Strike at Rio Tinto Canadian iron ore unit to delay investment: shareholder



Source: PLATTS

The miner’s strike at Rio Tinto’s Iron Ore Company of Canada remains unresolved and will delay planned capital investments at the site, said IOC shareholder Labrador Iron Ore Royalty Corp.

The refurbishment of the No.4 iron ore pellet line and the development of the Wabush 3 open pit ore mine, at the Labrador City site, will be affected by the strike which commenced March 27, LIORC said in a quarterly report Monday.

LIORC receives a 7% royalty on all IOC sales of iron ore products and owns a 15.1% share in the company, which operates a mining and processing complex in Newfoundland and Labrador and exports out of Sept Isles in Quebec.

The strike by members of the United Steelworkers union has happened just as IOC typically boosts shipment volumes from a seasonal low. IOC has turned the complex over to “care and maintenance” since the end of March.

LIORC said Q1 sales “are traditionally adversely affected by the closing of the St. Lawrence Seaway and general winter operating conditions and are usually 15%-20% of the annual volume, with the balance spread fairly evenly throughout the other three quarters.”

IOC produced 10.5 million mt of iron ore pellets and 8.5 million mt of concentrate in 2017.

The labor negotiations have so far seen a revised offer to workers fail. The strike is occurring at a time of high pellet premiums. The Platts Atlantic blast furnace pellet premium remained at $58/dry mt in May, after a surge since last year, based on reference 65% Fe blast furnace grade.

IOC management has stated it wants to achieve “fair and equitable agreements” with the workforce, while the company must be able to meet changes in the mining cycle to operate in the global markets long term, LIORC said.

IOC produces iron ore pellets and concentrate, and is managed by Rio Tinto, with a 58.7% stake, with equity interests also held by trading group Mitsubishi Corp. (26.2%).

Source: PLATTS