The Iron Ore Company of Canada has made cuts to its offices in St.John’s, Montreal, Labrador City and Sept Iles, according to the weekly newspaper Le Nord-Cotier.
The company would not confirm how many positions were eliminated or how many people were affected.
IOC spokesperson Natalie Rouleau told the newspaper that the positions were redundancies and affected permanent staff, temporary employees and contract employees.
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From a Rio Tinto news release issued Tuesday:
“Rio Tinto has given the go-ahead to a further US$277 million investment (Rio Tinto share US$163 million) in the next phase of a project that will ultimately raise the Iron Ore Company of Canada’s (IOC) concentrate production capacity by 40 per cent to 26 million tonnes per year (Mt/a).
This is the second phase of a three stage expansion that was announced in May 2010 with a US$400 million investment (Rio Tinto share US$235 million) to raise production capacity from 18 Mt/a to 22 Mt/a.
Phase two of the project will increase IOC’s spiral and magnetite concentrate production capacity by an average of 1.3 Mt/a to 23.3 Mt/a from 2013.
Recent studies have highlighted an opportunity to improve time to market through
bringing forward some capital items from the third stage, resulting in higher level of
production earlier. The third stage of the planned expansion to 26 Mt/a is currently under study and a final investment decision is expected by 2012.
Rio Tinto chief executive, Iron ore and Australia, Sam Walsh said the project was an
important development in increasing IOC’s production at a time when global demand is escalating.
“Global seaborne iron ore demand is projected to increase substantially over the next decade, and IOC’s concentrate is well placed to complement the increasing use of lower quality ore to meet that demand,” he said.
“With high iron content and very low levels of impurities, IOC’s concentrate provides
significant value to steel producers as ore grades from direct shipping mines continue to decline.”
The project’s construction is set to start immediately to capitalise on the brief Labrador summer construction season and will be fully commissioned by the end of 2012.”
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Ironore Company of Canada is reactivating its half a billion dollar plan to expand production at its a facility in western Labrador.
IOC shelved the project in 2008 during the Great Recession.
Work on the expansion is expected to be finished by 2012.
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Writing in the Globe on Christmas Eve, Fabrice Taylor noted the strong performance of Labrador iron ore in the market place, bouyed by increased global demand.
Then he notes the relatively high value of the Canadian dollar against its American counterpart.
The hair in the soup is the Canadian dollar. Part of the drop in Labrador's financials, mentioned above, is because of volumes and pricing, but a good part is also from foreign exchange. Some pundits see the dollar going to par with the greenback. That's only another nickel or so but it would hurt.
He’s right.
But the exchange rate isn’t the only thing in the soup threatening the fine meal. There’s a fly in the soup, as well, namely the medium to long term cost of operating the mines in western Labrador.
That’s not a labour problem or a dollar problem or a market problem or an ore problem.
It’s an energy problem.
Or more specifically the threat by the provincial government back in 2006 that it would expect the mines in western Labrador to start paying commercial rates for power come 2014.
And if commercial rates weren’t in the cards, well, the mining companies expect to be paying considerably more than they are currently.
Never mind that the companies own two thirds of Twin Falls Power Company, built near Churchill Falls when it was still called Hamilton Falls. And never mind either that the companies agreed to shutter their power station so BRINCO could push more water through its new plant at Churchill Falls. In exchange the companies got a block of power for about half a cent a kilowatt hour and anything beyond that for about a quarter of a cent per.
Either way, the prospect of higher power costs will play a role in the future of Labrador west. Low cost power will be crucial to sustaining the mines, especially in a high dollar world, so when threats get tossed around companies tend to take notice.
That threat is till out there.
Plus the threat’s been reinforced by the seizure last Christmas of hydro assets belonging to three companies, one locally owned and the other running a project not connected at all to the paper mill at Grand Falls. Longstanding agreements were brushed aside by a simple vote in the legislature. Agreements entered into in good faith and executed in good faith were crushed overnight, forcing at least one of the companies involved to default on loans. A court case was extinguished without compensation. Any company with any sort of operation in the province would have been insane not to revisit all their legal options.
And in Labrador west, it would be at all surprising to find out that the companies operating mines there are keeping a wary eye on what happens in St. John’s. That power contract issue hasn’t been resolved yet and it’s much more a looming crisis than anything connected to the Churchill Falls renewal in 2016 could ever be.
Hair in the soup?
Try a fly.
And a geezly big blue bottle one at that.
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Ironore Company of Canada (IOC) has advised the Newfoundland and Labrador labour minister that the company will close its mining operations in Labrador in July and may stay closed until October, according to Radio Canada.
If ore prices don’t rebound, the company is considering keeping its mine and associated facilities closed for as long as 13 weeks.
“Oui, c'est vrai,” IOC executive Michel Filon told Radio-Canada. “Maintenant, il n'y a aucune décision qui a été prise et si on a envoyé ce mémo, c'était pour garder le maximum d'options ouvertes et certainement de respecter les lois du travail”.
[Rough translation: “Yes, it’s true. No decision has been made yet and in sending the memo it is to keep our options open to respect labour laws.”]
Audio: Radio-Canada
H/t: labradore
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1. Vale Inco will be cutting jobs from its Canadian operations, including an unspecified number in Newfoundland and Labrador.
2. Kruger, Inc will be reducing production at Corner Brook by 15,000 tonnes in 2009. One of the mill’s machines will be idled for eight weeks.
3. Iron Ore Company of Canada announced it has ceased work on refurbishing at pelletizing plant at Sept Iles.
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Rio Tinto Group will be cutting its capital expenditure budget from US$9.0 billion to US$4.0 billion in 2009 in an effort to deal with the global economic downturn. The company will fix capex for 2010 at sustaining levels.
As a result it appears that IOC’s expansion in western Labrador will be slowed or deferred beyond 2010. That may change if markets improve in the meantime.
Rio Tinto announced its 2008 results and 2009 plans on 12 February.
At the same time the company announced a new venture with Chinalco which will see the state-owned Chinese company obtain interest in eight Rio Tinto mines globally.
IOC is not among them.
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China is starting out the New Year by limiting imports of iron ore. That is likely to further depress ore prices or ensure they stay low.
That isn’t good news for Labrador west, where one of its two mines has laid off half the workforce and the other postponed a major expansion indefinitely.
Meanwhile, if Rio Tinto competitor Billiton keeps pushing out ore and making a profit at the same time, Rio Tinto might find itself squeezed even harder if the Chinese start restricting market access.
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Just when everything was settling down, the brute force expropriation of AbitibiBowater assets has stirred everything up again.
Lord Haw Haw of Brownenvelope is back on the airwaves praising his former employer to the hilt and taking issue with anyone who suggests that maybe the Premier might be acting a little rashly. Then at the end of the two hours of blindly praising his former employer, Lord Haw Haw proclaims that people shouldn't blindly praise leaders.
The man lampoons himself every day and seems blissfully unaware.
The airwaves of Lord Haw Haw's afternoon laugh-fest and the morning talk show were crammed with every manner of worshipper praising the expropriation. Then again, most of those were just the usual suspects spouting the usual pap.
Meanwhile, outside Newfoundland and Labrador, people wonder what the heck is going down in Hooterville.
Again.
Well, here are a couple of points to ponder:
1. No one should doubt what would have happened in 2006 if the provincial government had the legal power to expropriate offshore licenses. That's the time the Premier fumed about expropriation. Too many people laughed the whole episode off as a big bluff.
2. Since the provincial government can't expropriate the offshore, the oil industry is resting easy. Hibernia, White Rose and Terra Nova are salted away. The companies wrestled huge concessions from the government on Hebron. There's nothing for them to worry about.
3. Other companies on the other hand are probably not sitting quite so pretty. Kruger, Vale Inco, Wabush mines, IOCC. They all are likely checking their legal agreements with the provincial government. Some of them might even start discussions to secure whatever guarantees they can against precipitous actions by the provincial Crown. If the provincial government is prepared to use the extreme solution up front to strip the carcass of a dead project, no one would blame those companies for wondering what might happen to a troubled one.
4. IOCC and Wabush Mines might want to take another look at their power contract and the whole Twin Falls Company. The last time this issued was raised - in 2006 - the Premier raised the completely false idea of sweetheart power deals and resource giveaways to bludgeon to death any suggestion the companies could avoid paying commercial rates the next time the deal came up for renewal.
Here's an extract from the post on that issue back in early 2007:
In early October, the feisty Premier warned Iron Ore Company of Canada - owners of the other mine in Labrador West - that they could expect to pay commercial rates for electricity once the current agreement ended. Williams likened the IOC/Wabush Mines power purchase deal to the Hydro Quebec giveaway on the Upper Churchill presumably knowing full-well that his comparison and the truth were two completely different things.
Presumably the same thing applied to Wabush Mines. You can imagine the talk: Forget the low cost power, boys, sez Danny. No more give aways. Maximum benefits to the province or take a hike.
And since Williams had flatly rejected a power deal in public, there was no way he would back down.
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One of these statements is true.
The other is not.
The only question is which one is which.
Natural resources minister Kathy Dunderdale, in the House of Assembly, December 2, 2008:
IOC informed me on Friday morning, Mr. Speaker, that they were going to delay Phase 1 and Phase 2 of their expansion program,...
Natural resources minister Kathy Dunderdale, in the House of Assembly, December 10, 2008:
I have met with Terry Bowles, the CEO for IOC, within the last six weeks. I have had a number of telephone conversations with him, Mr. Speaker. I will have another one today. The last communications we had around this piece, which I reported in the House, was that they were going to complete the work that was already started in Phase I and Phase II of their expansion but otherwise, plans were on hold.
Interestingly enough this is not the first time in the House, in December, that Kathy Dunderdale said two completely contradictory things about exactly the same subject.
Anyone remember Joan Cleary?
The government suddenly closed a short session of the House in 2006 when Dunderdale was caught at this sort of misstatement.
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IOCC ices expansion plans.
December 2 at Bond Papers, thanks to Kathy Dunderdale's loose lips in the House.
December 10 everywhere else.
It's not like the conventional media don't cover the legislature.
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In the House of Assembly Tuesday, natural resources minister Kathy Dunderdale revealed that Ironore Company of Canada (IOCC) will be delaying Phase I and Phase II of its planned $500 million expansion program.
She gave no time frame for the delay. IOCC announced the plan to increase output in early 2008 with a planned completion in 2011.
IOC informed me on Friday morning, Mr. Speaker, that they were going to delay Phase 1 and Phase 2 of their expansion program, that this would not have an impact on their permanent employees other than it might have an impact on overtime. The delay of the expansion is going to have an effect on services that they would have contracted to do pieces of work around that. It would have an impact on temporary workers who would be called upon to do that kind of work.
They did not provide to me at that time the numbers that were affected for potential people who would be involved in that contract. My main concern at that point in time, Mr. Speaker, was for the permanent employees of IOC, and I am glad to know that there will not be any layoffs of permanent employees at IOC at this time or in the short term.
IOCC's news release last Friday said only that the expansion project was under review. it also said that no layoffs of permanent employees were under consideration. It said nothing of temporary (non-permanent) employees.
Dunderdale described as "foolishness" questions from the opposition on the impact IOCC's decision would have on temporary employees and student employment.
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Yeah, right.
From the Iron Ore Company of Canada's news release:
IOC responding to the steel industry slowdown
(Canada) Sept-Îles, Labrador City, November 28, 2008 – Global iron ore demand has reduced as a result of the slowdown in the steel industry and the global financial crisis.A range of measures are being introduced by Governments around the world to stimulate their economies, and we expect that iron ore demand will improve in the medium term.
With this in mind, IOC has announced to employees and its community that it is taking prudent action to respond to reduced demand for our products.
IOC is making the following decisions in the interests of our people, our communities and the Company:
- No layoffs of permanent employees are being contemplated at this time.
Take note especially of the third bullet: "A review of our expansion programs".
Rio Tinto's entire global operation is currently reviewing operations and capital expenditure commitments. IOCC is no exception.
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