This week Sydvaranger Mine announced the need for 350 new employees for its iron ore mine in the Norwegian border town of Kirkenes. With only 9500 inhabitants in the municipality, and practically no unemployment, the mining company has to look for workers in the neigbouring Nordic countries and in Northwest Russia.
The mining company is still preparing for a rough start. With the drop of iron prices, the level of income will be far lower than what was expected when the project was financed in 2007. Sydvaranger has not yet however signed any sales contracts. According to plans the mining company will ship its first load of iron ore in summer of 2009.
In April the global iron industry renegotiates its annual contracts on iron deliveries. These negotiations will be of high importance for the price level of iron on the world market. According to newspaper Dagens Næringsliv, Sydvaranger has estimated that the company will still have profits only with a price level above 48 USD per ton. When the price level was on its peak in early 2008, mining companies sold iron for 170 USD per ton. Today, the price is approximately 70 USD per ton.
Mining experts say that the price level for metals does not seem to increase in a long time. The global demand for metals have been hard hit by the financial crisis, and only if the world’s largest iron companies reduce their production, then the prices may rice again.
