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46 | Atlantic Business Magazine | September/October 2010
LABRADORland of plenty
By Ryan Cleary
Special ReportNewfoundland and Labrador
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Red Bay, Labrador. Photo:Department of Labrador andAboriginal Affairs
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48 | Atlantic Business Magazine | September/October 2010
For sale: Labrador.In desperate economic times–and Newfoundland had its share leading up toConfederation with Canada in 1949–Labrador was put on the block. During one suchattempted 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 medicalmissionary based on the tip of Newfoundland’s Northern Peninsula, who condemnedthe 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 forcash.
Mary’s Harbour, Labrador. Photo: Department of Labrador and Aboriginal Affairs
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50 | Atlantic Business Magazine | September/October 2010
Grenfell was dead on the money.It was also incredibly fortuitous for Newfoundland
that Quebec decided to walk away from the proposedsale. Eighty-six years later and Labrador’s incredibleresource wealth helps drive the provincial economy, oneof Canada’s hottest.
Newfoundland and Labrador achieved have status inthe fall of 2008 (the first time since Confederation), andwhile offshore oil was a primary factor in the reversal ofeconomic fortune, Labrador’s economy has been abright spot for years.
That said, the recent worldwide recession hitLabrador’s resource-based economy hard. In 2009, thevalue of provincial mineral shipments (primarily fromLabrador) decreased about 50 per cent to $1.9 billion,due to lower production and a severe drop in price foriron ore and nickel, according to provincial budgetdocuments.
This year, however, the Danny Williams administra-tion expects the value of mineral shipments to increaseabout 60 per cent to $3.1-billion as a result of higher
production and healthier prices for iron ore, nickel andcopper.
“This is Labrador’s time,” said former Newfoundlandand Labrador Premier Brian Tobin, in an address earlierthis summer to Expo Labrador 2010 in Happy Valley-Goose Bay. Tobin is executive chairman of ConsolidatedThompson, which operates a new iron ore mine and millat Bloom Lake, Que. near the Labrador border.
“There is nothing dreamlike in this, the potential forLabrador is unlimited,” said Tobin, who grew up inLabrador, graduating from Robert Leckie High Schoolin Goose Bay. “This is still a land of opportunity and aplace that should attract significant capital and createnew jobs.”
Indeed, the Labrador West economy has run so hot inrecent months that international workers have beenbrought in from countries such as the Philippines to fillservice-industry jobs at businesses like Tim Hortons.Labrador’s economy is thriving on the mines ofLabrador West (“the iron-ore capital of the world”),where the unemployment rate is practically zero.
Based on drilling to date, the Kamistiatusset Property in WesternLabrador looks like it may contain iron ore deposits equivalent toConsolidated Thompson’s lucrative Bloom Lake project. Show above isthe train that carries iron ore from Bloom Lake to the processing terminal.Inset: aerial of Bloom Lake. Photos: Consolidated Thompson.
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“Labrador West is going to be the Fort McMurray of theEast,” says Labrador Affairs Minister John Hickey.
The economy of Lake Melville/Happy Valley-Goose Bay,a hub in terms of government, health, and transportationservices, is equally as robust, he says. “One thing I don’thave to worry about as an MHA is people coming to melooking for work. Anybody who wants a job can work.”
Hickey takes the boast a step further: “The future of thisprovince lies in the development of the resources ofLabrador,” he says.
That kind of thinking began when the Williams govern-ment took power in the fall of 2003. “For far too long, the
people, resources and potential of Labrador have beenignored and excluded from decision making processes of theprovince,” read the Progressive Conservative book of pre-election promises. “We can no longer tolerate this atmos-phere of exclusion, and we must recognize that Labradorwill play a pivotal role in the future success of thisprovince.”
Seven years after taking office, the Williams administra-tion has two Labrador cabinet ministers (there were none in2003; Patty Pottle holds the other portfolio of AboriginalAffairs). Further, Hickey says the current Tory governmenthas invested $2.4-billion in Labrador since day one, “an
Torngat Mountains, Labrador.Photo: Department of Labrador and Aboriginal Affairs
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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, largeenough to fit the three Maritime provinces and the island ofNewfoundland within its boundaries. But Labrador’s popula-tion stands at only 28,000, with about 10,000 people inLabrador West, another 10,000 in the Lake Melville/HappyValley-Goose Bay area, and the other 8,000 scattered innorthern Labrador and along the coast.
Hickey was born in outport Newfoundland but moved toLabrador as a boy in 1962. He worked for years withNewfoundland and Labrador Hydro, starting off as a
linesman and working his way up to senior management. Heearned his political stripes while serving 16 years with theHappy Valley-Goose Bay town council, including time asmayor. From his job with Hydro, the town council, and fouryears as minister of Labrador Affairs, he knows the Big Landlike 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 ofLabrador in the background. He runs through a long list ofLabrador’s economic attributes with obvious passion andzeal, starting with Labrador West’s incredibly rich iron-oretrough. “There could be as many as 10 mines operating
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around Labrador West in the next few years,” saysHickey. “China and India have a huge demand foriron ore.”
The Iron Ore Company of Canada runs thelargest iron-ore operation. In May, IOC officialsrelaunched an ambitious plan to expand its minein Labrador City. The first phase of the expansionproject (priced at $435-million) is expected toincrease annual production from the company’sLabrador City operation to 22-million tonnes.The plan was stalled in 2008 when demand forsteel, and the pellets IOC produces, nosedived inthe wake of the financial crisis, which poundedmarkets worldwide.
The thriving economy of Labrador West hascreated social challenges, including a housingshortage. A recent online posting for the area,which includes Labrador City and Wabush, listeda bungalow for $4,500 a month. The vacancy rateis practically zero,” says Hickey. “There are chal-lenges, but I call them good challenges.”
Labrador is rich in other minerals besides ironore, including uranium (there’s a moratorium ondevelopment until March 2011), and rare earth(used in the high-tech industry). “Keep in mind wehave so many treasures yet to be found,” Hickeysays.
Although operating at a lower-than-normal
54 | Atlantic Business Magazine | September/October 2010
The Iron Ore Company of Canada, which runs the largest operation in Labrador, sees room for expan-sion. Shown here: Luce pit, IOC, Labrador City. Photo copyright© 2010 Rio Tinto.
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capacity as the result of a yearlong labour dispute,Vale’s Voisey’s Bay nickel mine continues toproduce. Hickey is most excited about the poten-tial 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 getpower to the North Coast,” says Hickey, addingsuch a move would end the coast’s reliance onexpensive oil burning generators and create othereconomic opportunities.
In terms of hydro potential, Premier DannyWilliams has described Labrador’s proposedLower Churchill development as the “most attrac-tive undeveloped hydroelectric project in NorthAmerica.” The Newfoundland and Labradorgovernment is focused on developing the $6.5-billion Lower Churchill hydroelectric megapro-ject, but it’s looking for a way to transmit thepower into hungry markets.
There are other hurdles to overcome before theLower Churchill can get off the ground (includingfinancing and the securing of long-term energycustomers) but that hasn’t stopped the Williamsadministration from releasing this summer a bene-fits strategy for the project’s construction phase.The benefits would be enormous: at least 21.5-million person hours of construction employment
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Vale Inco’s mill and accommodations complex in Voisey’s Bay, Labrador. Photo: Vale Inco.
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alone on the two hydroelectric develop-ments at Gull Island and Muskrat Falls, aswell as a Labrador-island transmissionlink.
A key to Labrador’s development isinfrastructure, including completion of theTrans-Labrador Highway. It’s expected theentire 1,125 kilometres of road from theQuebec/Labrador border to Blanc Sablon,Que. will be completed as a Class Ahighway by September. Which should dowonders for Labrador’s tourism potential.
“Labrador has been the best kepttourism secret in Canada, without ques-tion,” Hickey says, describing the industryas “an awakening giant.” The “giant” hasbeen awoken by tourism promotion, thehighway’s completion, and the attractionof two national parks–Torngat MountainsNational Park and the Mealy MountainsNational Park Reserve. “Alaska of the Eastis what American tourists call Labrador,”Hickey says. “They come to Labradorbecause they say it’s a new frontier, it has asmall population and a vast wilderness. It’sthe lure of the Labrador wild.”
Labrador economic potential doesn’tend there.
The Big Land’s vast forests are beingeyed by the wood pellet industry. At leasttwo proponents have submitted proposalsto the provincial government.
The fishery is also moving forward. TheLabrador Fisherman’s Union ShrimpCompany, a co-operative that manages ashrimp plant in Charlottetown and fivecrab plants on the southern Labradorcoast, announced a new $4.5-million crabplant for Mary’s Harbour earlier this year.
Hopes are also high for the future of5 Wing Goose, the Canadian Air Forcebase in Happy Valley-Goose Bay, whichHickey sees as a future centre of excellencefor Unmanned Aerial Vehicle Technology.
Hickey says the story of Labrador hasyet to be told. “There are so many goodthings happening.” There are chal-lenges–the remote coastline, small popula-tion, and distance between communitiesamong them–but those challenges arebeing overcome.
Hickey speaks with excitement about anew summer home he purchased recentlyin St. Lewis, the most easterly permanentcommunity on the North American main-land and one of the best locations on theLabrador coast to see icebergs.
“It’s a little piece of heaven,” saysHickey, before quickly finding yet morepotential. “Maybe we could build aniceberg water plant there someday.” | ABM
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