Labrador Iron Mines cuts capex on weak iron ore demand

Canadian iron ore producer Labrador Iron Mines has undertaken a critical review of its capital spending due to the sharp decline in spot iron ore prices and challenging market conditions.

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Its 2012 exploration programme has been reduced to $5 million from the original budget of $8.6 million, the company said on Tuesday September 4.

All capital expenditure programmes relating to the Silver Yards processing plant and development of the Houston deposits have been deferred.

About $52 million of planned capital investment has been deferred into 2013 in order to manage the company’s cash resources and requirements.

“During this period of weakness and uncertainty in the iron ore market, it is essential that we remain disciplined in our cash management and capital spending programmes and reduce operating costs,” chairman and ceo John Kearney said.

“Consequently, consistent with announcements made by major iron ore companies, we have suspended some capital investment programmes and deferred others to focus our resources on maximising production in the short term,” he added.

“This decision reflects a disciplined and pragmatic approach as we weather the current challenging market conditions,” he said.

Labrador Iron Mines remains on track to meet its sales target of 2 million tonnes of iron ore in 2012, the company said.

It sold three shipments of iron ore in August which totalled 520,000 wet tonnes. For the year to date, it has sold seven shipments totalling 1.2 million wet tonnes of iron ore.

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