Labrador. - Atlantic Business Magazine

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Special Report
Newfoundland and Labrador
LABRADOR
land of plenty
By Ryan Cleary
46 | Atlantic Business Magazine | September/October 2010
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Red Bay, Labrador. Photo:
Department of Labrador and
Aboriginal Affairs
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Mary’s Harbour, Labrador. Photo: Department of Labrador and Aboriginal Affairs
For sale: Labrador.
In desperate economic times–and Newfoundland had its share leading up to
Confederation with Canada in 1949–Labrador was put on the block. During one such
attempted sale, in 1924, Newfoundland offered Labrador to Quebec for $30-million,
although the already fire-sale price was cut in half before year’s end.
The deal had its opponents, including Dr. Wilfred Grenfell, a prominent medical
missionary based on the tip of Newfoundland’s Northern Peninsula, who condemned
the proposed sale as short sighted. Grenfell argued that Labrador was resource rich,
and Newfoundland would be blind to its own interests if it parted with Labrador for
cash.
48 | Atlantic Business Magazine | September/October 2010
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Based on drilling to date, the Kamistiatusset Property in Western
Labrador looks like it may contain iron ore deposits equivalent to
Consolidated Thompson’s lucrative Bloom Lake project. Show above is
the train that carries iron ore from Bloom Lake to the processing terminal.
Inset: aerial of Bloom Lake. Photos: Consolidated Thompson.
Grenfell was dead on the money.
It was also incredibly fortuitous for Newfoundland
that Quebec decided to walk away from the proposed
sale. Eighty-six years later and Labrador’s incredible
resource wealth helps drive the provincial economy, one
of Canada’s hottest.
Newfoundland and Labrador achieved have status in
the fall of 2008 (the first time since Confederation), and
while offshore oil was a primary factor in the reversal of
economic fortune, Labrador’s economy has been a
bright spot for years.
That said, the recent worldwide recession hit
Labrador’s resource-based economy hard. In 2009, the
value of provincial mineral shipments (primarily from
Labrador) decreased about 50 per cent to $1.9 billion,
due to lower production and a severe drop in price for
iron ore and nickel, according to provincial budget
documents.
This year, however, the Danny Williams administration expects the value of mineral shipments to increase
about 60 per cent to $3.1-billion as a result of higher
50 | Atlantic Business Magazine | September/October 2010
production and healthier prices for iron ore, nickel and
copper.
“This is Labrador’s time,” said former Newfoundland
and Labrador Premier Brian Tobin, in an address earlier
this summer to Expo Labrador 2010 in Happy ValleyGoose Bay. Tobin is executive chairman of Consolidated
Thompson, which operates a new iron ore mine and mill
at Bloom Lake, Que. near the Labrador border.
“There is nothing dreamlike in this, the potential for
Labrador is unlimited,” said Tobin, who grew up in
Labrador, graduating from Robert Leckie High School
in Goose Bay. “This is still a land of opportunity and a
place that should attract significant capital and create
new jobs.”
Indeed, the Labrador West economy has run so hot in
recent months that international workers have been
brought in from countries such as the Philippines to fill
service-industry jobs at businesses like Tim Hortons.
Labrador’s economy is thriving on the mines of
Labrador West (“the iron-ore capital of the world”),
where the unemployment rate is practically zero.
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Torngat Mountains, Labrador.
Photo: Department of Labrador and Aboriginal Affairs
“Labrador West is going to be the Fort McMurray of the
East,” says Labrador Affairs Minister John Hickey.
The economy of Lake Melville/Happy Valley-Goose Bay,
a hub in terms of government, health, and transportation
services, is equally as robust, he says. “One thing I don’t
have to worry about as an MHA is people coming to me
looking for work. Anybody who wants a job can work.”
Hickey takes the boast a step further: “The future of this
province lies in the development of the resources of
Labrador,” he says.
That kind of thinking began when the Williams government took power in the fall of 2003. “For far too long, the
people, resources and potential of Labrador have been
ignored and excluded from decision making processes of the
province,” read the Progressive Conservative book of preelection promises. “We can no longer tolerate this atmosphere of exclusion, and we must recognize that Labrador
will play a pivotal role in the future success of this
province.”
Seven years after taking office, the Williams administration has two Labrador cabinet ministers (there were none in
2003; Patty Pottle holds the other portfolio of Aboriginal
Affairs). Further, Hickey says the current Tory government
has invested $2.4-billion in Labrador since day one, “an
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investment never seen before in Labrador’s history.”
Often referred to as the Big Land, Labrador has a huge
landmass of just over 294,000 square kilometres, large
enough to fit the three Maritime provinces and the island of
Newfoundland within its boundaries. But Labrador’s population stands at only 28,000, with about 10,000 people in
Labrador West, another 10,000 in the Lake Melville/Happy
Valley-Goose Bay area, and the other 8,000 scattered in
northern Labrador and along the coast.
Hickey was born in outport Newfoundland but moved to
Labrador as a boy in 1962. He worked for years with
Newfoundland and Labrador Hydro, starting off as a
linesman and working his way up to senior management. He
earned his political stripes while serving 16 years with the
Happy Valley-Goose Bay town council, including time as
mayor. From his job with Hydro, the town council, and four
years as minister of Labrador Affairs, he knows the Big Land
like the back of his hand.
“I’ve watched Labrador unfold, I guess you could say,”
Hickey says in an interview at his St. John’s office, a map of
Labrador in the background. He runs through a long list of
Labrador’s economic attributes with obvious passion and
zeal, starting with Labrador West’s incredibly rich iron-ore
trough. “There could be as many as 10 mines operating
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The Iron Ore Company of Canada, which runs the largest operation in Labrador, sees room for expansion. Shown here: Luce pit, IOC, Labrador City. Photo copyright© 2010 Rio Tinto.
around Labrador West in the next few years,” says
Hickey. “China and India have a huge demand for
iron ore.”
The Iron Ore Company of Canada runs the
largest iron-ore operation. In May, IOC officials
relaunched an ambitious plan to expand its mine
in Labrador City. The first phase of the expansion
project (priced at $435-million) is expected to
increase annual production from the company’s
Labrador City operation to 22-million tonnes.
The plan was stalled in 2008 when demand for
steel, and the pellets IOC produces, nosedived in
the wake of the financial crisis, which pounded
markets worldwide.
The thriving economy of Labrador West has
created social challenges, including a housing
shortage. A recent online posting for the area,
which includes Labrador City and Wabush, listed
a bungalow for $4,500 a month. The vacancy rate
is practically zero,” says Hickey. “There are challenges, but I call them good challenges.”
Labrador is rich in other minerals besides iron
ore, including uranium (there’s a moratorium on
development until March 2011), and rare earth
(used in the high-tech industry). “Keep in mind we
have so many treasures yet to be found,” Hickey
says.
Although operating at a lower-than-normal
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54 | Atlantic Business Magazine | September/October 2010
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capacity as the result of a yearlong labour dispute,
Vale’s Voisey’s Bay nickel mine continues to
produce. Hickey is most excited about the potential for the Voisey’s Bay mine to go underground,
which would make it a much larger project,
requiring an estimated 50 megawatts of electricity.
“If we get power to Voisey’s Bay we could also get
power to the North Coast,” says Hickey, adding
such a move would end the coast’s reliance on
expensive oil burning generators and create other
economic opportunities.
In terms of hydro potential, Premier Danny
Williams has described Labrador’s proposed
Lower Churchill development as the “most attractive undeveloped hydroelectric project in North
America.” The Newfoundland and Labrador
government is focused on developing the $6.5billion Lower Churchill hydroelectric megaproject, but it’s looking for a way to transmit the
power into hungry markets.
There are other hurdles to overcome before the
Lower Churchill can get off the ground (including
financing and the securing of long-term energy
customers) but that hasn’t stopped the Williams
administration from releasing this summer a benefits strategy for the project’s construction phase.
The benefits would be enormous: at least 21.5million person hours of construction employment
Vale Inco’s mill and accommodations complex in Voisey’s Bay, Labrador. Photo: Vale Inco.
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56 | Atlantic Business Magazine | September/October 2010
alone on the two hydroelectric developments at Gull Island and Muskrat Falls, as
well as a Labrador-island transmission
link.
A key to Labrador’s development is
infrastructure, including completion of the
Trans-Labrador Highway. It’s expected the
entire 1,125 kilometres of road from the
Quebec/Labrador border to Blanc Sablon,
Que. will be completed as a Class A
highway by September. Which should do
wonders for Labrador’s tourism potential.
“Labrador has been the best kept
tourism secret in Canada, without question,” Hickey says, describing the industry
as “an awakening giant.” The “giant” has
been awoken by tourism promotion, the
highway’s completion, and the attraction
of two national parks–Torngat Mountains
National Park and the Mealy Mountains
National Park Reserve. “Alaska of the East
is what American tourists call Labrador,”
Hickey says. “They come to Labrador
because they say it’s a new frontier, it has a
small population and a vast wilderness. It’s
the lure of the Labrador wild.”
Labrador economic potential doesn’t
end there.
The Big Land’s vast forests are being
eyed by the wood pellet industry. At least
two proponents have submitted proposals
to the provincial government.
The fishery is also moving forward. The
Labrador Fisherman’s Union Shrimp
Company, a co-operative that manages a
shrimp plant in Charlottetown and five
crab plants on the southern Labrador
coast, announced a new $4.5-million crab
plant for Mary’s Harbour earlier this year.
Hopes are also high for the future of
5 Wing Goose, the Canadian Air Force
base in Happy Valley-Goose Bay, which
Hickey sees as a future centre of excellence
for Unmanned Aerial Vehicle Technology.
Hickey says the story of Labrador has
yet to be told. “There are so many good
things happening.” There are challenges–the remote coastline, small population, and distance between communities
among them–but those challenges are
being overcome.
Hickey speaks with excitement about a
new summer home he purchased recently
in St. Lewis, the most easterly permanent
community on the North American mainland and one of the best locations on the
Labrador coast to see icebergs.
“It’s a little piece of heaven,” says
Hickey, before quickly finding yet more
potential. “Maybe we could build an
iceberg water plant there someday.” | ABM