Funding for Canadian iron-ore projects may be in doubt after prices for the steelmaking raw material plunged, according to Labrador Iron Mines Holding Ltd.
The slump called into question the viability of developing or expanding Canadian mines that would lift production by about 200 million metric tons between 2018 and 2020, based on government forecasts, Chief Executive Officer John Kearney said today at the 7th EU Iron Ore Conference in Vienna.
“The finance ability of some of those projects has got to be questioned,” he said. “We got beaten up really badly.”
Ore prices as gauged by The Steel Index Ltd. reached $86.70 a dry metric ton, the lowest level in almost three years, on Sept. 5 as slowing demand caused steel mills in China to curb purchases. Prices are still down 20 percent in 2012 even after rebounding from last month’s low. Shares of Toronto-based Labrador slumped 80 percent this year.
Labrador lost money on two of three ore shipments sold in August, scaled back production to 1.7 million tons from 2 million tons and postponed $100 million of spending to develop a second mine next year, Kearney said.