Layoffs likely at Labrador iron ore mine: union

An iron ore mine in western Labrador will be cutting production in reaction to the global economic slump, a union official said Monday.

In a letter to employees obtained by CBC News, the company's vice-president and general manager Gino Levesque said the company will have difficult decisions to make as a result of the current economic downturn. 

"We are now going through the most difficult time in the history of Wabush Mines, with, from what I perceive to be, an unfavourable work climate at the plants, the worst cost structure in North America and a plant that is aged," he said.

According to the letter, layoffs are guaranteed, temporary workers will be let go, overtime will be eliminated, and contractual work will be cancelled.

Wabush Mines officials told union leaders last week that it expects to cut production by as much as 40 per cent from this year's levels, said Lloyd Hunter, president of the United Steelworkers local.

Hunter said the union executive has not yet been advised of any layoffs, although Hunter said he expects to see job losses amid what he called "rough times ahead" for the mining town of Wabush.

"It means less jobs, less money in the town," said Hunter. "One layoff is too many, from the union point of view."

The news marks a rapid turn of fortune for Wabush Mines, which — like the Iron Ore Company of Canada mine in neighbouring Labrador City — had been ramping up production to meet the global demand for steel. 

"The economic conditions, the demand for iron ore — we have to crunch our plans to fit," Hunter told CBC News. "So, we're facing hard times, as they see it."

Hunter said current production ranges between 4.3 million and 4.6 million tonnes per year. He said the company is advising that production will be cut to between 2.8 million and 3.6 million tonnes.

Wabush Mines manager Bill Dodds said the company will have a better sense of 2009 production targets by this Friday.