IOC revives expansion program

Canada's biggest iron ore producer, Iron Ore Company of Canada (IOC), has said it will invest $435 million in the first of a three-stage expansion of capacity at its Labrador City mines and concentrator.  IOC, which is 58.7 percent owned by the mining and metals giant Rio Tinto, is reinstating a program suspended in 2008 when steel production was slashed during the global economic crisis. The price of iron ore fell to $40 a tonne but has since recovered to more than $100 a tonne due to strong demand from China and other Asian countries. IOC is the largest manufacturer of iron ore pellets in Canada, with 1,900 employees. It operates a mine, concentrator and pellet plant in Labrador City, Labrador, as well as port facilities in Sept-Iles, Quebec. The company, which ships to steel makers in the Great Lakes area, Europe and Asia via the port, will add four million tonnes of annual capacity to bring the total to 22 million tonnes in 2012. The aim is to eventually bring production up to 26 million tonnes a year. The company has said it will upgrade its Labrador City conveyor system to remove delivery bottlenecks and add a fourth autogenous grinding mill, as well as expanding the mines. Commenting on the announcement, IOCÔÇÖs president and chief executive officer Zo├½ Yujnovich said: ÔÇ£Some uncertainty and potential volatility remain about global economic recovery but we are seeing a strong rebound in the iron ore and steel markets, with every expectation that it will be sustainable. The fundamentals for our business are quite strong, and this expansion programme will enable us to take full advantage of our market strength, and of recovering markets in Europe and North America. ÔÇ£Growing our business is important for our future. Through the economic downturn, we built strength in our financial discipline,ÔÇØ she continued. ÔÇ£Now that markets have rebounded, it is vital that we build from that discipline to build further strength in our business. This expansion programme will enable us to do that." She concluded: ÔÇ£I am confident and optimistic that we have what we need to succeed. We have a market that is responding, and we have a business that is poised for expansion. We have exciting times ahead.ÔÇØ The first phase of expansion is expected to cost $497 millionÔÇö$22 million more than the original estimates. Rio Tinto will invest $435 million in the first stage, with partners Mitsubishi of Japan and Labrador Iron Ore Royalty Income Fund providing the balance. Rio Tinto is one of the world's largest mining companies, with operations in more than 40 countries around the globe.