In a sign of just how tough conditions have got for iron ore mining companies, a well known iron ore player in Canada has announced a bold shift in strategy.
Under a partnership with its joint-venture partner WISCO, one of China’s largest steel groups, Toronto-listed Century Iron Mines won mining awards last year as Newfoundland’s best explorer in 2014. But this morning the company announced an unlikely sidestep in strategy and will now primarily focus on distributing Australian eggs in Hong Kong.
Century Iron has formed a new subsidiary, Century Foods, which has signed an “exclusive distribution agreement” with Sunny Queen Pty, a privately-owned giant in Australian chicken eggs. The agreement will initially focus on Hong Kong and Macau, but Century’s directors have secured a “first right to negotiate” over an extension to the contract, which could be rolled out across the Chinese mainland.
“Over the years, Century has established a strong foothold in iron with the discovery and development of multibillion tonnes of iron deposits,” Century said. “This agreement marks a historic debut of Sunny Queen’s products in Hong Kong and Century’s debut in the food sector.”
The economics of eggs and iron ore are essentially the same, the company stressed, with both playing to China’s compelling post-urban prospects and its vast appetite for raw materials, creating a “dynamic and growing mega-size market.” As such, Century is “rigorously pursuing” the acquisition of “non-ferrous assets,” including eggs. It is currently planning to focus on the supermarket and food service channels, rather than retailing the eggs itself.
The announcement comes hot on the heels of news that steel is now cheaper than cabbage on a per tonne basis in mainland China. Century appears to have taken the news seriously, quickly switching from metals to food, or “mining to dining”, in the group’s own words. It is not however the first miner to flee the iron ore market in recent months.
In Australia, Flinders Mines recently hopped from iron ore exploration into gold, whilst Gindalbie Metals is bidding to turn its iron ore licences in Western Australia into a dump for nuclear waste. On the outskirts of Melbourne, Nagambie Mining has similarly converted an abandoned mine site into a landfill site.
WISCO, Century Foods and Sunny Queen were unavailable for comment. Century’s shares lost 21 per cent in thin trading in Toronto yesterday, but having fallen 77 per cent in 3 years, have fared better than many other junior iron ore producers, including Atlas and BC Iron.