Labrador Iron Mines and Tata Steel Minerals Canada, a subsidiary of Tata Steel Ltd., have agreed to cooperate on various aspects of their respective iron ore operations in the Labrador Trough in Canada. The companies operate adjacent direct shipping ore mines near Menehik, Labrador, and Schefferville, Quebec, and both utilize and intend to utilize the same rail and port infrastructure.

The strategic relationship will include multi-part cooperation agreements in areas of logistics, property rationalization, and various ancillary mutual support and potential off-take arrangements. As part of the logistics agreements, the companies will formalize arrangements for development of a rebuilt rail line that will pass from Tata’s new Timmins area processing plant through Labrador Iron Mine’s Silver Yards facilities to the main rail line to the Port of Sept-Îles. They also will cooperate on other areas of future logistics operations such as camp accommodations and the sharing of ore cars, flat bed freight cars, and rail car repair facilities.

The cooperation agreement also includes respective participation in developing infrastructure at the Port of Sept-Îles, with the objective of establishing access and terminal facilities for both companies to the port’s new deep-sea multi-user dock.

As part of their strategic relationship, Labrador Iron Mines and Tata have agreed to enter into a transaction for the development of Labrador Iron Mines’ Howse deposit and Tata’s Timmins 4 deposit. Labrador Iron Mines will sell a 51% interest in the Howse deposit to Tata for C$30 million and will acquire up to a 100% interest in Tata’s Timmins 4 deposit for C$3 million, payable from ore sales from the deposit. Tata has an option to infuse up to an additional C$25 million into the Howse project in the future to further increase its interest in the Howse deposit to 70%.

The Howse deposit is located about 25 km north of Labrador Iron Mines’ James mine and Silver Yards processing plant. The deposit has a historical resource of 28 million mt and is part of the company’s proposed Stage 3 project, currently expected to be developed in 2020. It is expected that significant cost savings and synergies can be achieved by processing Howse ore through Tata’s adjacent Timmins Area plant.

Tata’s direct shipping ore project has 125 million mt of resources spread over 25 deposits. When fully commissioned this year, the project will have capacity to produce 6 million mt/y of sinter fines.