100 million tonnes in iron ore production possible by 2020

Daniel MacEachern
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IOC mining operation outside Labrador City in Labrador. — The Canadian Press Images/Paul Daly

Three lines creeped up the right-hand side of David Liverman’s graph, projected at the front of Salon B at the Delta Hotel.

The blue line showed the province’s minimum annual iron ore production in the year 2020 — almost 40 million tonnes per year from the Labrador trough, which will actually be reached within a few years, as expansions in Labrador City and Wabush, among others, come on stream.

The yellow one, representing likely production, scrambled up above 80 million tonnes.

The eye-catching red line, though, representing maximum production, shot up over the 100 million mark.

That figure, acknowledged the assistant deputy minister for natural resources, is hypothetical — but reachable if iron ore prices stay strong and forecast production targets are realized.

“If I was working for a company, this is where I’d put up my forward-looking statement, because this is highly speculative,” he told the audience during his minerals sector overview at the annual Mineral Resources Review.

“Predicting the next 10 years is very hard. Nobody really expected what happened (recession) in 2008-2009.

“However, despite volatile commodity prices, we think that Chinese and Asian demand is going to remain strong.


“Iron ore prices are going to be very critical in terms of the major developments going forward, because a lot of them are iron ore related, and the current iron ore prices — the pundits are telling us they’re not going to stay as high as they are, but they’re also going to stay very strong, so I think the outlook is very positive for the iron ore industry.”

That much activity could more than double the number of people — currently about 6,000 — working in the mining industry, he said, and push mining’s contribution to the province’s GDP from about 12 per cent today closer to oil and gas’s 30 to 35 per cent share.

About 250 people representing mining and related businesses as well as government officials are attending the three-day conference, which includes seminars and project updates. In his welcoming remarks, new Natural Resources Minister Jerome Kennedy noted the industry’s “vast potential,” pointing to this year’s $4.7 billion in mineral shipments, the highest on record.

“Nationally and internationally, people are taking notice of how Newfoundland and Labrador has established itself as an industry leader in mineral exploration development and has one of the fastest growing economies in the country,” he said.

Rapid expansion of the mining industry will bring its own problems too, cautioned Liverman, including land-use issues, labour supply, infrastructure strain, and pressure on communities.

“It’s going to represent real problems for communities,” he said. “If you look at Western Labrador alone, if you put this kind of development in Western Labrador there, it’s going to be a real challenge for them to cope, so we need to look at innovative solutions for this. We need to plan ahead.”

Don Gallagher, president of Global Commercial and executive vice-president of Cliffs Natural Resources, said three trends are driving global demand for iron ore: the continuing infrastructure growth of emerging economies, delayed response on the supply side, and declining ore grade qualities in other iron ore-producing nations.

“What we’re competing against now are the direct-shipping ores coming out of Brazil and Australia that are declining in quality, and there’s really not much you can do with the direct-shipping ores other than set up a beneficiating plant, which is quite expensive,” he said. “Most of the projects you hear coming on in the (Labrador) Trough are concentrate, so that you have the capability to really bring it to a high grade, the raw material. So I think they’re very well placed.”

Gallagher echoed Liverman’s comments that infrastructure and other issues will prove to be a challenge over the next 10 years.

“To co-ordinate the logistics, to best serve all the constituents, will be something that will take a lot of stakeholders getting together and working on,” he said.



Twitter: TelegramDaniel

Organizations: Delta Hotel.The, Mineral Resources Review, Global Commercial Cliffs Natural Resources

Geographic location: Newfoundland and Labrador, Wabush, Brazil Australia

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Recent comments

  • Chris
    November 05, 2011 - 06:55

    To John. Although I agree that it would be nice to see better services in Lab West and in all communities in NL and agree that island NLers could do more to learn about their fellow NLers in Labrador, I think you are being a bit ridiculous about the separate comment. One, the ore won't last. Just remember Bell Island. It had 12,000 people during the 50s and now has less than 3000. Second, the first Churchill Falls deal was horrible for NL. Do you think Ontario would have been forced into such a deal? Probably not. It is a larger economic power and could have sat on that resource until a better deal came along. Lab West alone would have the politic clout of a small company. Quebec (or possibly even the rest of NL) would control the hydro dam in no time. Yes, argue for more pieces of the pie for your neck of the woods. Everyone does. Sadly, its how our political system works. But stop blaming everything on St. John's. It gets a bit boring after a while. How about instead you ask your local politicians what happened to the millions spent in Labrador on social issues like the move from Davis Inlet to Natuashish (200+ million). Enough money has been misspent and wasted over the years in the big country to pave the Labrador highway in gold. Also, the government didn't pay for MileOne. To Not One Spoonful. Danny's gone. The Liberal Party is still sinking further without him opposing them. Maybe if the Liberals actually had a decent platform and plan instead of just complaining about the Tories they'd actually have a chance of making a comeback. Personally, I'd love to see the return of the Liberals, but sadly they still need to shake off some of its rotting apples.

  • kev
    November 04, 2011 - 20:35

    Too bad we couldn't take the nickel and the iron and start making stainless steel products. Companies that do secondary processing within Newfoundland and Labrador should be able to buy the raw materials from these two sources at 10% less than the world market. Let's start making real money from our resources.

  • Cyril Rogers
    November 04, 2011 - 15:40

    I find it so ironic that we are sending so much raw product, whether it is iron ore, fisn oil or other resources, out to be processed into manufactured products and all we get are the resource jobs and the royalties. This was what Danny and the rest of the Tories raged aabout befroe they took power. Now, we are doing more of it than ever, all to feed the never-ending spending spree they went on in 2005. They are about to do it again with Muskrat Falls because Nova Scotia will get most of the power from that project whether people want to believe it or not. Nova Scotia is getting a huge ship-building project and it will be run on our power. As for the rest of it, they can buy it for dirt cheap prices---we won't need most of it anyway. Especially, if all we do is mine the raw material and ship it out.

  • John
    November 04, 2011 - 12:32

    Hmmmm....mining (Labrador West) will contribute close to 30 - 35 % of total GDP for the province. I wonder if that will translate into receiving more government spending in the area on much needed housing, health care, highways? took about 15 years to get a new hospital - but no equipment/doctors to run the darn thing. Or will it just be the same old...same old...with the bobble heads in St.John's with their heads up their yingyangs? Build your highways, new fancy buildings, and sports centres in St.John's and forget about the rest of the province...nothing will change...I vote for Labrador (Labrador West/Churchill Falls) to separate from Newfoundland and take their hydro and mining with them - the province would go bankrupt in a hurry!!!

    • Correction
      November 04, 2011 - 13:20

      The mining figures refers to all mining in the province not just Lab West but the majority of that value is Lab West. I don't know where those stats came from but the Dept of Finance website says that mining GDP for the whole province was 6.7% in 2010. The value of mining also seems to be highly volatile with wide swings in value. It's interesting that you don't want Goose Bay or the coast in the separation but to become a Quebec territory.

    • Chad
      November 08, 2011 - 08:03

      I would have to agree with John. Labrador West or Labrador in general do not get our share of infrastructure money from the government. 2011 and we still have to drive on a dirt highway!! I dought that this will ever be the case on the avalon? One individual stated that we only contributed 6.7% to the GDP of the prov. in 2010. I don't agree with those figures. I can remember in the eighties when IOCC was on strick that the government had to redo their budgit because they wern't getting their money out of Labrador West. This to me is more than 6.7 %. IOCC, Wabush Mines, Voiseys Bay, Churchill Falls, Lower Churchill, Alderon ( New potential Mine in Labrador West) and a potential mine on the coast of Labrador. To me this is alot more than 6.7 Percent going to the island. I know that I pay more in income tax than a lot of people on the island make in a year. mutiply that by 2000 People at IOCC alone, a lot of tax dollers from one company alone. It is about time the government put some serious money into Labrador and not just the pennies that they have been throwing at us.

  • Not one spoonful
    November 04, 2011 - 10:18

    It's really funny how eight years ago the Tories used to complain constantly about all of the resources that were leaving our province to be refined elsewhere. My how they've changed their stripes. They promised us a new oil refinery, suggested we'd soon have an aluminum smelter, and whined constantly about our minerals leaving the province for processing. Turns out Danny and crew were just spouting rhetoric. All of our resources - oil, fish, pulp logs, iron ore, and countless other minerals now leave our province in higher ''unrefined'' proportions than ever before. Soon will be shipping our hydro out at highly subsidized and discounted rates as well. The only exception, of course, is nickel, under a deal that the previous Liberal government negotiated. Thanks Danny. We knew you were full of it.

    • correction
      November 04, 2011 - 13:22

      ' The only exception, of course, is nickel, under a deal that the previous Liberal government negotiated. ' Nickel is being exported, unprocessed, already. The exports were approved by, you guessed it, the previous Liberal government.