Finnish assets – plans in a nutshellHannukainen / Kuervitikko can be in production from 2013 with sales of iron ore concentrate of direct reduction (DR) grade (2 million tonnes annually after the full ramp up) and by-products such as gold and copper. A plant for production of iron nuggets seems likely to be built in Kotka just east of Helsinki and in production maybe in 2015. Raw material will be iron ore concentrate from Hannukainen (approximately 1.5 million tonnes annually after the full ramp up) transported by rail to Kemi and further by ship to Kotka. Possible location in Kotka is partially due to the fact that the plant is dependent on being close to a natural gas pipeline, and a an agreement of gas deliveries with Russia is applicable. Kotka also has a deep harbour. NAU will try to bring a strategic partner into the Finnish projects.
This iron nugget plant can generate a substantial value increase for shareholders. A substitute product, merchant pig iron, is today sold for USD 400/tonne FOB Black Sea and FOB Brazil. It is expected around 96 – 97 % Fe in the nugget, slightly higher than in pig iron. The iron ore concentrate from Hannukainen is expected to around 70% Fe.
Products from Hannukainen will be sold in the free market from sometime in 2013 when production there is expected to get started. When production of iron nuggets is commenced, Hannukainen will provide Kotka with necessary iron ore concentrate. Construction of an iron nugget plant is estimated to 2-3 years, and therefore production start up in Kotka can be 1-2 years later than in Hannukainen.
Source: the NAU/OSE message of Nov. 23, 2009, the NAU presentation dated Jan. 17, 2010, an article in the Finnish newspaper Kauppalehti Feb. 10, 2010, in addition to my own research