The proponent of a giant iron mine on Baffin Island says it wants to delay parts of the project over financing difficulties.
Baffinland Iron Mines Corp. (TSX:BIM), which is 70 per cent owned by mining giant ArcelorMittal, has informed Nunavut's mining regulator that it wants to defer building two large pieces of infrastructure for the Mary River project on the north end of the island.
A letter sent Thursday asks the Nunavut Impact Review Board to allow the company to hold back on building a railway to haul the ore away and on a deepwater port at Steensby Inlet that was to have been the rail line's destination.
Instead, the mine is to truck ore to a port at Milne Inlet on the east coast of Baffin Island over an all-weather road. That road and the Milne port were originally intended to be used only during the mine's construction.
"In the current global financial environment, the large development capital cost for the Mary River project is difficult to finance," the letter says.
Previous estimates have placed the capital requirements for the project at over $4 billion.
Iron ore prices have gone up since September, but they remain about 30 per cent lower than the highs of early 2011 due to concerns about the strength of the global economic recovery.
The main driver of demand has been China as it continues to modernize and urbanize.
The owners say the new plan will allow Baffinland to ship about 3.5 million tonnes of ore a year and help the mine start earning revenue sooner. They say they remain committed to the original plan.
"Baffinland remains committed to the project as defined in the final environmental impact statement," says the letter.
It does not contain a timeline for construction of the railway and Steensby Inlet port.