From mining to dining: Century Iron Mines expands into food production
As the outlook for iron ore continues to look bleak, Century Iron Mines Corp. is turning a negative into a positive.
The Canadian mining company announced it plans to postpone further advancements on its flagship high-grade Joyce Lake project, opting instead to expand into a new business of selling Australian eggs to China while iron ore prices recovery.
“Australia is going from mining to dining,” said Sandy Chim, chief executive officer at Century Iron Mines Corp.
The company has signed an exclusive distributorship agreement with Sunny Queen, Australia’s leading egg producer, to debut its own products in Hong Kong and Macau.
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According to Bloomberg, Century Iron Mines will invest $2 million into the egg venture, drawing on capital originally set aside for the Joyce Lake mine project.
“I am delighted with the successful launch of our new business unit with Sunny Queen, a major player in the food sector, the support of our strategic partners and shareholders, and Alan on board to build and lead a professional team to execute our business plans,” said Chim. “We all look forward to advancing Century Food, beginning with Sunny Queen, and to prospering as China continues to urbanize and develop for decades to come.”
In November, Century Iron Mine said it was anticipating spending $250 million on development and starting production by 2017. However, prices for iron ore are currently hovering around $56 a ton. The break even for Century’s Joyce Lake is $58.25.
“We are going to sit on it and wait until the market comes back,” Chim said.
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The shift into food production isn’t surprising. Australian mining billionaires Gina Rinehart and Andrew Forrest have both expanded into food production as prices for iron ore remain stale.
John Meyer, a mining analyst at SP Angel Corporate Finance LLP in London, said the move isn’t surprising when faced with a money-losing mine.
“Sometimes it is a question of survival,” Meyer said. Mining entrepreneurs “are good at following the money and not patient enough to wait for the cycle to turn,” he said.
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