IOC’s 5-week shutdown first in almost a decade — Weak demand

For the first time in almost a decade, The Iron Ore Company of Canada has scheduled downtime at its Labrador City operation because of weak demand for its products.

About 1,500 workers were sent home in late July for a 5-week shutdown that comes as a direct result of lower-than-expected sales to Japan. Sixty-five of the workers have been laid off permanently.

“It is unusual for us,” said Jean Pierre Maltais, IOC’s superintendent of communications and government relations, in referring to the action. IOC decided last fall that a summer shutdown was necessary after it became apparent that advanced sales for iron ore this year would not meet expectations. The company sells about 70% of its ore pellets and concentrate to Europe and the Far East with the remainder going to North American buyers. The slump in world demand and prices for iron ore has sparked rumors in Labrador City that a more substantial layoff is looming. Some union officials maintain as many as 200 more jobs may be lost. Maltais wouldn’t confirm or deny the rumor.

“We have nothing on that yet,” he said. “I mean if the situation gets worse, of course we will have to take some more steps. But only if it gets worse.” The rumors were enough, however, to get IOC President Derek Rance to address them in a recent letter to employees. In his letter, Rance reportedly insisted that despite talk to the contrary, full operations will resume at Labrador City once the shutdown expires Sept. 2.

He did warn the workers, however, that the world market for iron ore is becoming more competitive and that the company will have to work harder to maintain its share of the marketplace.

Last October, IOC laid off 110 unionized workers and 43 office staff at Labrador City as part of an announced company restructuring. Another 90 or so workers were cut from IOC’s shipping operation at Sept Iles, Que. At that time, a company statement said the job cuts were necessary to reduce operating costs and improve efficiency and productivity. Operations at Sept Iles and nearby Wabush in Labrador are unaffected by the current shutdown at Labrador City.

IOC is privately owned by three U.S. companies: Hanna Holdings, Bethlehem Steel International and National Steel Corporation. It began mining iron ore at Labrador City in the early 1960s. The combined operations there have an annual production capacity of about 10 million tonnes of high-grade iron ore pellets and 6 million tonnes of iron ore concentrate.