Huge iron ore deposits in Labrador and northern Quebec, along the Labrador trench, are on the verge of development. Several mining companies and CN Rail have launched a feasibility study on a new rail link to tidewater.
CN (ticker TSX: CNR and NYSE:CNI) announced that a customer group of mining companies – Cliffs Natural Resources Inc. (NYSE: CLF), Labrador Iron Mines Holdings Ltd. (TSX: LIM), New Millennium Iron Corp. (TSX: NML), Cap-Ex Ventures Ltd. (TSX-V: CEV), and Alderon Iron Ore Corp. (TSX: ADV and NYSE MKT: AXX) – have committed to work with CN on a feasibility study into the construction of a proposed rail line and terminal handling facility to serve the Quebec/Labrador iron ore range. The large Caisse de depot pension fund is also involved in studying this infrastructure project with CN.
In addition to a new rail line a new terminal handling facility at the Port of Sept-iles in Quebec would complement plans for a new dock at the port. Ottawa has announced it will invest up to $55-million to fund construction of a deepwater dock at Sept- Îles, Que., that will be used for shipping ore. The project cost is estimated at $5 B with a construction start date of 2017.
Hydro-Québec has also been asked to study extending the provincial transmission grid, which would benefit new producers.
It is noteworthy that the Quebec North Shore & Labrador Railway already has a line into Schefferville. QNSL was opened in 1954 by the Iron Ore Company of Canada (IOC) for the transport of iron ore from Schefferville, Labrador to the port of Sept Îles, a distance of 359 miles (573km). In 1958, a 36 mile (58km) branch was added from Emeril Junction (also called Ross Bay Junction) to the iron ore deposits of the Wabush area around Labrador City; the distance from Labrador City to Sept Îles is 257 miles (414km). Since 2005 Tshiuetin Rail Transportation Inc.has operated the 132.5 miles of railway connecting Emeril (Labrador) and Schefferville. Tshiuetin is owned by the 3 following first Nations:
- Innu Takuaikan Uashat Mak Mani-Utenam
- Naskapi Nation of Kawawachikamach
- Nation Innu Matimekush– Lac John
Tshiuetin has about 40 employees.
The previous Quebec Liberal government was strongly supportive of Plan Nord initiatives. The new PQ government may have differing approaches to infrastructure development and priorities.
CN and Caisse de depot obviously see an investment opportunity. The mining companies are keen on having the rail infrastructure in place. The QNSL is an old line with capacity issues in light of the large volume of iron ore than may be eventually be shipped.
Canada is a pipsqueak in the world iron ore market, 9th in terms of production about 32 m tonnes.