Record iron ore prices boost spending, hiring in Labrador, union leader says
Recent record iron ore prices are good news for Labrador, one of the world’s largest producers of ore.
Paul Gray, vice president of iron ore markets for Wood Mackenzie, a global energy research and advisory group, said all producers stand to benefit from the surge in prices – which reached over US $ 237 per ton last week before dropping. The price has been climbing steadily since February, with a surge this month. On Monday, the price closed at over $ 217.
âWhat we’ve seen over the past week is truly unprecedented,â said Gray.
With four mines in operation, the area along Labrador’s southwest border with Quebec, known as the Labrador Trough, is poised to benefit from the uptrend, Gray said.
Producers include the Iron Ore Company of Canada, which owns the region’s largest mine near Carol Lake, which is operated by Rio Tinto. IOC employs nearly 2,000 people at its nearby Labrador City site.
Between reserves and undeveloped resources, the company has access to three billion tonnes of iron ore.
But it is not only its quantity that makes the Labrador reserves such a sought-after commodity in today’s market. Quality, Gray said, is also a factor.
The price, he explained, is based on 62 percent iron ore. But the high quality pellets and concentrates produced at Carol Lake contain 65% iron, and therefore of better quality.
âThis is exactly what the market wants right now,â Gray said.
In addition to the overall price, Gray adds, the premium for high-grade iron ore – like that produced in the Labrador Trough – has also increased.
“These producers are expected to do even better than the industry average,” he said.
Gray said he believed the price was due to “strong demand” for maritime iron ore from the Chinese steel industry, as well as declining supply due to disruptions in iron-rich regions like Brasil.
Michael Furlong, president of Steelworkers Local 5795 in Labrador City, says that in an area where so many people depend on the industry, soaring iron ore prices are synonymous with success.
âAs prices go up, we see more things developing here,â Furlong said. Labrador morning. “It’s very stimulating for our economy.”
He says higher prices are driving more spending and more hiring in the area.
âIt puts a lot of strength into the local mines,â Furlong said. “As long as [prices] stay up, things should be fine in this region. “
But it’s hard to say if they’ll last, says Paul Gray.
âWe didn’t predict this,â he said. “I don’t think anyone predicted that, to be honest. Not to that extent.”
Expected recharge time
Gray expects Chinese demand to slow in the second half of the year, as the country’s construction and public infrastructure blitz – an effort to offset the economic impact of the pandemic – has already subsided.
A price drop in the coming months would not surprise him. But anything is possible, he said.
“If we see any kind of hiccup in the supply of iron ore to the coast, it wouldn’t take much to push prices even higher.”
Furlong chooses to focus on the present.
“The thing that I think everyone needs to be aware of is that we are having a good time and I hope they can last.”
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