REUTERS

CAPE TOWN THE world’s largest steel producer ArcelorMittal expects to clear regulatory hurdles in Canada early next year, allowing it to begin construction of a new iron ore mine close to the Arctic, a senior official said on Wednesday.

The Mary River deposit in the Canadian Arctic, acquired through last year’s C$590 million ($567.61 million) deal to buy Baffinland Iron Mines, will help ArcelorMittal in its efforts to reach its long-term goal of nearly doubling its iron ore production, reducing dependence on miners such as Vale SA , Rio Tinto and BHP Billiton .

“We are hoping that those regulatory processes would be complete in early 2013, which would allow us to have the project approved and begin the planning out for construction purposes,” said Ron Hampton, the Mary River project director.

“We don’t have a specific (construction) date right now, but it will not be before 2013.” The mine and associated infrastructure, including a port and railway, is expected to cost between C$4 billion and C$5 billion, with first production about five years after construction starts.

“Our current production plan is for 18 million tonnes and we would hope to ramp up to that fairly quickly; within the first year or two of start of production,” said Hampton of the mine, which has confirmed resources of 400 million tonnes, with an upside potential of 1 billion tonnes.

He said construction of the port, which would have to be large enough to handle capesized cargo ships with icebreaking features, would be undertaken in two phases - 18 months of off-site fabrication, then a two-year installation.

The port could eventually handle 30 million tonnes a year of iron ore, though this was contingent on resource upgrades. Output will be targeted towards European markets, both ArcelorMittal internal consumption and potentially some external customers, Hampton said.