Quebec-Labrador railway may spark iron ore boom

The partners, said CN, have committed to work with the national railway on the feasibility study for a proposed rail line and terminal handling facility to serve the Quebec/Labrador iron ore range.

The remote geographic zone straddling the Canadian Québec and Labrador areas have been causing quite a stir in mining circles lately due to the large iron reserves waiting to be developed. The 1000-kilometre-long area, also known as the Labrador Trough or the New Quebec Orogen holds several iron ore deposits of substantial size and grade.

One of the companies exploring the area is Labrador Iron Mines, which received environmental approval and a project release from the Government of Newfoundland and Labrador for its Houston iron ore mining project in March.

With provincial release, the company said it was one step closer to beginning site construction. Its chief operating officer, Rod Cooper, said in a separate statement that the development of a new railway in the Labrador Trough is of great interest to Labrador Iron Mines Holdings as it would provide optionality for long-term rail capacity.

In addition, Cooper said, a new terminal handling facility at the Port of Sept-iles in Quebec would complement plans for a new dock at the port.

Major iron reserves

Labrador Iron Mines has one of the only projects moving forward at the Labrador Trough, a finger-shaped landform that holds several iron ore deposits of substantial size and grade. “The area has the potential to be a major global” area for iron ore production, said Desjardins Securities analyst Jackie Przybylowski, in a report  by The Globe and Mail.

In March Desjardins issued  a 64-page report devoted to the investment prospects of companies active in the region and on five of the area’s pure play iron ore prospects.

In the report, the firm chose Labrador Iron as “top pick” and set a one-year price target of $8.50 in the absence of a takeover, and even more if the company gets taken out by an acquirer.

“We believe Labrador Iron Mines is a potential acquisition target, given the company’s position as a pure play iron ore producer with no strategic partner or off-take agreement,” the report said. “Off take” is mining jargon for a deal to sell production from a mine to a major steel producer.

Mining has played an important and sporadic role in the economic, social, and cultural history of Newfoundland and Labrador.

The huge iron ore deposits of Labrador and neighbouring areas of Québec were discovered by Canadian surveyors in 1892.

See also an infographic explaining why the Labrador Trough is poised to become one of the world’s major iron ore producing regions. >> >>