CORRECTED-ArcelorMittal suspends Quebec mine expansion on weak market

Thu Jun 2, 2016 2:03pm EDT
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(Corrects paragraph 5 to $190 in 2011 instead of $190 million)

By Susan Taylor

TORONTO, June 2 (Reuters) - ArcelorMittal, the world's largest steelmaker, is suspending a major expansion of its Mont-Wright iron ore mine in northern Quebec due to poor market conditions, a spokesman said on Thursday.

The company, which employs some 2,500 workers at the mine, informed the United Steelworkers union this week that it will not start expansion work in June as planned. The project would have extended the mine's lifespan by 15 years to 2045.

The decision was based on the project cost, "fairly high" mine production costs, low iron ore prices and global competition, said ArcelorMittal spokesman Paul Wilson.

The expansion was expected to boost annual output to 30 million tonnes from 24 million tonnes, take a couple of years to complete and cost in the "tens of millions," he added.

Oversupply and waning demand have depressed spot iron ore prices .IO62-CNI=SI to $49.30 a tonne, down from an all-time high of about $190 in 2011.

ArcelorMittal said it is looking to revive the project by cutting costs and is in wide-ranging talks with the government on support, Wilson said, adding the company is "not throwing in the towel."

In 2013, ArcelorMittal sold a 15 percent stake in Mont-Wright to South Korean steelmaker Posco and Taiwan listed China Steel Corp for $1.1 billion.   Continued...