MONTREAL - A metal mining analyst says a drop in iron ore prices to the lowest level in five years could further delay development of Canada's Labrador Trough.
Jackie Przybylowski of Desjardins Capital Markets says the price is hurting the ability of companies to obtain funding to get projects moving.
Weaker demand caused by a slowdown of the Chinese economy pushed iron price down to about US$78 per tonne on Monday, the lowest level since September 2009.
Steel and iron ore futures in China also fell to their lowest ever, ahead of a week-long national holiday that starts Wednesday.
Przybylowski says she expects prices will remain flat or even dip a little further until the Chinese resume purchases after the holiday.
However, the analyst is optimistic for the longer term and expects prices will recover to about US$100 by mid-winter.
The low price is especially challenging for companies that don't have agreements in place with strategic partners or high-cost ore producers.
Labrador Iron Mines Holdings (TSX:LIM) suspended all operations at its mines for the year in July, which a year ago supported as many as 370 jobs.
The analyst also says the low price could also hurt the Quebec government's attempt to kick start a new railway in the Labrador Trough, a component of the Liberal government's northern development plan.