Labrador power line suspended as Alderon works on financing

Construction work on a new transmission line for western Labrador has been suspended amid signs of another sign of a slowdown in the mining industry.

The Newfoundland and Labrador government said that work on a third transmission line running between Churchill Falls and western Labrador has been halted, due to Alderon Iron Ore's inability to wrap up financing for the Kami mine project.

Wabush Mayor ColinVardysaid he's concerned about the loss of employment opportunities in the region at an already challenging time.

"First of all, it's job loss. Building a transmission line,obviously those are jobs that we need right now," saidVardy.

"I think it's a sign of what's coming forward. The economy here is becoming much cooler. I think there's instability coming."

Vardysaid issues like the ones surroundingAlderon'sproject have made people in his community uneasy.

"There's a lot of uncertainty right now and without trying to put fear into people that are here residents, we need the attention of the provincial government," he said.

Government still 'optimistic'

"The global mining industry is facing short-term challenges as a result of low commodity prices," Natural Resources Minister Derrick Dalley said in a statement.

"This makes it difficult for companies to raise capital for new projects, including those in Labrador."

Dalley, who said the government is still "optmistic" about the mining industry, said that Alderon officials have assured the government that it is still committed to the Kami project.

Alderon had campaigned successfully to have a third transmission line built from Churchill Falls to supply the power needed to run the Kami project once it is built.

A deal was reached in February with Nalcor Energy, the Crown corporation that operates Newfoundland and Labrador Hydro.

• Alderon secures power from Nalcor to run Kami mine

So far, government has cleared 20 kilometres of land that will be used by transmission towers.

Government saidall of the money spent so far on that will be covered by the $21-million security that Alderon put in place.

Alderon CEO Tayfun Eldem said the halt on the transmission line is a setback, but that work will be ready to resumeonce thefinancing plan is completed.

Eldem saidthere's a process that has to be followed when talking to lenders, and with a new advisor those processes have to be updated and that's what is taking up time.

"We are pushing ahead with our financing efforts; in fact, we are ready to relaunch the process with our new advisor, who has been working busily for the last six weeks," he said.

"[The advisorwill be] updating the reports and models, and with those we will be going to market in very short order."

Eldem added that while the low market prices for iron ore of late are of concern, they're pushing ahead with their plans.

He added that since their financing has been delayed, the transmission line delays are not worrisome, as long as work is back on track once their financing goes through.

Alderon had been hoping to launch the Kami mine by the end of 2015, with the mine having a working life of about 30 years.