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A Labrador Iron operation.

Labrador Iron Mines Holdings Ltd. said it is halting all operations at its mines for the rest of the year, the latest industry player to fall victim to slumping demand.

The benchmark price of iron ore, used to make steel, has plummeted 30 per cent this year on rising global supply and reduced steel output in the critical Chinese market. The spot price is in the $93 (U.S.)-a-tonne range, down from almost $120 in early April, a level at which high-cost producers such as Labrador Iron can barely meet their costs. Some observers see the price falling to below $80.

Labrador Iron is experiencing "considerable strain" on its cash resources and now needs outside investment if it is to continue operations, the company's chairman and chief executive officer John Kearney said.

Across-the-board cost-cutting measures are in place and Labrador Iron is in talks for potential financing with commodity traders, financial institutions and others, the company said. The focus for 2014 is development of the flagship, long-life Houston Mine in the Labrador Trough, it said.

However, financing in the current climate of uncertainty has dried up for many mining companies, as they buckle down and slash costs to ride out the slump. Iron ore producers Atlas Iron Ltd. of Australia and giant BHP Billiton Ltd. have cut jobs and taken steps to boost productivity. Closer to home, Cliffs Natural Resources Inc. indefinitely mothballed its Wabush Pointe-Noire iron-ore pellet plant on Quebec's north shore last year, and Baffinland Iron Mines Corp. sharply scaled back its Mary River iron ore project in Canada's north.

"Right now, the chart for iron ore looks horrible," said John Kaiser of Kaiser Research Online. "I would not want any exposure to iron plays."

Labrador Iron said on Wednesday that development of its Houston Mine is subject to completion of financing and the negotiation of major contracts. The company also said it is seeking to cut costs by renegotiating agreements with contractors and suppliers.

Desjardins Securities industry analyst Jackie Przybylowski said in a note that she sees a "low probability that the company will raise the required funds in the next few years."

Smaller companies with deep-pocketed partners have a better chance at surviving the current slump than those on their own, Ms. Przybylowski said. "It seems like the mining companies that have partners are probably in a better position to finance their projects."

For the fourth quarter ended March 31, Labrador Iron said it posted a loss of $20.5-million (Canadian) or 15 cents a share, compared with a net loss of $71.3-million or 65 cents a year earlier. The company completed its third operating year in December 2013.

Some observers say iron ore – particularly the deposits in the rich Labrador Trough in Newfoundland and Labrador and part of Quebec – still offers solid mid- to long-term potential.

"There can be short-term fluctuations but demand from China and India will continue" as modernization and urbanization boost the need for steel, Wade Locke, economist at Memorial University, said.

"The Labrador Trough has a lot of big, big potential," said Mr. Locke, who co-authored an economic impact assessment of iron mining in Labrador for the Newfoundland and Labrador government in 2012.

A key advantage of Labrador Trough iron ore is that it is relatively cheaper to produce than iron ore in China, the world's biggest producer, Mr. Locke said. Somewhat offsetting that is the high cost of shipping to China.

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