Race to develop the Labrador Trough

Ashley Fitzpatrick
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Quebec promises infrastructure investment to capitalize on mining potential

In mining, infrastructure is king. Along with the value of your commodity, access to railways, ports and power determines how costly a project will be and, ultimately, whether or not it is viable.

With a rise in iron ore prices being fuelled by China (Chinese steel production is estimated to have accounted for 65 per cent of the global total in 2011), iron ore producers on the Quebec-Labrador border have moved ahead with expansion plans, while newcomers have made their way into the industry.

"What's happening is everybody in the planet is rushing to bring these deposits into production. We're in a bit of a race and competition with Australia, West Africa, Brazil and so on," executive director of Mining Industry NL, Gerry O'Connell, told The Telegram.

"Commodities are commodities. You never know what's going to happen. But in the meantime, iron ore prices are strong and everybody is rushing to satisfy the demand - in the shortest time frame possible."

The Labrador Trough is the heart of Eastern Canada's iron ore rush. It is an iron-rich, geological structure stretching between the border between Quebec and Newfoundland and Labrador, and from South of Labrador West up to Quebec's Ungava Bay.

The trough is roughly 1,600 kilometres long. For the sake of perspective, the drive from St. John's to St. Anthony is about 1,100 kilometres.

Despite its size, there is little infrastructure in the area covered and the race to pull ore from the trough has resulted in commitments for new and better infrastructure.

In giving his budget speech March 20, Quebec Finance Minister Raymond Bachand said the government of Quebec has partnered with CN and the Caisse de dépôt et placement du Québec and is working to provide a new rail line for Labrador Trough mines.

The line is being proposed at more than 800 kilometres, running from just north of Schefferville to the port in Sept-Îles. It would cost "several billion dollars," Bachand said, adding it's too soon for a firmer estimate.

For that work to move ahead, some tough negotiating must happen to reach agreements with mine operators and First Nations.

"Obviously that isn't a done deal," said O'Connell, when asked about the railway. "A lot of the Quebec 'Plan Nord' is like that - a lot of aspirational stuff, but it's hard to point to actual hard numbers or dollars being spent."

However, he said, "if all these (iron ore) projects that are now being proposed were to go to development, you would certainly need more capacity on the (existing) railway than you have right now. There would have to be railway upgrades at a minimum."

Two main lines are currently used - the Québec North Shore and Labrador Railway from Labrador City-Wabush to the port of Sept-Îles, Que., and a railway from Fermont, Que., to Port-Cartier on the coast, the latter being owned and used by ArcelorMittal Mines.

The rail to the port of Sept-Îles is the main line used by Labrador-based projects. That port is set to undergo a $220-million upgrade over the next 18 to 24 months to better handle its mine traffic.

On Feb. 13, the Sept-Îles Port Authority announced the upgrades, including the creation of a 450-metre long, multi-user dock at Pointe Noire, adjacent to Sept-Îles and part of the overall port area.

"Close to 1,000 jobs will be created during the two-year construction phase. Between 150 and 200 new jobs will be created locally for various rail transport, storage, and port handling activities. There will also be 2,500 to 3,000 new jobs that are directly related to the implementation of the new terminal and associated with the booming iron market that northern Québec and Labrador is experiencing with the arrival of many new mining companies," a port authority news release stated.

Meanwhile, the government of Newfoundland and Labrador, with a budget to be handed down Apr. 24, has noted the potential for $15 billion of industry investment in this province over the next five to 10 years, for expanding and developing mining projects in the Labrador Trough.

To that, provincial Liberals have been pressing questions on this province's contributions to overall infrastructure to solidify further investment. Pointing to the Quebec commitments in rail and port, MHA for Cartwright-L'Anse au Clair, Yvonne Jones has accused government of not seeing what a new port facility or new rail could do for Newfoundland and Labrador. She has also said the province needs to commit to an industrial power rate and supply for mines.

"You're looking at 100 years of shipping ore through Quebec with that infrastructure and we're not even looking at anything in Labrador, which doesn't make sense," Jones told The Telegram, leading up to the House opening.

In the House, Natural Resources Minister Jerome Kennedy has said he has personally met and spoken with representatives from companies active in the region, to hear about their needs. On power, he said feasibility studies are still underway and the demand for power has yet to be made.

On port and rail, the provincial government holds a January 2011 study by Stassinu Stantec Limited Partnership (Stantec), looking at constraints on iron ore developments. It includes a high-level look at the potential for Labrador rail and port developments, suggesting ice concerns make coastal Labrador less feasible as mining ports, while cross-Labrador rail raises costs too high for Canadian iron ore to remain competitive.

In a March 22 publication focused on the Labrador Trough, financial group Desjardins stated the global rush on iron ore risks flooding the market in the longer term.

"We expect many projects will be delayed or cancelled due to factors such as weakening iron ore commodity prices, infrastructure constraints and labour availability," it states. "However, we believe that many projects (in particular, world-class, low-cost projects controlled by major global diversified miners) will proceed to production despite these challenges."

Developments by Champion Minerals, Labrador Iron Mines and Alderon were stated to be likely to move into production, mainly because they might be able to tap into existing rail infrastructure.


Organizations: The Telegram, Mining Industry NL, CN Caisse de dépôt et placement du Québec First Nations Labrador Railway Sept-Îles Port Authority Stassinu Stantec Limited Partnership Stantec Champion Minerals

Geographic location: Quebec, Newfoundland and Labrador, Sept-Îles China Quebec-Labrador Australia West Africa Brazil Eastern Canada Ungava Bay St. John's St. Anthony Schefferville Fermont Port-Cartier Pointe Noire Northern Québec

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Recent comments

  • Fred Poole
    September 27, 2012 - 19:49

    I wish the NL government would stop with the feasability studies and start fulfilling their long overdue responsibilities to Labrador and its people. For example, St. Lewis (Labrador) is a year-round practically ice free deep water port. I submit that if the gon't of NL really wanted to develop Labrador, they could easily find a way to do so. It is 2012 and Labrador only recently got a highway. Now, perhaps they can pave it??? The problem is, NL has only ever taken from Labrador to develop the Island and they are still doing it today, Muskrat falls and Voisey Bay for example. In my view it is a sad and shamful province. If nothing else the gov't of NL should be shamed into treating Labrador as part of their province...the part with the richest resource base.