The Tenacious Spirit Lives on in the Iron Ore Capital
Labrador City, Newfoundland
Labrador City, incorporated in 1961, is located in western Labrador near the Quebec border and is part of the Canadian province of Newfoundland and Labrador. Together with its twin town of Wabush, located five kilometres to the south, the area is commonly referred to as Labrador West and has a combined population of approximately 11,000. Labrador West is the Iron Ore Capital of Canada resting on one of Canada’s richest iron ore formations discovered in 1892 – the Labrador Trough.
‘Long may your big jib draw.’ The simple Newfoundland wish for favourable winds to fill your sails denotes a desire for good fortune and prosperity and is the embodiment of the spirit of optimism and perseverance so prevalent in the province.
It is this spirit of optimism that is a true representation of how the Town of Labrador City, Newfoundland views its future unfolding, despite its current challenges. As a registered nurse for thirty years, former nurse practitioner and Labrador City mayor since 2011, Karen Oldford is now focused on both healthy individuals and a healthy community.
It was the Iron Ore Company of Canada (IOC), a leading producer of iron ore concentrate and pellets and majority owned by the Rio Tinto Iron Ore group, one of the world’s largest mining companies, that established Labrador City in the 1950s. The IOC was also responsible for constructing the Quebec North Shore and Labrador Railway to transport ore to Quebec’s Port of Sept Iles, 575 kilometres to the south.
The Wabush mines were established in the 1960s by the Canadian Javelin Company and were later jointly owned by Dofasco Inc., Stelco Inc. and Cliffs Natural Resources Incorporated, a Cleveland based firm, which manages the mine. The mining industry and its secondary industries have driven the city’s economy forward ever since, creating a mono-industrial community that revels in the pleasures of the ’boom’.
However, the past couple years have been challenging for the city with the closure of the Wabush mines in 2014 and the Bloom Lake mine in northeast Quebec, which Cliffs bought in 2011 and closed in January, 2015. The IOC employs roughly 2500 workers in Labrador City and Wabush and has had to make significant job cuts while it re-evaluates costs and tries to find more efficient ways of doing business. These closures and cuts are a direct result of a substantial drop in iron ore prices which were US$190 per ton in 2011 and dropped below US$50 per ton in the past year.
The trickling down effect during a downturn in the economy hurts communities, but the reality is that lessons can be learned. With strategic planning and a rethinking of regional growth strategies, the merits of what makes Labrador City a wonderful place to work, live and establish businesses can live on, through revisioning and a proactive approach to diversity while continuing to build on its strengths.
Labrador West’s ‘Plan Big’, initiated in 2013, is just such a regional growth strategy. It was designed to address the issues associated with rapid growth such as housing shortages and land constraints. Plan Big, “started as part of the excessive growth that we were seeing and now really knowing what to expect and what we really needed,” says Mayor Oldford. “It was a partnership between provincial and federal government, all the mining companies and the municipalities. It was only finalized six or eight months prior to the downturn in the industry. That is when all the data came in.”
Although Plan Big was initiated to deal with the rapid growth in Labrador West it also, “gave us calculators and information to be able to deal with downturn as well,” adds Mayor Oldford.
The data provided by Plan Big enabled a closer look at the impact of the mining industry in the city, including the housing stock, “which was really good information for us to have now and into the future,” she says.
The demand for housing in Labrador West reached an all time high during the boom, and people were willing to pay the exorbitant prices for a chance to live and work in a region that offered job security and good wages.
With regard to the issue of affordable housing in Labrador City and Wabush, the simple law of supply and demand dictates that when demand is high, prices rise. “Certainly, as we all know, in a free market society when there is a demand and not enough housing stock, prices rise. And they rose dramatically. That wasn’t good for our community and certainly wasn’t good for the individuals – not during the boom and certainly not now.” She says that during the boom, the community knew that there was going to be a downturn, and the subsequent high mortgages were not a favourable outcome. “But we have no control over the free market.”
She explains that the Plan Big strategy is essentially all about planning, anticipating the challenges of growth and being prepared. “We now have all the information from Plan Big. In a free market society, I’m not aware of anything that will, I guess, protect people either from exorbitant prices or prices dropping, unfortunately. Really, it comes down to what the banks are willing to do, because they’re the ones that have the control over the mortgages and the lending.”
Mayor Oldford says that while the downturn happened quickly, the Plan Big framework will enable the city to take a proactive approach to planning for sustainability over the next twenty years. Strategic planning, such as Plan Big, will enable the adoption of a mindset of constant readiness to react swiftly to economic changes.
She also notes that the city started to look at diversification six months prior to the downturn and has been putting programs in place to create such a diversified economy to, “help us better weather these up and downs in our cycle.”
The city will continue to build on its strengths such as lower hydro rates, access to rail, the deep water port in Sept Isle, Canada’s most crucial iron ore handling port and the Trans-Labrador Highway that connects eastern and southern Labrador to Quebec and worldwide markets.
Perhaps more importantly, Labrador City has access to a well-educated, skilled workforce. “And certainly, even in the province, our work force numbers were a lot younger than in most other areas in Newfoundland and Labrador.”
Additionally, the city also capitalizes on its remoteness and cold climate recognizing that, “there are some businesses that do better in cold climates such as data warehousing, because you don’t have to spend a lot of money on cooling.”
Since the area is an iron ore haven, there is a need to develop other businesses to be engaged in secondary processing on site. When Labrador City was established, over fifty years ago, mines were owned by big smelters in the U.S. to ensure the availability the product to build steel. Mayor Oldford suggests a smelter could be a great long-term project for the city and is, “something that we’re actually putting together proposals on.”
The city is also looking at adventure tourism as a sector that holds much potential for the region. Mayor Oldford says that, during the upturn in the mining industry, housing was in short supply and, “As a tourist, you couldn’t even get a hotel room. So we lost a lot of people that wanted to come and explore our area and couldn’t. We do have some very unique features.”
Having the natural environment on the doorstep means there are opportunities for fishing, kayaking, snowmobiling, skiing and hiking – so many activities that make the region appealing to tourists. “So there’s lots of that possibility there,” she adds. “That’s the type of industry that we need to further develop and package.”
The first phase of the Lower Churchill Falls Project, referred to as the Muskrat Falls Project, was sanctioned in 2012 by the government of Newfoundland and Labrador. This hydroelectric generation in Labrador West is expected to be completed by 2017. Phase two of the project will consist of the Gull Island generating station making this project North America’s top undeveloped hydroelectric source.
“We do have access in Labrador West to the recall power in the Upper Churchill deal,” says Mayor Oldford. “So we have access to power for industrial development.”
She does note, however, that Alderon Iron Ore Corporation had, “started to build a third hydro line in order to bring that power to us from Churchill Falls.” However, during the city’s downturn, Alderon pulled out, and the line was not built.
“We, as communities, have lobbied to have a third line because that availability of hydroelectricity allows us to attract big industries that are looking for places to go,” she says. “We need to look at that as part of our economic diversification for our region, [and] also the province.”
There are several municipal, provincial and federal programs and services available in Labrador West of which business and industry can take full advantage. One such program, the Economic Diversification and Growth Enterprises Program (EDGE), offers qualifying companies a ten-year tax holiday from corporate and provincial income tax, and then a five-year phase-in of these taxes. Companies designated as an EDGE corporation must have a minimum capital investment of $300,000 and create at least ten permanent jobs.
EDGE is part of the, “types of programs that are being explored right now,” says Mayor Oldford. These not only attract business, but “help local businesses diversify and export their expertise, in many cases. Some of our businesses that have expertise in mining are actually working out of Brazil now… They’re doing projects in Africa. So they’re exporting the expertise that’s been learned in our extreme climate and environment in the mining industry for fifty years to benefit new upcoming industry in other parts of the world.”
The ore produced in Labrador City is a much higher grade than most other world producers, the mayor affirms. It is because of this quality that it is, “better for countries that are more concerned about their environment. It burns cleaner. It’s a more environmentally safe product than a lot of the other ore that’s on the market… Those are big pluses that we have for the industry in Labrador West.”
There are new mines on the horizon for the area including the Kami Alderon deposit that is shovel-ready. Mayor Oldford says that, “if they get the investors, it wouldn’t take them long to mobilize because they’ve got all their homework done, and they have their environmental assessment [EA] through.”
Another mine still moving ahead, despite the downturn, with mining leases owned by the provincial government, is the Julienne Lake deposit thirty kilometres outside the city. Companies competitively bid on the rights to develop this project in 2012. In 2014, the Julienne Lake (JL) Alliance was formed by Altius Energy Corporation, a mining royalty company based in Calgary, and a couple of Chinese companies were selected for final stage negotiations for the mineral rights award.
“Altius believes that now is the right time to develop. There’s actually available manpower and resources in the community to make development a lot cheaper than it would be during a growth period… Both Labrador City and Wabush will be directly impacted once those mines develop,” adds Mayor Oldford.
Summarizing her optimism for Labrador City, Mayor Oldford states that for a city of only 11,000, “We have more services available to support the community than a lot of communities double or triple our size… It’s a beautiful, wonderful, safe place to raise a family. It’s because of that we all chose to stay. It’s that sense of community that keeps us here.”