The Arctic is considered the last frontier of mining. Beneath the expanse of the utterly desolate icy landscape lie several riches — oil, gas, iron ore, uranium, zinc, gold, and rare earth minerals, among others. However, until just a few years ago, the resources had been left untapped due to the inaccessibility of the region and the massive costs of extraction. But now, thanks to the exponential rise in commodity prices since 2007, and an extraordinary melting of the polar ice cap, the countries that can stake a claim to parts of the Arctic have sensed an opportunity to commercially exploit the frigid territory.
In fact, it is one frenzied scramble for mining ventures in the Arctic. Since the once-ice-blocked northern shipping routes have opened up owing to climate change, two iron ore mines in Norway’s far north, which lay abandoned for 14 years, have been reinstated and Sweden is planning to open an iron ore mine in its Arctic region as well. But Canada’s latest Mary River iron ore mining project in northern Baffin Island, which is more than 300 miles above the Arctic Circle, stands out for its scale and complexity. Following an intense bidding war, a joint venture between the world’s largest steel producer, ArcelorMittal, and a company backed by a Houston-based private equity firm has taken over Baffinland Iron Mines Corporation, the owner of the Mary River mines, for $593 million.
The acquisition closed in March and the joint venture is now expected to spend $4.1 billion on developing what should turn out to be the first iron-ore mine inside the Arctic Circle. Other aspects of the Mary River project too are as mind-numbing as the region’s cold (temperatures sometimes fall below -58F or -50C). For instance, as much as $2 billion of the estimated cost of developing the project has been earmarked for an 87-mile railroad, which will connect the mines to a port that can be reached only by ice-breaking cargo ships with three times the normal engine power and custom-built to navigate frozen waters. The railroad, which is touted to be the globe’s most northern railroad when complete, will clearly be an engineering feat. This is because the railroad’s supporting ground could potentially become unsteady due to climate change. To provide stability, the railroad track will need to be set on a four-meter deep foundation made of crushed rock and pylons will be driven into the bedrock to ensure that the 31 bridges on the railroad are strong and secure.
Considering what is at stake, the costs and the complexity of the project seem justified. With Mary River, ArcelorMittal itself has come a step closer to its goal of doubling its iron ore output and reducing its dependence on top producers like Vale, Rio Tinto, and BHP Billiton. Moreover, with an estimated capacity to produce around 18 million tons of the best grade (66% iron) of ore a year, Mary River has the potential to make Canada — which already produces around 27 million tons of iron ore a year — one of the world’s top iron-ore-producing countries after Australia and Brazil.
The Mary River mining project is, in fact, another indication of the frantic rush by global mining companies to secure every ounce of resource in a commodity-hungry world. Amid the vigorous exploitation of Africa, the sights are now turned toward the Arctic. While Norway and Finland are analyzing their old mines to see if it is economically feasible to reopen them, numerous companies have landed in Greenland to mine its rich deposits of zinc, uranium, and rare earth minerals. And with northern sea routes now staying open longer due to thinner ice, Russia has been transporting minerals from its Siberian mines to the port of Rotterdam in The Netherlands. The global oil and gas giant BP, of course, famously tried and failed to team up with the Russian integrated oil company Rosneft in an Arctic exploration venture.
So the battle to conquer the last frontier of mining has never been more intense. The frigid conditions may have been a hindrance at one time, but climate change and high commodity prices have certainly made the Arctic a hot destination for global mining groups now.
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