Wabush 3 jumps environmental hurdle

Beaten down over the past few years by low iron ore prices, Canada's Labrador Trough received a welcome boost on Friday with the announcement that the Wabush 3 open pit mine project has been released from environmental assessment, clearing the way for construction.

The project is an expansion of the existing Carol operation, which currently produces about 21 million tonnes of ore annually and has a payroll of around 2,000. The Labrador City operation produces concentrated iron ore and pellets (further processed), and transports these by train to the port of Sept-Îles on the Gulf of St. Lawrence for export.

Mine owner IOC recently implemented two phases of its Concentrate Expansion Project (CEP1 and CEP2) to upgrade and modernise its operations to increase production. CEP 1 (operational since August 2012) consisted of installing a new crusher and conveyor at Luce Pit and a new grinding mill at the concentrator, both of which increased iron concentrate production capacity from 18 to 22 million tonnes per year, according to a project page.

The expansion, which would add about a dozen years to the mine, would begin construction in 2016 with mining starting in 2018, according to details supplied Friday by CBC News. Development costs are pegged at $250 million.

"We look forward to the development of the proposed Wabush 3 Open Pit Mine Project in Labrador. Today's release from environmental assessment is an important announcement for IOC and a great opportunity for Labrador West – a region that has experienced its share of highs and lows in the mining industry," said Derrick Dalley, minister of natural resources with the Newfoundland and Labrador government, adding "We are optimistic that in the long term the combination of high quality iron ore resources, stable and dependable regulation and taxation, and low cost power will continue to sustain the iron ore industry and communities in Labrador." 

Wabush 3 will consist of an open pit containing 744 million tonnes of iron ore, an overburden storage area, a waste rock disposal pile, haulage roads, a pole line, a groundwater extraction system and a mine water collection, treatment and disposal system, local media The Telegram reported on Friday.

IOC is the largest manufacturer of iron ore pellets in Canada, and is operated by Rio Tinto, which is also the largest shareholder at 59 percent. Twenty-six percent of the company is owned by Mitsubishi Corp., and the Labrador Iron Ore Royalty Income Fund owns 15 percent. It currently operates five mines, a concentrator plant and a pellet plant in Labrador West.

In October 2014 Cliffs Natural Resources (NYSE:CLF) shut down the country’s third largest iron ore operation, Wabush Mines, citing a need to cut capital expenditures.