VIDEO: Is it better to build an iron ore mine in the Labrador Trough or West Africa?

Iron ore mine developments in West Africa are closer to Asian markets but Canada's Labrador Trough has political stability, says says Phil Newman, CEO of CRU Strategies, who spoke with at the PDAC 2013 at the start March. In the video below Newman weighed the benefits and drawbacks of both regions for mining iron ore.

Both regions have juniors that are exploring and trying to lure investors to build the next great iron mines, which Newman says is a great business if you can afford it.

"If your name isn't on the list, you can't come in," says Newman jokingly.

The rich iron ore prices of the last few years are sliding, says Newman. He says the rest of this year is "reasonably good" with prices in the $135 to $150 range, but the long-term outlook is for a weakening with costs heading to $100 or dropping further. Newman expects production in Australia to expand significantly, which will push down price. The big three iron ore miners plan to add 900 million tonnes of new capacity over the next few years.

Iron Ore Spot Price (Any Origin) Chart

Iron Ore Spot Price (Any Origin) data by YCharts

China has its own iron ore miners, but the industry is hampered by too many small, under-capitalized private firms.

"There's a lot, and I mean thousands and thousands of private miners that tend to group together and share processing facilities, and they tend to be quite high cost," says Newman.

He expects many of these small miners to disappear and the large state-owned enterprises to continue to modernize.