Canada delves into Arctic iron ore

The Canadian government has approved the construction of a huge open-pit iron ore mine above the Arctic circle in the country's northernmost territory of Nunavut.

Reuters reports that Canada's Minister of Aboriginal Affairs and Northern Development gave the go ahead to the Mary River project on Baffin Island on Monday following recommendations from the Nunavut Impact Review Board.

The Mary River project is believed to harbor one of the world's richest undeveloped iron ore deposits. The mine is under development by ArcelorMittal (NYSE:MT) subsidiary Baffinland Iron Mines Corp, and is expected to produce over 18 million tonnes of iron ore per year throughout a 21-year mine life.

ArcelorMittal, the world's largest steelmaker, obtained control of the project following an intense bidding war in 2011 as part of an effort to reduce its dependence on the global iron ore oligopoly of BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO) and Vale (NYSE:VALE). The company currently owns a 70% stake in Baffinland Iron Mines Corp. with Iron Ore Holdings LP holding the remaining stake.

Despite the new approval the fate of the project remains uncertain, as it still requires a project certificate and water license, the finalization of an impact benefit agreement with local residents, as well as approval for construction from Baffinland shareholders.

The project also faces some of the harshest operating conditions in the global mining industry. Temperatures at the site can sink as low as minus 30 degrees Celsius, and the region is steeped in 24-hours of night during the winter months of November to January.

RELATED:

Canada's Labrador to drive potential iron ore boom in the country >> >>

Verdict on massive Nunavut iron ore mine imminent >> >>