IOC in Labrador on backburner with Rio Tinto shakeup, but not dead: analyst

A shakeup with the leadership of the company that owns the iron ore mining operation in western Labrador could mean a slowdown, but one analyst says it's unlikely the Iron Ore Company of Canada will shut down.

Rio Tintolast weekappointedJean-Sbastien Jacques to take over the company as chief executive. The mining gianthas also reorganized its operations, with iron ore operations taking a back seat to copper.

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With an oversupply of iron ore expected for the next 10 years, Rio Tinto's focus will be on its other commodities and resources, like copper and iron ore, in Western Australia.

While the company's new focus and emphasis on a different resource may mean a slowing down of operations at IOC in Labrador, one analyst said it would take higher iron ore prices to ramp operations back up.

Unless prices are higher, RioTinto'sgoing to just keep a low profile, that's what I think.- CeciliaJamasmie

"I do think that Rio Tinto is not getting rid of the Canadian operation. It's high-quality iron ore, higher quality than the one they get from Australia, but the shipping cost is what really kills the business in a way," said Cecilia Jamasmie, who runs Mining.com.

"Unless prices are higher, Rio Tinto's going to just keep a low profile, that's what I think. And then wait for prices to recover a bit more before they do anything else with the operations."

The IOC operation has fallen under a new umbrella within the Rio Tinto corporation, Jamasmie said.

But, she added this new umbrella is branded as energy and minerals and is being managed by "one of the guys they that trust the most."

"This person, Alan Davies, was even pegged to be the next CEO," she said.

Rio Tinto could try to spin off the energy and minerals section altogether in an attempt to turn a profit, she said.

Jamasmie said once iron ore prices rebound again, it's possible Labrador could see more business.