Forest fires and wild markets linked to financial problems for operator of iron ore mine

Tacora Resources cited a volatile market, raging forest fires and unexpected maintenance as contributing factors that led to it seeking creditor protection earlier this week.

The Minnesota-based company is the owner and operator of the iron ore Scully Mine in Wabush in western Labrador.

Documents filed with the Ontario Superior Court claim this move is so Tacora has some breathing room to figure out its financial future.

According to filings, in 2022 the company wrapped up three projects meant to increase production butsays there were design problems that led to unscheduled downtime and lower production. The price of iron ore has also been volatile.

Then, in June, wildfires in Quebec temporarily shut down the railway the only way to get their product to market.

A $75-million agreement will keep the mine open for the next 20 weeks.

In the meantime, it's expected that work will carry on as usual at the mine, with no layoffs or impacts to payment, benefits or pensions. That's according to a statement sent to employees of the mine, and which was obtained by CBC News.

Town braces

Last month, Tacora and the Town of Wabush signed a five-year, $12.2-million grant in lieu of taxes.

However, Mayor Ron Barron said the agreement's future is up in the air. When the council has to plan its budget, the situation with Tacora will have an impact on its operations.

"It's just bad for the community and the business community, in particular, because they're the ones that are going to suffer big time," Barron told CBC News.

Barron said there are businesses that are owed money and the town will also be impacted.

"It's a dark cloud that's over the community. You know, moving forward, they're operating. So let's wait and see what's going toplay out here."

Barron added the town has been in a similar position, when the mine's previous owner Cliff Natural Resources shuttered the mine in 2014.

At least now, Barron said, Tacora is looking to carry on, which makes him a little more optimistic about the situation.

Labrador West MHA Jordan Brown is also hopeful about the mine's future,especially since there has been a $75-million investment.

"There is some optimism there that, you know, that they want to continue to operate the mine and they don't want to close it," said Brown. "So there is an investor, at least one investor right now, that wants to see the production continued."

Leading up to the creditor application, Brown said, employees had been saying positive things, like production was up and new equipment is expected onsite in the next few weeks.

In June, Tacora received $1.25 millionin federal funding from the Atlantic Canada Opportunities Agency to help it process manganese.

In a statement to CBC News, a spokesperson said ACOA is monitoring the situation and has been in contact with the company. It added that Tacora is still in good standing.

Tacora president and CEO Joe Broking was not available for comment.

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