been approved by the Indian Bureau of Mines (IBM).

Essar Steel has also got the Terms of Reference (ToR) from the Union ministry of environment, forest and climate change.

Earlier, the Odisha government issued the letter of intent to Essar Steel after it emerged as the preferred bidder in

8 | SKILLINGS MINING REVIEW January 2018

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using traditional blast furnaces will leave Toledo in trucks and trains, the ore is expected to arrive from mining regions entirely aboard lake ships.]

Coal, historically Toledo’s heaviest-volume cargo, fell back into second place last year behind iron ore as it declined by just over 200,000 tons. For now, all iron ore through Toledo goes to AK Steel blast furnaces in Middletown, Ohio, and for substantial parts of 2015 and 2016 that steel mill received a significant part of its raw material from an iron processor in northwest Indiana.

But the Indiana plant closed late last year, pushing all of AK’s iron-ore supply chain back through the Toledo port.

Even though the new Cliffs Natural Resources Inc. plant planned for the former Gulf Oil refinery site on Front Street in East Toledo isn’t scheduled to begin production until 2020, expected consumption is about 2 million tons of iron ore annually to produce 1.6 million tons of hot-briquetted iron.

the first iron ore block offered for e-auctions in Odisha.

In the US greater Iron Range region, overall rebounding iron ore traffic led a nearly 16% increase in cargo tonnage through the Port of Toledo during 2017, and a port official said expected groundbreaking for a new iron smelter near the port should boost that cargo further in future years.

Robust aluminum shipments gave the port’s general and miscellaneous cargo sector the second highest percentage increase in the year-over-year statistics posted last week by the Toledo-Lucas County Port Authority.

Iron ore shipments across CSX Transportation’s Lakefront Dock totaled 3,417,862 tons during 2017, more than double the 1,629,927 tons through that facility the year before.

That accounted for more than 35% of all cargo across the local docks last year by weight.

The total cargo of 9,619,723 tons marked a 15.88% increase over 2016, but it was still more than 2 million tons shy of the port’s recent peak in 2014, when iron-ore traffic was even higher and coal business also was stronger than it was last year. [The hot-briquetted iron used as a raw material by electric-arc mills that make steel by melting concentrated iron and scrap metal rather than

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January 2018 SKILLINGS MINING REVIEW | 9

STEEL

a r c e l o r m i t t a l

'

s

Mergers & Growth Spurts Two of the biggest steel companies in the world, Steel and mining firm ArcelorMittal and Japan's Nippon Steel, are planning to put in a joint bid for bankrupt steelmaker Essar Steel, according to a report by The Economic Times.Both ArcelorMittal and Nippon Steel had initially planned to submit separate bids for Essar Steel.

A

Vedanta, AION Capital Partners and a Dubai-based billionaire are the remaining contenders who are bidding for the debt-laden steel producer.

ArcelorMittal is also reportedly bidding for debt-laden steel producers Essar Steel and Bhushan Steel, ET reported. Tata Steel, JSW Group,

The ArcelorMittal’s Government of Quebec investment project electricity rebate, intended for companies engaging in major investment projects in the manufacturing sector as well as in the transformation of natural resources, is currently estimated at CAD$25 million until 2020. In addition to these new announcements, ArcelorMittal Long

mong venture capital firms,

Sequoia Capital India was the most active firm in 2017. Steel major ArcelorMittal has pulled out its bid for the bankrupt Bhushan Power and Steel Ltd after conducting due diligence, a report in The Economic Times stated citing people aware of the development.

10 | SKILLINGS MINING REVIEW January 2018

Products Canada has invested CAD$27 million for a new finishing line at its Longueuil mill, a project which was completed in June 2017. ArcelorMittal Long Products Canada will also be in a better position to meet its customers' needs and face international competition.

ArcelorMittal has acquired bankrupt France-based solar trackers manufacturer Exosun for an undisclosed price to expand its solar portfolio. The transaction was cleared by the Commercial Court of Bordeaux where Exosun had filed for insolvency in July 2017.

Exosun, which is headquartered in Martillac, manufactures steel solar trackers that help photovoltaic panels to follow the path of the sun, thereby boosting the efficiency of ground-

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Mineral Leasing Interest Picks Up

C

hippewa

Capital Partners and Tom Clarke controls a large amount Nashwauk Minnesota, but no mineral rights are

of surface rights in

hoping to have the state mineral leases reinstated upon meeting certain

Minnesota Governor Mark Dayton Resources.

conditions set by of

Natural

and the

Department

Expecting more activity in 2018, Cliffs Chairman, President and CEO Lourenco Goncalves emphasized their Project Mustang, which began operating in May of 2017. Cliffs also secured all $700 million they need for their first hot-briquetted iron (HBI) plant planned for Toledo. mounted solar farms. The solar tracker provider is also expected to leverage ArcelorMittal’s financial strength which will help it cater to its customers in important solar projects. The assets of Exosun will now come under the ArcelorMittal Projects division, which is engaged in large projects across the energy and civil construction sectors.

The project means the plant can produce more DR grade pellets. Some will feed the HBI plant, and some will go to customers. Across the country, mineral lease battles are continuing.

Exosun has 43 employees who delivered over 55 solar farms across the world with a total installed capacity of 700MW. Through its steel solar frames and its corrosion and abrasion-resistant Magnelis steel, ArcelorMittal has been operating in the solar energy market.

In 2016, the installed capacity was 75GW in 2016, of which, half of them are in large-scale solar farms, the company said.

ArcelorMittal added that the use of solar trackers in large solar farms which is currently at 25% could go up to 50% by 2020.

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January 2018 SKILLINGS MINING REVIEW | 11

SHIPPING/ STEEL

of engines, cargo hold renewal and replacement of conveyor belts in the unloading systems. Depending on the trades it serves, a Great Lakes freighter can carry anywhere from 50 to 100 cargos in a season. A few vessels in the Cuyahoga River iron ore shuttle in Cleveland, Ohio, can carry even more cargos in a season. A steamship is having its boiler completely rebuilt.

A 1,000-foot-long laker will have highly-efficient Rolls Royce propeller blades installed that will reduce fuel consumption and increase speed.

U.S.-Flag Great Lakes Fleet $65 Million Tune-Up U.S.-flag Great Lakes vessel operators will spend $65 million maintaining and modernizing their vessels at Great Lakes shipyards this winter. When complete, the fleet will be ready to meet the needs of commerce come the spring break-out in March.

W

inter is the one opportunity our members have to renew

10 months to deliver their customers’ annual raw materials requirement, so

and upgrade their vessels,” H.I. Weakley, President of Lake Carriers’ Association, the trade

the vessels are in service 24/7 during the shipping season.”

association representing the major

The major focus this winter will be on normal maintenance such as overhauls

said James

U.S.-flag

carriers.

“They

have just

12 | SKILLINGS MINING REVIEW January 2018

The industry’s carbon footprint will again shrink when a 1,000-foot-long U.S.-flag laker becomes the sixth vessel to have an exhaust gas scrubber installed in the past few years. Ten lakers will be placed in drydock to allow the U.S. Coast Guard and American Bureau of Shipping to inspect the hull. These inspections are required by U.S. law.

The Lakes fresh water environment means vessels can serve the economy for decade upon decade. Two of the 1,000-footers will begin their 40th year of operation in 2018.

The major shipyards on the Lakes are located in Sturgeon Bay, Superior and Marinette, Wisconsin; Erie, Pennsylvania; and Toledo, Ohio. Smaller “top-side” repair operations are located in Cleveland, Ohio; Escanaba, Michigan; Buffalo, New York; and several cities in Michigan.

The industry’s annual payroll for its 2,700 employees approaches $125 million and it is estimated that a wintering vessel generates an additional $800,000 in economic activity in the community in which it is moored.

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Steel Production Costs & Iron Ore Prices Iron ore is once again on the firing line. Futures sank as steelmakers in China facing a decline in profitability switch back to using more lower-grade material, cutting into demand for higher-quality ore, according to China Merchants Futures Co. In Singapore, the most-active SGX AsiaClear contract lost as much as 4.4 per cent to $US71.24 a tonne, the biggest drop since December 2017.

O

Dalian Commodity Exchange, futures 3.5 per cent to the lowest close in more than three weeks. Iron ore's coming under n the

tumbled

renewed pressure after surging into a bull market last month, eroding earnings at miners including

Group, BHP Billiton

and

Rio Tinto

Vale.

investment in Africa. Home to the world’s largest known and highest-grade iron ore deposit, as well as a history of friendly political ties with Beijing, Guinea offers an important study of related China-Africa political economy and of the emerging iron ore and steel-intensive industrial ties being promoted by Beijing in Africa.

Further distance between iron ore indices appears unlikely and a correction is expected soon. Mill margins Profitability of Chinese steelmakers, which participants say is the core determinant of the iron ore price spread, is expected to retreat below 1,000 yuan ($153.85) per tonne amid expectations of relatively subdued supply disruptions in the year-to-come. While China capacity cuts and efforts to reduce emissions, represented by the production restrictions during the winter heating season, are expected to continue in 2018, another major driver behind steel prices the 2017 crackdown on substandard steel production has no obvious successor for 2018. China’s standing order to curb on steel output in direction relation to fight pollution, a move that initially buoyed demand for higher-grade ore as mills' profitability climbed. The exit of induction furnaces typically used to produce substandard steel with scrap created a surplus.

Indian Steel companies hoping to post strong numbers in the January-March quarter riding on a strong demand pickup have come in for a rude shock. After the hike, experts said steel production costs are expected to jump to a substantial increase by industry standards. A shift in the drivers of China's economy underlies contemporary change in iron ore and steel markets. Medium-term structural change also lies on the horizon with rising Chinese

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January 2018 SKILLINGS MINING REVIEW | 13

IRON ORE

G L OB AL I R ON O R E

Exploration & Mining PROJEC TS

Balla Balla Infrastructure Group’s $5.6 billion integrated iron ore project in the Pilbara is on track for development after the Western Australia government validated the state agreement signed earlier this year. BBIG plans to construct a new iron ore export facility on the Pilbara coast between Karratha and Port Hedland, with a 162km railway linking it to iron ore deposits in the central Pilbara.

T

he project is expected to create

3300 construction jobs and 910 operational positions. The Railway (BBI Rail Aus) Agreement 2017 bill ratifies the state agree ment signed between the state and

community development and third party access requirements. BBIG Chair Jon Young said the company welcomed the support that the BBI Project and its state agreement received in Western Australia.

the project proponents earlier this year, which provides tenure for the railway component of the project and outlines

local industry participation,

The Indian State government is exploring various options to procure iron ore for the proposed Bayyaram

14 | SKILLINGS MINING REVIEW January 2018

steel plant which is being set up with the support of the Central government, according to Minister for Mines and Geology K T Rama Rao. Minister Rao said the iron ore availability at Bayyaram does not meet the required quality and the State government was planning to procure iron ore from Biladila in Chhattisgarh. The Geological Survey of India (GSI) report on iron ore at Bayyaram is not promising since it doesn’t meet the minimum quality percentage.

Rao said the State government was also planning to lay a special railway line from Biladila to Bayyaram to facilitate transport of quality iron ore. Alter-

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per annum capacity pellet plant at RINL to meet latter\\u2019s requirement while surplus would be sold to others.

Similar joint ventures would be established with other steel plants. KIOCL posted a profit of Rs. 18.27 core after tax in 2016-17 by producing 1.7 million tonnes of pellets that found buyers from China, Malaysia, Vietnam, South Korea and Japan. It also sold 7.3 lakh tonnes of pellets domestically. KIOCL’s pellet plant Panambur would be modernised at a cost of after tax 200 crore to aid the government\\u2019s plan to produce 300 million tonnes of steel by 2030 according to Singh.

natively, the State can also go for the modern way of slurry pipe to get raw material to the plant. The government has released Rs 2 crore to chalk out a feasibility report, which will be available by the first quarter of this year.

Union Minister for Steel Chaudhary Birender Singh has tasked KIOCL (earlier Kudremukh Iron Ore Ltd.,) with exploring iron ore and gold in South India, in Tiruppur of Tamil Nadu and Mysuru of Karnataka, respectively. It is in line with the government’s decision to diversify and expand KIOCL’s activities across the country and not just within Karnataka as a part of Steel Policy 2017. Mr. Birender Singh said that the government has recognised

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KIOCL as a mineral exploration entity under the MMDR Act, 1957 to undertake mineral exploration across India.

The company would explore iron ore in 100 sq km area of Tiruppur and 200 sq km of area in Mysuru districts. In line with the government’s thrust on utilisation of pellets as a raw material in blast furnace and sponge iron industry, KIOCL can contribute immensely in the field.

KIOCL has entered into a Memorandum of Understanding (MoU) with Vishakhapatnam- based Rashtriya Ispat Nigam Ltd., (RINL), also known as Vizag Steel, a public sector undertaking.

KIOCL will set up a 1.2 million tonne

Chinese consortium is comprised of leading infrastructure and machinery companies including China Railway Group, China Communications Construction Company and Dalian Huarui Heavy Industry Group has signed a memorandum of understanding (MoU) with the Brazil state of Bahia and Bahia Minera, a Brazilian subsidiary of Eurasian Resources Group, to develop a $2.4bn integrated mining and logistics project in Brazil.

The project includes Bamin’s Pedra de Ferro iron-ore mine, the Porto Sul deep-water port and the associated Fiol railway, which will link the landlocked state of Tocantins to the coast of Bahia.

The MOU sets out the intention of the consortium to jointly participate with Bamin in the ownership and development of the integrated mine, rail and port project and to arrange its financing.

The Pedra de Ferro mine will develop high grade, large-scale iron ore reserves located near the city of Caetit, in Bahia.

Once operational, the Pedra de Ferro

January 2018 SKILLINGS MINING REVIEW | 15

IRON ORE

mine will supply up to 20mt of high quality iron ore to global markets annually. Porto Sul will be a deep-water port located north of the city. It will be capable of handling up to capesize vessels and will be the export point for Bamin’s iron ore.

China also has plans to explore iron ore in Peru. Zhongrong Xinda Group's Jinzhao Mining , traditionally a copper, zinc and precious metals miner, is closer to becoming a regional force in the iron ore industry as Chinese mining companies ramp up investment. The unit plans to start construction at its’ USD 2.5 billion Pampa de Pongo iron ore project in the second quarter of this year. At last report, the company aims to finish work on a feasibility study for the 21,200ha property in Arequipa region before securing final permits from the energy and mines ministry. The project, which has 3.4 billion tonne in reserves, is designed to produce 22.5 million tonne per year and is scheduled to start operating in the third quarter of 2019, involves USD 1.3 billion in mine development and USD 1.2 billion in plant construction.

The Indian State government is exploring various options to procure iron ore for the proposed Bayyaram steel plant which is being set up with the support of the Central government, according to Minister for Mines and Geology K T Rama Rao.

The mining project will also feature a desalination plant and a slurry pipeline to the port of Marcona. Africa has to spend $360 billion on infrastructure by 2040, according to the African Development Bank (AfDB).

Alderon Iron Ore Corp. updates the independent Economic Impact Assessment of the Kamistiatusset Iron Ore

Project, located in the Labrador Trough, Canada’s premier iron ore district.

The EIA outlines significant economic benefits and positive implications for the economies of Newfoundland and Labrador, Quebec and Canada. The Kami Project is expected to create more than 100,600 full-time equivalent jobs across Canada, resulting in $7.6 billion in incomes to workers and businesses.

In addition, Kami is expected to generate $5.1 billion in total revenue for federal and provincial treasuries and $19.5 billion in GDP over a 26-year period, including two years of construction activities.

The Kami Project’s economic impacts were analyzed for the economies of Newfoundland and Labrador, Quebec, Ontario, the other Provinces of Canada.

Chairman and CEO of Alderon Mark Morabito stated China’s bid to reduce harmful emissions is driving an increase in domestic steel mills switching to high-grade iron ore products with fewer

16 | SKILLINGS MINING REVIEW January 2018

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developer or manufacturer that hasn't signed some type of an off-take with the chinese converters, or even in addition upstream," he said. Fortescue's interest in lithium comes as worldwide demand for electric vehicles continues to grow, and countries signal tougher rules on the use of petrol and diesel vehicles. The lithium sector has also been a favourite for investors this year, with lithium company Galaxy Resources, more than doubling in price since the middle of June of 2017.

Fortescue also likes copper, due to the fact as economies develop, copper is one of those ubiquitous metals that is needed in developing economies, and the extra electric wires you put in houses and motors and planes and anything, then it really is going to grow the call for for copper.�

And globally, copper grades are falling, so there may be less deliver of copper than the call for projection. Fortescue could check capability lithium initiatives using the equal approach as with different commodities. impurities, stated. For the type of iron ore concentrate that the Kami Project will produce (in the order of 65% Fe), there is already a significant spread to the normal Platts 62% iron ore index price, that, on September 1, 2017, was pegged at US$23.50 per tonne; this spread has widened over the last 18 months and prices for high-grade ore are expected to continue to increase as environmental regulation becomes more stringent.

The high-grade, low deleterious element iron ore that will be produced at Kami is the perfect composition to be blended with Pilbara iron ore and will fetch a premium price because of its quality. Iron ore heavyweight Fortescue Metals organization is seeking out lithium inside the widespread Pilbara location of Western Australia, in reaction to the strengthening outlook for lithium and electric powered cars worldwide. Requested if Fortescue's interest in lithium was driven by the strengthening outlook for lithium and electric powered cars, Fortescue's chief executive said: "Yeah, in reality."

In the meantime, the managing director of Australian lithium agency Kidman resources, Martin Donohue, state at recent convention last year that chinese organizations were making deals with lithium companies to secure lithium deliver. "it is very hard to find a lithium

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January 2018 SKILLINGS MINING REVIEW | 17

SAFETY

Key Areas for Mine Safety & Resources By its’ very nature, the industry presents a unique set of safety hazards that are completely different than other disciplines.

Hazards, like ground instability, are inherent to the environment itself, while others are introduced by the complex processes that mining requires.

K

omatsu

Mining Corp. has been

working to develop systems to extract personnel from

hazardous areas.

The lack of visibility

is of major concern if an operator becomes incapacitated.

Newer technologies including powered roof supports (PRS) automation, advanced shearer automation (ASA) and personal proximity detection systems are designed to make mines more efficient while enhancing worker safety. Fires pose one of the greatest safety threats to mines. Diesel fuel, grease, combustible materials, and flammable liquids and gases combined with ignition sources like heat, electri-

cal or mechanical energy, or chemical reactions, all increase the risk of fires in mines. One such option to address distressed environments is a Remote Management Center (RMC), an information and control station situated a safe distance, positioning the operator in a secure environment while still giving them access to critical information, camera images and control of the key components of the operation.

Inbuilt automation of individual components of the longwall system are well-developed and proven by technologies such as PRS automation and ASA, which help facilitate and allow for smooth remote operation.

18 | SKILLINGS MINING REVIEW January 2018

Automation is becoming a larger part of the longwall mining process; the highly productive underground coal mining method where a long wall of coal is mined in a single slice, where operators are moving farther from the face and its associated safety concerns.

However, fewer operators means that those remaining onsite are not always visible to other mine personnel.

The mining industry focus on new technology largely centers on safety with a strong interest toward mine automation and autonomy. It will be a long time before mines can function without any or minimal human intervention.

So for the near future popular thought is on semi-manual skill based repetitive work. It’s good policy to take the mine workers’ perspective and make the workplace safer, improve their well-being while increasing productivity.

www.skillings.net

Polymet Progressions

T

wo public meetings will give local citizens one of their final chances to tell

Minne-

sota officials what they think of the proposed

PolyMet copper-nickel mine.

Signs increasingly point to PolyMet winning those approvals soon, and supporters are billing the meetings as a chance to finish the long process.

Canada-based PolyMet Mining Corp., part-owned by Anglo-Swiss commodities giant Glencore PLC, The NorthMet Final Environmental Impact Statement was published in November

2015, preparing the way for decisions on permit applications. NorthMet is expected to require approximately two million hours of construction labor, create approximately 360 long-term jobs directly, and generate a level of activity that will have a significant multiplier effect in the local economy.

The company also said it can guarantee to cover costs of shutting down and cleaning up the mine. DNR officials said the permit to mine is determined on whether PolyMet meets the legal standards and that proper procedures are followed and not whether opening a new era of mining is wise. PolyMet Mining Corp. a publicly traded mine development company owns 100 percent of the NorthMet copper-nickel-precious metals ore body through a long-term lease and owns 100 percent of the former LTV Steel Mining Company site, a large processing facility located approximately six miles from the ore body in the mining district of Minnesota’s Mesabi Iron Range.

Vale(d) Promise to Re-open Mine

V

ale says the

Coleman Mine is expected to return to

production in mid-February, after being close down last year for vital restoration.

The

organisation

stated the maintenance might be finished by early

2018.

The union representing the people stated in December the of January. Now, a spokesperson with the business enterprise stated, based on recent inspections, the mine might not re-open in mid-February. repairs would continue until the end

"A few maintenance personnel have been recalled to help the restore work to the shaft, " Danica Pagnutti with the corporation stated, "so that it will mitigate impacts to our people at Coleman, who have been temporarily laid off, we have recalled and transferred more than 200 production and renovation personnel to quickly work at Coleman and other sites." For personnel with no work due lack of availability, the employer is adding on EI advantages via a supplemental unemployment plan to make certain the shaft is secure enough to operate and so that we can have Coleman Mine back to production.

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January 2018 SKILLINGS MINING REVIEW | 19

IRON ORE

Mesabi Metallics Year of Interest Continues

T

he

site land, including the majority of the mineral rights. But there's one problem, Cleveland-Cliffs also owns at least 3,700 acres of land on the same site. Cliffs also owns at least a portion of the mineral leases. Robb Bigelow, Managing Director for ERP Iron Ore, on behalf of Mesabi Metallics, declined to comment on who will actually be able to mine the site.

United Steel Workers

announced they have entered a neutrality agreement with

workers for

Mesabi Metallics, which

is hoping to finish the iron ore mine on the former

Essar site, in Nashwauk.

The agreement means USW can organize 350 Mesabi Metallics workers into the union, without interference from the company. The USW will not approach people until they are hired at the facility. But they will have access

to addresses. Mesabi Metallics owns at least a portion of the Nashwauk

NORTH AMERICAN MARKET (LTU) Company

IRON ORE PRICE REPORT

Ore Type

Pellets, FOB Michigan Mines Pellets, FOB Cleveland-Cliffs Inc. Minnesota Upper Lakes Port Source: CLEVELAND-CLIFFS INC. Cleveland-Cliffs Inc.

20 | SKILLINGS MINING REVIEW January 2018

"Today is all, all about our agreement with the steel workers, and we're really not going to comment on the matters that are tied up in potential litigation, not until an appropriate time, It's worth noting again that both companies do own rights to at least a portion of the land at the Nashwauk site.

Per Iron Unit

Per Gross Ton at 64%

Per Ton at 64% Reporting Date

$1.28

$81.92

12/31/17

$1.42

$90.88

12/31/17

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MINING INDUSTRY PEOPLE

ADVERTISING INDEX

Graphite One Resources Inc. appointed Kevin Greenfield and Jerry Birch, co-owners and senior executives of Taiga Mining Company, to its Advisory Board. Kevin and Jerry formed Taiga Mining Company in 1990, operating in remote interior Alaska, building Taiga from its modest beginning with a 6-cubic foot bucket line dredge into a company that was recognized this year as the Alaska Miners Association’s “Corporate Member of the Year” for the company’s contributions to the Alaskan mining community.

Azcon..........................................20 Barr Engineering.........................11 Corem..........................................19 Global Minerals Engineering.....20 Golder Associates......................22

Aldridge Minerals Inc. appointed Jeremy South and Gage Jull as independent directors to the Company’s board of directors. Mr. South is currently Managing Partner of a Canadian-based private equity group. He has over 30 years of experience in M&A, capital markets and private equity in Europe, North America and Australia, including senior positions in investment banking at Deutsche Bank, NatWest Markets and Deloitte. Mr. Jull is a co-founder and Principal of Bordeaux Capital. He has over two decades of experience in corporate finance covering the oil and gas, fertilizer and agriculture, mining, technology and industrial sectors.

Lake Superior Chapter ISEE.......20 L & S Electric Inc........................13 Malton Electric Company..........21 walcot water...............................09

Sierra Metals Inc. appointed Alberto Beeck as an Adviser to its Board of Directors and Alejandro Perellón as an Observer to its Board of Directors. Alberto Beeck is an investor and entrepreneur who combines his time between different businesses and social impact activities in the education sector. He is Managing Partner of Cranley Investments Holdings, Managing Partner of VH Properties, and Chairman of Lumni and of Sin Limites. Alejandro Perellón is a Vice President with the private equity firm Arias Resource Capital Management LP.

Hallett Dock Company...............05

Mielke Electric Works.................17 Naylor Pipe.................................24 NBC.............................................20 Neo Solutions.............................21 Northern Engine & Supply.........21

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January 2018 SKILLINGS MINING REVIEW | 21

STATISTICS

November 2017 Crude Steel Production

By John Edward, Associate Publisher

W

orld crude steel produc-

66 countries World Steel Association (worldsteel) was 136.3 million tonnes (Mt) in November 2017, a 3.7% increase compared to November 2016. tion for the

reporting to the

China’s crude steel production for November 2017 was 66.2 Mt, an increase of 2.2% compared to November 2016.

Japan produced 8.7 Mt of crude steel in November 2017, an increase of 1.0% compared to November 2016. In the EU, Italy’s crude steel production for

November 2017 was 2.2 Mt, up by 3.3% on November 2016. France produced 1.2 Mt of crude steel in November 2017, a decrease of -8.7% compared to November 2016.

Spain produced 1.3 Mt in November 2017, an increase of 18.0% on November 2016. Turkey’s crude steel production for November 2017 was 3.1 Mt, up by 7.0% on November 2016.

crude steel production for November 2017 was 3.0 Mt, up by 15.3% on November 2016.

The crude steel capacity utilisation ratio of the 66 countries in November 2017 was 70.7%. This is 1.5 percentage points higher than November 2016. Compared to October 2017, it is 2.2 percentage points lower.

Statistics based on World Steel Association Report released on December 20, 2017.

The US produced 6.7 Mt of crude steel in November 2017, an increase of 8.5% compared to November 2016. Brazil’s

Preliminary USGS Iron Ore Statistics for June 2017

By John Edward, Associate Publisher

A

U.S. G eological S urvey (USGS) report by Mineral Commodity Specialist Christopher A. Tuck, U.S. mine production and shipments of iron ore in June 2017 were 4.05 million metric tons (Mt) and 5.12 Mt, respectively. ccording to the

CAN’T AFFORD TO GET IT WRONG? JUST ASK GOLDER.

Average daily production of iron ore was 135,000 metric tons (t), 9% more than that of May 2017 and 8% more than that of June 2016. Average daily shipments of iron ore were 171,000 t, 10% more than those in May 2017 and 13% more than those in June 2016.

Mine stocks at the end of June 2017 were 10% less than those held at the end of May 2017 and slightly less than those held at the end of June 2016. U.S. exports of iron

Complex geology, remote sites and regulatory approvals are just some of the challenges faced in mining projects.

Integrating your engineering and environmental studies can result in a more robust design and can streamline the planning process, avoiding unnecessary delays and costly rework.

Let Golder’s global team of over 1700 mining consultants help you advance your project along the right path.

ore totaled 1.09 Mt in June 2017, 10% greater than those in May 2017 and 45% greater than those in June 2016. U.S. imports of iron ore totaled 210,000 t in June 2017, 33% less than those in May and 28% less than those in June 2016.  miningsolutions@golder.com www.golder.com

22 | SKILLINGS MINING REVIEW January 2018

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CRUDE STEEL PRODUCTION, NOVEMBER 2017. Source – World Steel Association OCT 2017

NOV 2017

13,983

14,747

13,550

3.2

Total - Other Europe

3,388

3,529

3,167

7.0

21.3

Total - C.I.S. (6)

8,585

8,870

8,515

0.8

26

-2.4

Total (66 countries)

136,280 145,254 131,458

3.7

1,650 e

1,651

-3.1

0

0

0

…

United States

6,709

6,976

6,185

8.5

e – estimate | r – revised Monthly Crude Steel Production in the 67 Countries included in the report, in thousands of metric tons. The 67 countries included in this table accounted for approximately 99% of total world crude steel production in 2016.

Total - North America

9,679

9,766

8,886

8.9

U.S. RAW STEEL PRODUCTION

434

437

359

20.9

Brazil

3,030

3,045

2,628

15.3

Chile

95 e

100 e

93

2.7

Colombia

105 e

110 e

104

1.2

Percent Change*

Capability Utilization Rate

Production

1,315 e

1,085 e

996

32.0

Total - European Union (28)

Cuba

20 e

20 e

21

-3.0

El Salvador

10 e

10 e

8

Guatemala

25e

25 e

1,600 e

Ecuador

45 e

45 e

48

-5.3

December 23, 2017

1,718

1.2

73.7

88,469

4.4

74.4

Paraguay

5e

5e

3

64.4

Previous Year

1,607

6.9

67.8

84,772

-

70.5

100 e

105 e

103

-3.1

December 16, 2017

1,698

1.6

72.8

86,751

5e

5e

6

-16.7

4.3

74.4

15 e

15 e

58

-74.0

Previous Year

1,607

5.7

67.8

83,165

-

70.5

3,834

3,867

3,401

12.7

December 9, 2017

1,672

- 2.8

71.7

85,053

4.3

74.5

Egypt

586

585 e

428

36.9

Previous Year

1,607

4.0

67.8

81,558

-

70.5

Libya

51

37

45

13.1

December 2, 2017

1,720

1.0

73.8

83,381

4.3

74.5

-

-

-

-

Previous Year

1,595

7.8

67.3

79,951

-

70.8

South Africa

551 e

566 e

500

10.1

Total - Africa

1,187

1,188

973

22.0

Iran

1,952

1,980 e

1,570

24.4

Qatar

190

239

171

11.1

Saudi Arabia (HADEED only)

269

470 e

496

-45.8

2,698

2,973

2,540

6.2

China

66,151

72,362

64,723

2.2

India

8,350 e

8,629

8,017

4.2

8,702

8,971

8,619

1.0

South Korea

5,650 e

6,200 e

5,701

Taiwan, China

1,900 e

1,965 e

Total - Asia

92,388

Canada

Mexico Trinidad and Tobago

Argentina

Peru Uruguay Venezuela Total - South America

Morocco

Total - Middle East

Japan

Australia New Zealand Total - Oceania

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NOV 2017

COUNTRY

Weekly Production WEEK ENDING

Year-to-Date Production

Percent Change*

OCT 2017

% CHANGE NOV – 17/16

NOV 2017

Production

% CHANGE NOV – 17/16

NOV 2017

COUNTRY

In thousands of Net Tons – Source - American Iron and Steel Institute * Percent Change is a comparison between a given week and the previous week.

The % change figure in the previous year row refers to the change from a given week compared with the corresponding week of the previous year.

AISI’s estimates are based on reports from companies representing about 50% of the Industry’s Raw Steel Capability and include revisions for previous months.

WEEKLY U.S. RAW STEEL PRODUCTION BY DISTRICT WEEK ENDING

DISTRICT

12/23

12/16

12/9

12/2

North East

207

213

202

210

-0.9

Great Lakes

639

628

607

631

1,750

8.6

Midwest

162

167

169

168

99,817

89,913

2.8

Southern

640

623

621

641

482

440 e

458

5.2

Western

70

67

73

70

55

57

55

1.2

Total

1,718

1,698

1,672

1,720

538

497

513

4.8

In thousands of Net Tons – Source – American Iron & Steel Institute.

January 2018 SKILLINGS MINING REVIEW | 23