Northland Resources, moving toward planned startup of mining and processing at its Kaunisvaara magnetite iron ore property in Sweden, recently issued a flurry of announcements for long-term contracts awarded to several of the project’s primary vendors and service providers.
In late March, Northland signed a comprehensive service contract with Metso involving the company’s processing plant at Kaunisvaara, which will produce high-quality magnetite concentrate.
The service contract includes staffing for the commissioning and completion, performance-guarantee testing, control of scheduling and quality, inventorying of spare parts and maintenance of the equipment related to the Kaunisvaara process plant.
Metso will deliver the primary crusher, semi-autogenous mills, pumps, other equipment, material and tools starting the second quarter of 2012 and began to deploy staff to Kaunisvaara at the beginning of April 2012. The contract, which will run for six years, is valued at roughly $100 million.
Northland, which is less than one year away from starting production at the Tapuli mine in Kaunisvaara, announced in early April that it would sign final agreements with logistic specialist companies to manage and develop the logistics solution between Kaunisvaara and the Port of Narvik, Norway. In 2013, 1.3 million mt of iron ore concentrate is expected to be transported from Kaunisvaara to Narvik, ramping up to full production of more than 4 million mt by 2015.
The company said Peab AB will handle concentrate transportation by truck from Kaunisvaara to a transload terminal at Pitkäjärvi, and Savage Services Corp. will manage rail line service and other logistical tasks from Kaunisvaara to Narvik. Grieg Logistics AS will manage port operation in Narvik.
The company’s concentrate will be transported by truck 150 km on public roads, before transfer to railcars at Pitkäjärvi. The trucks will be allowed to carry up to 60 mt at the beginning of production, but Northland said the Swedish Transport Administration is expected to grant dispensation for 90-mt trucks. Northland and STA are currently conducting tests using a 90-mt truck to determine the most efficient balance between gross weight and relative speed on the road—which will determine an optimum number of daily roundtrips combined with the minimum amount of road maintenance.
The operational agreement with Peab, which is in effect until the end of 2021, is valued at approximately $600 million.
“Peab has been an active participant in the Kaunisvaara project, constructing buildings and infrastructure at the mine site and at the Port of Narvik. We are therefore pleased to further extend our relationship on this important project for Northland,” said Jan Johansson, CEO of Peab.
Peab will also be responsible for the construction of the entire infrastructure at the Fagernes terminal in Narvik. The terminal will consist of a quay, a heated unloading facility for the railcars, a storage building and a ship loader. In addition, Peab is also responsible for construction of the transload terminal at Pitkäjärvi, where pre-development has already started. The construction agreement with Peab is valued at approximately $60 million.
Savage will operate the rail link from the transload terminal at Pitkäjärvi to Narvik. The concentrate will be transported on the 226-km-long Malmbanan railway. Malmbanan is currently used for iron ore transportation by Swedish iron ore producer LKAB.
Savage also will supply management services for the whole logistics chain, including overall responsibility for coordination and management between Peab, Savage and Grieg.
Grieg will operate the Fagernes terminal in Narvik, where the iron ore concentrate will be transferred from railcars to cape-size vessels for shipment to customers. The terminal is expected to load vessels of up to 180,000 mt. However, use of the Fagernes terminal is a temporary solution extending a minimum 10 years, said Northland, and the company is in discussions with the Narvik municipality to find a long-term terminal solution.
Northland also noted that Kiruna Wagon will deliver 150 railcars to be used for transporting the iron ore on the Malmbanan railway; and Northland has an option to buy 44 to 92 more cars from Kiruna Wagon. The railcars will be delivered between January 1, 2013, and May 5, 2014.
Northland said these combined logistical agreements, which are in effect until the end of 2021, have a total value of approximately $900 million.
Also in April, Northland announced that Pon Equipment will be responsible for maintenance of the Caterpillar equipment to be used at the mine.
The agreement with Pon encompasses maintenance, repairs and service on the 23 items of equipment that will be delivered starting in the second quarter of 2012 through the fourth quarter of 2014. The fleet consists of haul trucks, mining shovels, track dozers, wheel loaders and motor graders. The contract will be in effect for five years from Northland’s acceptance of the first equipment.
