ArcelorMittal ISPA.AS , the world's largest steelmaker, is...

ArcelorMittal ISPA.AS , the world's largest steelmaker, is suspending a major expansion of its Mont-Wright iron ore mine in northern Quebec due to poor market conditions, a spokesman said on Thursday.

The company, which employs some 2,500 workers at the mine, informed the United Steelworkers union this week that it will not start expansion work in June as planned. The project would have extended the mine's lifespan by 15 years to 2045.

The decision was based on the project cost, "fairly high" mine production costs, low iron ore prices and global competition, said ArcelorMittal spokesman Paul Wilson.

The expansion was expected to boost annual output to 30 million tonnes from 24 million tonnes, take a couple of years to complete and cost in the "tens of millions," he added.

Oversupply and waning demand have depressed spot iron ore prices .IO62-CNI=SI to $49.30 a tonne, down from an all-time high of about $190 million in 2011.

ArcelorMittal said it is looking to revive the project by cutting costs and is in wide-ranging talks with the government on support, Wilson said, adding the company is "not throwing in the towel."

In 2013, ArcelorMittal sold a 15 percent stake in Mont-Wright to South Korean steelmaker Posco 005490.KS and Taiwan listed China Steel Corp 2002.TW for $1.1 billion.

Champion Iron (CIA) , which will decide on a plan to restart its northern Quebec Bloom Lake iron ore mine at year end, said the timing of ArcelorMittal's decision "couldn't be better."

Chief Executive Michael O'Keeffe said that ArcelorMittal customers will eventually need to replace production and that the Quebec government will be keen to keep supporting development at Bloom Lake, an 830 million-tonne ore body.

Champion acquired the asset for C$10.5 million ($8.03 million) last year and expects it will take tens of millions of dollars to restart the mine. Cliffs Natural Resources CLF.N bought it for $4.9 billion in 2011 and invested more than $2 billion in upgrades.

Luxembourg-based ArcelorMittal said in February it was launching a new five-year plan designed to improve each of its five business segments.

The company, which makes about 6 percent of the world's steel, said apparent steel consumption in 2016 would be flat to slightly higher, as stronger demand in the United States and Europe would be outdone by declines in China, Brazil and former Soviet states. ($1 = 1.3080 Canadian dollars)