Peab has inked a letter of intent with Northland Resources to establish a joint venture firm, which will control the complete supply chain of iron ore concentrate, including transportation of iron ore from Northland’s mine located in Kaunisvaara to the port of Narvik.
According to Northland Resources’ President and CEO, Karl-Axel Waplan, the company believes that Peab can handle the supply chain solution, an important step to deliver the high-grade iron concentrate to Northland Resources’ customers. Both firms will form a 50:50 joint venture company, he added.
Northland Resources and Peab plan to form the joint venture in the Q3 of 2011. The logistics chain to be managed by the joint venture is expected to start operations during the end of 2012 when the Kaunisvaara mine will start production.
The logistical chain will involve the transportation of iron ore concentrate to the Svappavaara terminal from where the concentrates will be shifted to rail cars. The joint venture will also run the trains between Svappavaara and the port of Narvik where the iron ore concentrate will be stored and then loaded on the ships.
The Kaunisvaara iron ore mine is situated nearly 100 km north of the Arctic Circle in Pajala municipality in Northern Sweden. Once construction is over, the process plant will produce 5 million tons of iron ore concentrate and 12 million tons of iron ore per year.