(Corrects paragraph 5 to $190 in 2011 instead of $190 million)
By Susan Taylor
TORONTO, June 2 (Reuters) - ArcelorMittal ISPA.AS , the
world's largest steelmaker, is suspending a major expansion of
its Mont-Wright iron ore mine in northern Quebec due to poor
market conditions, a spokesman said on Thursday.
The company, which employs some 2,500 workers at the mine,
informed the United Steelworkers union this week that it will
not start expansion work in June as planned. The project would
have extended the mine's lifespan by 15 years to 2045.
The decision was based on the project cost, "fairly high"
mine production costs, low iron ore prices and global
competition, said ArcelorMittal spokesman Paul Wilson.
The expansion was expected to boost annual output to 30
million tonnes from 24 million tonnes, take a couple of years to
complete and cost in the "tens of millions," he added.
Oversupply and waning demand have depressed spot iron ore
prices .IO62-CNI=SI to $49.30 a tonne, down from an all-time
high of about $190 in 2011.
ArcelorMittal said it is looking to revive the project by
cutting costs and is in wide-ranging talks with the government
on support, Wilson said, adding the company is "not throwing in
the towel."
In 2013, ArcelorMittal sold a 15 percent stake in
Mont-Wright to South Korean steelmaker Posco 005490.KS and
Taiwan listed China Steel Corp 2002.TW for $1.1 billion.
Champion Iron CIA.AX , which will decide on a plan to
restart its northern Quebec Bloom Lake iron ore mine at year
end, said the timing of ArcelorMittal's decision "couldn't be
better."
Chief Executive Michael O'Keeffe said that ArcelorMittal
customers will eventually need to replace production and that
the Quebec government will be keen to keep supporting
development at Bloom Lake, an 830 million-tonne ore body.
Champion acquired the asset for C$10.5 million ($8.03
million) last year and expects it will take tens of millions of
dollars to restart the mine. Cliffs Natural Resources CLF.N
bought it for $4.9 billion in 2011 and invested more than $2
billion in upgrades.
Luxembourg-based ArcelorMittal said in February it was
launching a new five-year plan designed to improve each of its
five business segments.
The company, which makes about 6 percent of the world's
steel, said apparent steel consumption in 2016 would be flat to
slightly higher, as stronger demand in the United States and
Europe would be outdone by declines in China, Brazil and former
Soviet states.
($1 = 1.3080 Canadian dollars)