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Niobium, a metal mined in Quebec’s Saguenay region and sold worldwide to make steel stronger and lighter, is dancing with the dragon.High-strength steel’s biggest user is the auto industry and China is already the largest steel user and producer and will soon dominate global car assembly.

 

The Niobec mine and processing plants, which produce the final niobium alloy for export worldwide via Montreal, is located only 25 kilometres north of Saguenay (formerly Chicoutimi) and Alcan’s massive aluminum smelters. Last year, total output was 4.6 million kilograms of ferroniobium alloy – the powdery stuff fed directly into the steel furnaces.

 

And because of growth in high-strength steel demand from the booming economies of China, India and other parts of Asia, Niobec’s ferroniobium capacity is going to triple to about 13.5 million kilograms with an investment of $1 billion or more. Known reserves would still give Niobec a 46-year life.

 

Niobium doesn’t have the glitter of gold or diamonds, says Iamgold Corp., which inherited Niobec and key Quebec gold mining assets with its $518-million takeover of Quebec-based Cambior Inc. in 2006. But it has been a steady profit maker and job provider for 36 years.

 

It contributes $75 million to $90 million of annual cash flow to the parent and there’s only one larger producer – in Brazil. Iamgold has been mopping up much of the growth in world demand.

 

Iamgold ranks as an intermediate gold producer with operations in the Americas and Africa, and has been under pressure from some big shareholders to sell part or all of Niobec and focus solely on gold.

 

But CEO Steve Letwin seems reluctant to classify Niobec as non-core and is pursuing the $1-billion expansion (due on stream in phases from 2016) while saying he’d probably accept if someone came along with a $1.5-billion bid. Or he’d take in a partner or make a second try at an initial public offering.

 

The final decision on the capacity expansion will come in a year or so with delivery of the full feasibility study, said Bob Tait, vice-president of investor relations.

 

Iamgold recently reported a find of top-value “light” rare earth minerals in Niobec’s backyard. Rare earths go into smartphones, e-cars and many other items of the digital age, but are difficult and expensive to extract.

 

Industry numbers tell the story of niobium’s growth: From 1993 through 2002, global consumption grew at an average eight per cent annually, and since then at 20 per cent – mostly from China. The metal’s price is about $40 per kilogram.

 

“Niobec has been a great story and its growth prospects are strong,” said Louis Gignac, who was CEO of gold producer Cambior at the time of the sale to Iamgold. “As in all mining projects, there may be extra risks and surprises when you triple a mine’s existing capacity.”

 

Niobec is now an open-pit operation and Iamgold plans to switch to a different “block caving” all-underground extraction system, raising some questions about rock stability, geologists say.

 

The crushing and milling technology are standard, they say. The plant that converts niobium into ferroniobium for the blast furnace requires a mix of aluminum, iron oxide and other ingredients, along with high temperatures. About 85 per cent of the process water is recycled.

 

The industry estimates $9 of niobium used in a car built with high-strength steel will provide a weight saving of 100 kilograms and a five-per-cent gain in fuel efficiency. High-strength steel is also used in heavy construction such as the bridge between Denmark and Sweden.

 

Read more: http://www.montrealgazette.com/business/Niobec+triple+output/6698446/story.html#ixzz1wPTgdlwm

 

What is interesting, I heard a while back Iamgold was thinking of selling Niobec or spinning it off, as its own corporation again.

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