October 27, 1998
Executive Council)

Government pleased with the North/IOCC's new capital investment for Labrador West

Premier Brian Tobin, stated earlier today that the government is pleased with North/IOCC's major capital expansion plans for its Labrador West operations. Charles Furey, Minister of Mines and Energy, Perry Canning, MHA - Labrador West, and Ernie McLean, Minister of Government Services and Lands, attended the news conference in Labrador City.

"The North/IOCC $1 billion capital investment plan is good news for Labrador West. The company's capital expenditure commitment in its iron ore operation reflects the confidence shareholders have in the long-term viability of the province's largest mining operation and in the provincial mining industry in general," says Furey.

Approximately $650 million, or 60 per cent, of the capital investment will be spent in improving the Labrador operations. This investment will enable IOCC to further reduce unit costs, improve competitiveness, stabilize employment levels and thereby further secure the future of the mining operation at Labrador West in the face of a declining market for all commodities. "Today's announcement is essentially a $1 billion vote of confidence in Labrador West employees and the future of the mining operation. The new capital will result in an increase of productivity and competitiveness at Labrador West and in turn ensure the long-term viability of the operation," says Furey.

The pellet plant at Sept Iles will be reactivated as part of the company's investment plans. Without the reactivation of the Sept Iles plant, major elements of the investment program at Labrador West would not proceed. "In making its decision to reactivate the pellet plant at Sept Iles, IOCC made certain commitments to the Government of Newfoundland and Labrador. The company has committed that all direct reduction pellets, the market growth area, will occur only at Labrador West and that the flotation plant at Sept Iles will not be reactivated. The company will continue "no layoff" policy and commitment to purchasing 60 per cent of supplies from Labrador West," says Furey.

The Government of Newfoundland and Labrador is committed to gaining full benefits from the development of our natural resources and will continue to aggressively pursue these benefits. "The government would not have accepted the reactivation of the pellet plant in Sept Iles if it had been economically viable to construct a new plant at Labrador West," added Furey.

"Over the past 18 months there has been a renewed confidence in the economy in Labrador West. Both IOCC and Wabush Mines are operating at near capacity. Housing starts have increased and new businesses have opened broadening the base of the economy over the past two years. With North/IOCC's commitment to Labrador West's future, I expect this confidence to continue," says Canning.

Media contact:

Heidi Bonnell, Premier's Office, (709) 729-3564

Tara Laing, Department of Mines and Energy, (709) 729-4890

1998 10 27                            11:30 a.m.