Hit by price dive, Canada's Labrador Iron Mines seeks court protection
02/04/2015 15:04
By Euan Rocha
TORONTO, April 2 (Reuters) - Canada's Labrador Iron Mines
Holdings sought court protection from creditors on Thursday,
making it the latest victim of a high-stakes battle for market
share among major producers that has sent iron ore prices
tumbling and crippled small players.
The Toronto-based company, which owns assets in the
iron-ore-rich Labrador trough in Eastern Canada, mothballed its
operations last year and is now seeking to complete a
restructuring so it can eventually resume operations.
"We're trying to focus on restructuring to stay in business.
This is not a liquidation and get-out-of-town situation,"
Labrador Iron Chief Executive John Kearney said in an interview.
Iron ore prices hit new lows this week due to lingering
concern over a supply glut and weak steel demand in China, the
world's top consumer of both iron ore and steel. ID:nL3N0WZ292
Despite weak demand, the world's largest iron ore miners
Vale VALE5.SA , Rio Tinto RIO.AX RIO.L and BHP Billiton
BHP.AX BLT.L have kept up production to protect market
share.
Last week, Australia's Fortescue Metals FMG.AX called on
iron ore miners to cap production in the hope of reversing the
dramatic fall in prices. ID:nL3N0WR188
The price collapse to $49 a tonne .IO62-CNI=SI has weighed
heavily on Canadian miners. In January, Cliffs Natural Resources
CLF.N sought creditor protection in Canada, just months after
it ceased production at its Bloom Lake iron ore mine in the
Labrador trough in Quebec. ID:nL1N0V61TR
Labrador Iron (LIM), which voluntarily delisted its shares
from the Toronto Stock Exchange recently, said it intends to
deploy a comprehensive restructuring plan that may include
selling some noncore assets to fund operating costs or to help
it secure interim debtor-in-possession financing.
LIM said it is confident it will be able to preserve its key
assets, including its flagship Houston project in the Labrador
trough, pending a price recovery.
LIM said it is continuing to negotiate a potential support
arrangement with RBRG Gerald Metals, an existing creditor and an
offtake customer. If successful, that may provide working
capital financing to fund its ongoing corporate activities.
The Canadian company also said its joint-venture partner,
Tata Steel Minerals Canada, has exercised its option to buy
LIM's remaining interest in the Howse project, which is also
located in the trough, for C$5 million ($4 million).
($1=$1.26 Canadian)
(Reporting by Euan Rocha; Editing by Peter Galloway)
((euan.rocha@thomsonreuters.com; +1 416 941 8185; Reuters
Messaging: euan.rocha.reuters.com@reuters.net))
Keywords: LIM BANKRUPTCY/