Iron Ore Co. revives Labrador expansion

The Iron Ore Company of Canada said Thursday it was reviving an ambitious project in Labrador that was halted a year and a half agoby the worldwide economic crisis.

IOC said in a statement it will resume the first phase of an expansion project in western Labrador that is expected to pump up annual production from its Labrador City operation to 22 million tonnes.

The project ground to a sudden halt in 2008, when demand for steel and thepellets that IOC produces nose-dived in the wake of a financial crisis.

Michel Filion, IOC's communications director, said the company is aware it is proceeding with an expansion while the international economy is still recovering from a deep recession.

"There is some volatility in the market, but we believe that the global economy is recovering and we're confident in the future," Filion told CBC News Thursday.

Union officials welcomed the news, citing it as a bonus for communities far beyond Labrador City.

"It's positive for the whole province that IOC is going ahead with this expansion," said George Kean, president of the United Steelworkers local in Labrador City.

"This is a great day for our membership and good for the long-term viability of our community," said Kean, who acknowledged that the expansion will bring a renewed focus to some long-standing problems in western Labrador, particularly a shortage of housing.

In a statement, IOC president and CEO Zoe Yujnovich saidshareholders have approved a $435-million plan to increase concentrate production by an extra four million tonnes by 2012.

The company said it is now proceeding with a three-stage expansion program that is expected to bring annual production to 26 million tonnes.

Thursday's announcement marks a reversal of fortune for IOC, which was hit hard by the economic crisis and the steep slump for products, particularly cars and trucks, that rely on steel.

IOC had only just unveiled its expansion plans in 2008 when it was forced to cancel them.

"Through the economic downturn, we built strength in our financial discipline," Yujnovich said.

"Now that markets have rebounded, it is vital that we build from that discipline to build further strength in our business. This expansion program will enable us to do that," she said.

IOC is one of the world's largest producers of iron ore pellets, and ships to steel producers in North America, Europe and Asia.