Iron Ore of Canada invests $289 million to further expand Labrador production

Canadian Press - By Ross Marowits

February 8,2011

MONTREAL - Iron Ore of Canada is investing $289 million as it resumes the second phase of its expansion plans to increase iron ore production in Labrador.

The concentrate expansion program was suspended in 2008 due to the global financial crisis.

The investment will increase annual concentrate capacity from 22 million tonnes to 23.3 million tonnes. A third phase under study will further increase production to 26 million tonnes. Funding approval is expected by 2012.

"Not only will the project allow us to become a more competitive business, grow as a company and reach our full operational potential, it will also permit us to further contribute to the economy and to sustainable employment opportunities for our employees," said president and CEO Zoe Yujnovich.

The C$289-million investment will expand Iron Ore of Canada's magnetite processing facility and add new spiral lines to its gravity separation circuit.

It will also include purchase of additional mining equipment, railway cars and a locomotive as well as upgrades at the Wabush terminal subsubstation.

Rio Tinto, which owns nearly 59 per cent of IOC, will contribute US$163 million as its share of the project.

Sam Walsh, head of Rio Tinto's iron ore division, said the project was an important development in increasing IOC's production at a time when global demand is escalating.

"Global seaborne iron ore demand is projected to increase substantially over the next decade, and IOC's concentrate is well placed to complement the increasing use of lower-quality ore to meet that demand," Walsh said.

The IOC concentrate's high iron content and very low levels of impurities provides significant value to steel producers as ore grades from direct shipping mines continue to decline, he said.

Construction will begin immediately to take advantage of the short construction season in Labrador City and is expected to be completed by the end of 2012.

The first stage of the expansion plan is scheduled to be completed by the end of this year. A US$400-million investment was announced last May to increase production capacity from 18 million tonnes.

It will add an overland conveyor to remove bottlenecks, a fourth autogenous grinding mill to increase primary grinding capacity and mine and rail equipment.

The expansion plan allows IOC to take a major step towards achieving its long-term vision of growing its business, said Yujnovich.

IOC is the largest manufacturer of iron ore pellets in Canada. It operates a mine, concentrator and a pelletizing plant in Labrador City, N.L., port facilities in Sept-Iles, Que., and a 418-kilometre railway linking the mine to the port.

It has about 1,900 employees.

Minority shareholders are Mitsubishi Corp. (26.18 per cent) and Labrador Iron Ore Royalty Corp. (15.1 per cent).

In addition to approving the IOC expenditure, Rio Tinto said it will invest US$933 million to extend the life of a key mine in Australia.

The investment in the Marandoo iron ore mine in Western Australia's Pilbara region will extend its life by 16 years to 2030. Rio Tinto owns the mine outright