Labrador. Living large in

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1 Living large in Labrador current mines are expanding. new ones are entering production. Exploration is taking off. With $16 billion in potential projects ahead, Labrador s future is looking very bright indeed. By Stephanie Porter 62 Atlantic Business Magazine September/October 2012

2 special report Newfoundland and Labrador nick McGrath, Newfoundland and Labrador s Minister Responsible for Labrador Affairs, moved from St. John s to Labrador City in 1978, when he was just 19. At the time, there were only two operational mines in Labrador Wabush Mines and the Iron Ore Company of Canada (IOC) both in Labrador West. A young lad in search of opportunity, McGrath landed in a town reeling in the after-affects of a major strike at the IOC mines. Coming from St. John s, it was not only overwhelming, but isolated too: what would become the Trans-Labrador Highway then only reached about 20 kilometres out of Labrador City before stopping short. It was a very emotional time for Labrador, says McGrath. I didn t understand what it meant to live in a one-industry town. It was a bit difficult to deal with. It didn t take long, however, before McGrath stopped thinking of his new hometown as a small town in the middle of nowhere, and began to recognize it as remarkably urbanized and affluent. McGrath gradually settled into Labrador life, engaging in the community and eventually opening several businesses in the area. Thirty-four years later, and it might be fair to say Labrador is making good on all its promise. Although the region has experienced its share of boom and bust, since the 1990s there s been a steady build in business, exploration, and optimism. This year marks a new peak in industrial activity in the Big Land and it s a trend that s set to continue. Decades after starting operations, the IOC and Wabush mines are both in expansion phases. They have been joined by other major players, including mines in Voisey s Bay and, last year, Labrador Iron Mines in northeast Labrador. Additional mines will start production in the next year or two. Online extras: atlanticbusinessmagazine.com 63

3 Far left: One of 11 units at the Churchill Falls generating station in Labrador being repaired in November Credit: commons. wikimedia.org (Martin Lopatka) Left: Muskrat Falls on the Lower Churchill river. Photo supplied by Nalcor. Above: Phase 1 of the Trans-Labrador Highway is undergoing paving from Labrador City to Happy Valley-Goose Bay and should be completed by Source: JFDLV, com/photo/ Then there is the long list of exploration sites for iron, uranium, rare earth elements, and other minerals, dotted across the land. Activity is booming in other sectors as well, including upgrades at Churchill Falls (airport runway rehabilitation, the ongoing transformer replacement program, and new accommodations for the growing number of contracted workers), and the potential $5-billion Muskrat Falls hydroelectricity development. And that 20 km of rough road McGrath remembers? Paving crews have been full steam ahead in summer 2012 and Phase 1 of the Trans-Labrador Highway the 653 km between Labrador City and Happy Valley-Goose Bay should be complete by According to the Atlantic Provinces Economic Council s Major Projects Inventory, released June 2012, Labrador is a hot spot, with over $16 billion in potential projects on the horizon. This is a continuous good news story for Labrador, says McGrath. And it s just the start. The next decade is going to be huge. 64 Atlantic Business Magazine September/October 2012

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5 Over the past 20 years, IOC has invested more than $2 billion in capital infrastructure. Shown here: (top) Luce mine; (above) Goulet mine; (right) Humphery main mine. Photos courtesy of IOC. Expansion planning Growth does bring challenges, and parts of Labrador are already dealing with some big ones, including severe shortages in labour and housing. Volatile world markets will determine the viability of many of Labrador s projects; the Eurozone instability is not going unnoticed. Heather Bruce-Veitch, IOC s director of external relations, explains that IOC is expanding carefully, and with the longterm health of the operation and nearby communities in mind. Over the past 20 years, IOC has invested over $2 billion in capital infrastructure, the vast majority of it in Labrador West. By the end of 2012, the company will complete its first and second concentrator expansion projects, increasing annual production from 18 million to 22 million tonnes. In the longer term, we are well-positioned to expand, but in the shorter term we need to be extra cautious as the market is still showing signs of volatility, says Bruce- Veitch. We want to be a business that can ride out any economic downturn not a boom and bust operation. Even if in the short term the market is volatile, the economic situation is tough, we 66 Atlantic Business Magazine September/October 2012

6 still need to secure our future by increasing capacity and productivity while lowering our costs. Our expansion projects aim to do so. IOC isn t the only mining operation in the area with expansion on the mind. Wabush Mines, in operation since 1965, produced 3.2 million tonnes of iron ore concentrate in If all goes according to plan, that will increase to 5 million tonnes over the next three to five years. Joining the two long-standing mines, Alderon Iron Ore Corporation, also in Lab West, will come online in the next couple of years. According to its corporate website, in 2015 Alderon will start producing eight million tonnes a year at a grade of 65.5 per cent iron. Just north of Labrador City and Wabush, Labrador Irons Mines extracted about 1.2 million tonnes of ore in 2011, the company s debut (partial) season. That number should double in 2012, the first full year of operations. Nearby, Tata Steel Minerals Canada spent the summer of 2012 preparing the site for a processing plant, which should process about 5.5 million tonnes of ore, starting in Further north again, along Labrador s east coast, Vale Newfoundland and Labrador s mine continues to thrive, with Vale produces nickel sulphide concentrate (also containing copper and cobalt) and copper sulphide concentrate from its mine site at Voisey s Bay, Labrador. Here, a 450-tonne shiploader for the Vale mine mill complex. Photo courtesy of GJ Cahill. major increases in nickel, copper, and cobalt production in The biggest delays come and will come in trying to find skilled workers, says McGrath. Provincial estimates suggest a shortage of 70,000 to 80,000 workers in Newfoundland and Labrador in the next decade. It s no secret what oil and gas have given to this province, says McGrath. It s also no secret that those are unrenewable resources we have to prepare ourselves for when the oil is done. Labrador is a very strong component of the province s future. We know the natural resources are there; now, what are the necessities to bring those resources to fruition? Solving the worker issue will be one key, he says, and ensuring industry has the power it needs to continue to surge forward is another. central preparations Fresh from a trip to Happy Valley- Goose Bay, the central hub of Labrador, McGrath is pleased to report a surge of energy in the area. Mineral exploration much of it very promising is ongoing on all sides. In fact, exploration expenditures Trusted. Preferred. Experienced. Established in 1921, PF Collins has grown to become Atlantic Canada's trusted and preferred service provider of International Trade and Project Logistics. (709) Online extras: atlanticbusinessmagazine.com 67

7 are predicted at an all-time high of $173 million in Labrador for 2012; that s $46 million more than last year, and about three times the figure for The central region of Labrador is preparing for a major influx of industry, says McGrath. You can feel the effects on the economy already; people are getting ready. Carol Best, a resident of Happy Valley- Goose Bay for nearly three decades, goes one step further: she feels palpable excitement, as well as palpable trepidation-slash-fear. The reason for the excitement is obvious. It s just all around us, says Best, the executive director of the Central Labrador Economic Development Board. New businesses are coming and looking to get set up. Among the new businesses are a new aviation company, and a new helicopter company, as well as construction and other businesses ready to service industry, from parts to repairs. Foreign workers have already been recruited to come to Labrador and work service jobs. Best says a sure sign of the times is that her two children, like everyone in the town, should not have to worry about employment: if they wish to stay in central Labrador, there is no question that they would be able to. Amidst all the busyness, though, there is trepidation, that we re not ready, that there is no clear master plan. Certain issues are being dealt with, she notes, much of it in anticipation of the Lower Churchill project. Currently, a new business cannot count on Internet access, as the local bandwidth is too crowded. That should change by the end of 2012, when a new fibre-optic Internet system is scheduled to be complete a $24 million project partially funded by Nalcor, the province s energy corporation. A new airport terminal in central Labrador is nearly complete. And, as the Trans-Labrador Highway is paved, transportation will be less of an issue. A major question mark remains the Lower Churchill development, specifically, Muskrat Falls. The development of Muskrat Falls would provide not only an economic boost in and of itself, but it would also provide the electricity needed to change a healthy mineral find into a full-scale development. Muskrat Falls is very polarizing here, admits Best. But I do truly believe that for the mining exploration projects to move beyond the exploration stage, they need power. We have to have power for the uranium mines, for forestry secondary processing, for Voisey s Bay. Everything needs power. This fall will bring further debate in the province s House of Assembly, which should decide the fate of the multi-billion dollar project. They do call us the Big Land. The future is big. It could be big and bad but it could also be big and very, very good. McGrath does not temper his enthusiasm in the same way. He s seen the resilience of Labradorians through decades of great change; he says communities and industry are planning for long-term success. He does, as well, have a message to the rest of Atlantic Canada: There is a shortage of skilled workers; there is also a shortage of entry-level workers in Labrador, he says. If you re looking for a job, it s a great place to live, Labrador can be your safe haven. Labrador is the future. Labrador is where it s happening. ABM 68 Atlantic Business Magazine September/October 2012