Comments from the Managing Director
There is no question that the greater focus on sustainability in both society and the industry will benefit Nordic Iron Ore. We will produce a high-grade iron ore concentrate that contributes to environmental sustainability. There are also indications that the current price premium at which our product is being traded will remain as steel manufacturers increasingly transition to more sustainable production.
The past year has been an unusual one on the iron ore market. The price of iron ore was heavily impacted by the spread of the COVID-19 pandemic as demand for steel fluctuated. The price of iron ore fell at first, only to rebound during the second half of the year to levels that have not been seen since the peak years 2010-2013. During the first quarter, the price trend continued to climb, and the average price for the quarter was USD 167/tonne, which was significantly higher than the previous quarter.
Nordic Iron Ore will produce iron ore that is classified as 65% Fe. The price premium spread between Platts IODEX 65% Fe and 62% rose sharply during the quarter, increasing to more than USD 30/tonne, as demonstrated in the graph below.
Steel industry focusing more on sustainability
It is positive both for society and for us that the steel industry is increasing its focus on environmental sustainability. Several
initiatives have been introduced to reduce/eliminate carbon emissions, in some regions already by 2050. This industry trend benefits us since we deliver "green ore", which helps steel manufacturers produce "green steel" worthy of its name. Our
product will also offer cost-related benefits for steel and pellet manufacturers through increased productivity. Our products decrease the amount of energy consumed in pellet manufacturing, thus reducing slag production in the blast furnace and lowering carbon emissions per produced tonne of steel.
The preparations to start construction at the mine are under way. During the quarter, we were in contact with potential suppliers and we discussed with relevant land owners the borders of the land areas we need to control. We also initiated an independent assessment of these areas.
Furthermore, we prepared a proposal for environmental compensation, which must be approved by the County Administrative Board and adopted by Stora Enso, which owns the compensation areas in question.We commissioned both an updated plan for the new entrance tunnel to the mine and the preparation of the basis for a modified loading terminal. We also engaged the English consultancy firm Paterson & Cooke to evaluate alternatives for the waste management that was used as the basis in previous studies. The goal is to find a solution that significantly reduces the environmental impact of the mining operations but is also attractive from an economic sta
With regard to future financing, the Board is evaluating a number of options. During negotiations, it is unfortunately not always possible to control the counterparty's schedules and priorities; some patience is required. However, it is very encouraging that global players - which only a few years ago were not really interested in our project - are now contacting us to discuss the possibility of working together. It will be very exciting to see where these discussions lead.