Northland files for bankruptcy – who’s next?

Iron-ore truck at Northland resources' mines outside Pajala in Northern Sweden.

Iron ore miners all over the Barents Region are troubled by drop in prices. Northland Resources outside Pajala in northern Sweden field for bankruptcy Monday morning.

Northland Resources failed to refinance its mining business. With more than $650 million in debt, the board of directors had no other options than filing for bankruptcy. 

“The Company and its employees have done an impressive job in developing a professional and modern mining operation in a very short time. It is therefore sad that the dramatic fall in iron ore prices this year made it impossible to raise the required financing, which was a prerequisite for continued operations,” says Olav Fjell, chairman of the Board in a press-release issued Monday morning.

Northland Resources has been in a financial difficult situation all since the digging began in 2010. In classic boomtown style, store houses lengthened and new businesses popped up to support the mine: mechanics, restaurants, and outfitters appeared to take advantage of the influx of workers and cash.

But the cashflow has been difficult all since start up. In early October this year, the company was forces to stop all operations and most employees got a notice of termination.

When the massive Kaunisvaara mine, 20 km from town, was forced to close its doors, Pajala’s unemployment rate went from being one of the lowest in Sweden, to one of the highest. 240 mine workers and 191 ore truck drivers are now out of a job.

Northland Resources, by many exemplified as the bright future for the believed to come mining boom in the Barents Region, is victim for falling prices of raw-materials on the world market.

Also other iron-ore miners in the Barents Region have troubled days.

In Kirkenes, Sydvaranger Gruve has agreed with its employees to cut salaries in a struggling situation to survive. Another iron-ore miner in northern Norway, Rana Gruber, was forced to sack 50 employees in late November, the local newspaper Rana Blad reports.

On Russia’s Kola Peninsula, Alcon iron-ore miner in Olenogorsk started to reduce the number of employees in late October. 

According to Murmanski Vestnik, some place between 300 and 700 people might be forced to leave the company.

Spot iron ore prices have fallen nearly 50 percent so far this year, Reuters reports adding that low-cost miners such as Vale, Rio Tinto and BHP Billiton have boosted production. Top buyer China, on the other side, has slowed down the demand.