Wabush gets $3.8M from government over 3 years

The Newfoundland and Labrador government has stepped in to help the Town of Wabush. 

It was announced Thursday that the town will receive $3.8 million from the provincial government, to compensate for the $2 million per year operations grant the town was getting from Cliffs Natural Resources.

This benefits every resident of Wabush, because it gives the town council an opportunity to move forward, without having to go to the residents to bear the cost.- Labrador West MHA Nick McGrath

That grant money dried up this year when the company shut down operations.

The town has been cast in a shadow of economic uncertainty since the closure of Wabush Mines. The company announced in October it would be officially shutting down the operation, citing high production costs.

As well, discussions with MFC Industrial to buy the site have recently fallen through.

• Cliffs Resources officially closing Wabush Mines 

Government's "transitional" funding will be used to pay for municipal services, while the town explores other sources of revenue.

However, the fund will stop flowing if an operator for the mine is found. 

Remaining optimistic 

Labrador West MHA Nick McGrath told CBC's Labrador Morning Show Friday that Wabush will receive $3.8 million over a three-year period.

McGrath said he remains "very optimistic" that a new operator for the mine will be found, and added government's money will buy time and soften the immediate economic blow to the region.

"In the first year, they will receive 90 per cent of what they were receiving from Wabush Mines. It's a significant investment that the province is making to the municipality. But this benefits every resident of Wabush, because it gives the town council an opportunity to move forward, without having to go to the residents to bear the cost," McGrath said.

McGrath said while a municipality like Wabush is transitioning with a plan, government has to be careful to not just "step in and dictate."

"We have to be very, very careful, [and] government is working very closely on this. It's a touchy situation, because you don't want to put yourself in a position where you relieve the companies of an obligation that they have," he said.

"One of the best examples I can use is Grand Falls-Windsor. There was an asset there that we went in and we got control of the hydro power there — but then when we expropriated, we also adopted a major environmental issue with the mill." 

Buying time

Mayor Colin Vardy says the government funding will help the town in the interim.

"You know, the iron ore industry is always ups and downs … and you have to take advantage of when the upswing comes," Vardy said.

"At least now, over the next three years, it gives us an opportunity to look at other sources for revenue and other opportunities for the municipality."

Vardy said the town will table its budget on Friday, and because of the government money, it will be a balanced one.

"Seeing some of the hardship that we've been dealt here in Wabush, the budget that we have coming forward is one we can be very proud of."