Niobium demand, price stays high despite steel weakness – Iamgold

Liezel Hill
MiningWeekly.com
Canadian miner Iamgold expects demand for niobium to remain strong, despite a softening steel market, COO Gordon Stothart said on Thursday.

Iamgold produces the metal, which is used in specialty high-strength steels, at the Niobec mine, in Quebec. The mine began producing concentrates in 1976 and ferroniobium in 1994, and currently produces approximately 10% of world niobium consumption, according to Iamgold's website.

It has been a strong earner for the company in over the last few quarters, and contributed $16,2-million in operating cash flow during the September quarter. Iamgold produced 1,15-million kilograms of niobium in the third quarter this year, compared with 1,10-million a year earlier. The mine's operating margin rose to $22/kg, compared with $14/kg in the same quarter of 2007.

The company has been “pleasantly surprised” by the limited downward pressure on the price of niobium in the last few months, despite a gloomy outlook for steel demand, linked to expectations over a global economic slowdown. “To this point we really haven't seen any impact,” Iamgold president and CEO Joseph Conway said during a conference call.

Because niobium represents such a small part of the cost of the steel in which it is an ingredient, the price is driven by demand, rather than by any cost-containment on the part of steelmakers. “And the demand for the specialty steels is especially keen, and forecast to continue to be keen going
forward,” said Stothart.

He cited, as an example, that $4 of niobium used in the manufacture of a mid-sized vehicle would allow a saving of about 100 kg of weight in steel, because of the properties of the ferroniobium steel. This, in turn, would translate into fuel savings of half a litre per 100 km on a mid-sized car, he said.

“We certainly feel very comfortable about how the niobium market looks going forward.” Iamgold said in June that it could potentially double the reserves at its Niobec niobium mine, in Quebec, Canada, by introducing a paste backfill system at the operation.

Engineering is currently under way and the associated plant and underground development are expected to be completed by 2010, Stothart said.

The company is also studying other ways of optimising operations at the mine, including the potential installation of a gravity separation circuit on one of the tailings streams, by using a Kelsey jig unit. Based on lab tests, this could enable Iamgold to improve niobium recovery by 2% or more, and a report on pilot plant tests will be completed by the end of the year, after which the company will make a decision on how to move forward.