Labrador Iron halts mining on iron ore price drop

Thu Jul 3, 2014 3:43am EDT
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* Labrador incurs net loss, shares fall 9.5 pct

* Iron ore prices have tumbled 30 pct this year

* Weak prices credit negative for Fortescue, Atlas - Moody's

By Manolo Serapio Jr and James Regan

SINGAPORE/SYDNEY, July 3 (Reuters) - Canadian iron ore miner Labrador Iron Mines Holdings (LIM) said it has halted mining operations this year, as falling prices on the back of a surge in global supply hit smaller producers.

LIM, which operates in the Labrador Trough in Quebec, posted a loss of C$105.2 million ($98.6 million) for the year to March and said it would almost certainly have posted further operating losses this year given current low prices.

Iron ore prices have fallen about 30 percent so far in 2014 as a flood of new supply to main market China, fueled by an expansion binge among global miners, has overwhelmed demand.

Smaller miners are not able to achieve the economies of scale that have driven down production costs at companies such as Brazil's Vale SA, and BHP Billiton and Rio Tinto in Australia.

"LIM is currently not planning for any mining or processing activity in 2014," company president and chief operating officer Rod Cooper said in a statement on Wednesday. Subject to completion of financing, LIM plans to begin production from its bigger Houston iron ore mine in April 2015, said Cooper.   Continued...