Northern Iron Limited: Resources, Infrastructure, Quality

Northern Iron Limited: Resources, Infrastructure, Quality

Northern Iron is an Australian Stock Exchange listed company and is the 100 percent owner of Sydvaranger Iron Ore operation in northern Norway. The Sydvaranger operations use world-class mining, rail, processing and port assets to produce and export high quality iron ore concentrate to steel industry customers worldwide. Product from the operation currently contains iron ore content of approximately 68.2 percent and silica content of around 4.8 percent. Existing reserves offer a 20-plus-year mine life.


“When we first started we were at something around 60 percent iron content. Now, we produce a very high quality, high purity iron ore in excess of 68 percent,” says Antony Beckmand, CEO, Managing Director. “That's been one of our success stories, being able to turn around that quality. It’s been a unique product to bring to the market in terms of quality and purity — a premium grade product.”


Blazing a Trail with Ultra-fine Product


“We produce a pellet feed concentrate, an ultra-fine material of 53 microns; it's extremely fine,” says Beckmand. An everyday item equivalent in size would be a human hair. Beckmand went on to explain the Company’s strategic approach to penetrating the European Market: “There's only one pelletising plant in Europe; Tata Steel Group, Holland. So that was our target audience at the beginning of the startup. We were able to secure a long-term contract with them.”


“What we've been doing over the last two years is trying to get acceptance of our ultra-fine product into the rest of the European steel industry, which is set up to take a much coarser material — we've been blazing a trail with that.”


The Company’s trail blazing and efficient operations have been paying off so far, with the Company achieving several successive record production quarters. A record production quarter of 545kt in December 2013 was surpassed by a new record of 553kt in the March 2014 quarter, and indications are that the June 2014 quarter will deliver at an even higher rate.


Sydvaranger Gruve AS


Sydvaranger consists of four magnetite iron deposits with JORC compliant reserves and resources (Kjellmannsåsen, Fisketind Øst, Bjørnevatn and Tverrdalen). Sydvaranger is located adjacent to the towns of Bjørnevatn and Kirkenes in Norway, approximately 1,500km northeast of the capital, Oslo. The mine at Bjørnevatn is connected via a rail line to a concentrator facility and ice-free port at Kirkenes located 8km to the north, providing direct access to the Barents Sea. Sydvaranger is the owner and sole user of the railway, and has secure access to the port through long-term contracts with Tschudi Bulk Terminals AS. “The existing infrastructure and world-class ore body is what made this such an attractive project,” adds Beckmand.


The team at Sydvaranger Gruve are determined to continually improve performance in all aspects of their business. Their future success will be underpinned by focusing on the following key strategic drivers: safety, health and environment, productivity, reliability, competence and culture and sustainability. “The key is sustainability. We know we're a high-cost producer, but we're also a high-quality producer. And that makes us unique and highly desirable,” says Beckmand.


Asset location continues to be a strong advantage for Northern Iron. “We're in Norway, which is about six sailing days from Europe; our main point of marketing. We have an advantageous location. Norway itself is preferable compared to a lot of other start-up iron ore companies based in Africa for example,” says Beckmand. “We've been able to access more of the European market which, geographically, has been a big advantage over shipping to more distant markets and has enabled us to realize a freight advantage in the local European market.” 


Part of Northern Iron’s great success in efficiency has come through its strategic partnerships. One such key relationship that especially stands out is The Tschudi Group. The Tschudi Shipping Company AS is the privately owned Norwegian holding company for the Tschudi Group with its roots dating back to 1883. Traditionally as a ship-owner Tschudi Shipping Company has operated in the conventional and non-conventional shipping markets worldwide. Over the past 10 years, the Tschudi Group has developed further into a Shipping, Offshore and Logistics Group.


Felix H. Tschudi, Chairman of the Board for The Tschudi Group highlighted the key points regarding accessibility and logistics that make the Sydvaranger Gruve AS mine site such an intelligent point of operations. “The mine is very well placed for activities in the arctic. It’s in a spearhead position to play a major role; a very promising area for resource development. This is especially true because the Gulf Stream keeps the water open throughout the year. It's an ice-free, almost non-arctic wedge into the arctic,” says Tschudi.


These attributes support Northern Iron’s current strategic roadmap aimed at progressively expanding production at Sydvaranger to significantly higher levels. The process for achieving further permitting to enable production above circa 3 Mt of product p.a. is currently under way.


Innovation and Efficiency


In order to compete with the giants on the global market, Sydvaranger Gruve AS must operate efficiently. Goods, services and manpower costs a great deal in Norway. The Company acknowledged that if they are going to survive in the international market they have to be more productive and deliver better quality than their competitors.


The Company has managed a 15 percent increase year-on-year in total tonnes mined. Furthermore, there have been successive monthly concentrate production records in January, February, July and December 2013, showing a consistent trend. This is now surpassed by production records during 2014 with the Company on track to deliver a record 2.3-2.4Mt for the year.


Key Focus Areas


Key focus areas for Northern Iron include mine production (flexible plans, ready to deliver higher ore feed to match concentrator demand), plant production (momentum, continuing to achieve new production records – reliability is the key to quick improvement) and improvement to current operations (targets developed with bottom-up actions providing clear tasks, timeframes and accountabilities). With improving product volumes, reducing unit costs and a providing a great place to its employees to work, Northern Iron seeks to achieve its ultimate goals of building a sustainable long-term business that delivers returns to its stakeholders.