The Iron Ore Company of Canada is blaming a weak outlook in the commodities market for a decision to delay development of the Wabush 3 project in Labrador West.
The project has been described as “critical” to the ongoing viability of the operation, but company officials said in a memo to employees Tuesday that it must limit capital spending in 2016.
With iron ore prices now at a 10-year low, and no signs of a rebound on the horizon, IOC officials said tough decisions have to be made.
The Newfoundland and Labrador government gave its approval for the new open pit mine in September, bringing some much-needed good news to an area hard hit by a prolonged slump in iron ore prices.
Development was expected to begin in 2016, and mining was to commence in 2018. Developments costs were estimated at $250 million.
The memo explained that IOC will continue with engineering activities and will submit a revised approval request to Rio Tinto’s board of directors in the second quarter of 2016.
“We recognize this news is unsettling for our employees,” Thierry Martel, IOC’s vice-president of technical services, said in the memo.
Expansion plan seen as crucial to IOC’s future
IOC has been trying to increase production at the operation, and the Wabush 3 pit was seen as crucial to that plan.
Labrador West, which consists of Labrador City and neighbouring Wabush, depends heavily on the mining industry, and has been hard hit by the market downturn.
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