TORONTO (miningweekly.com) – The Quebec provincial government has set aside C$20-million to fund a feasibility study to determine the best route and options for a proposed new rail link for iron-ore miners in the Labrador Trough to access global markets.

One of the project developers in the Trough, ASX- and TSX-listed Champion Iron on Friday welcomed the decision by the Quebec Finance Ministry, after Finance Minister Carlos Leitão this week tabled the 2014/15 budget.

The province announced a series of actions and measures to support mining development in Quebec, including that it would evaluate the need for a new rail link to the Labrador Trough to determine the optimum features of the new infrastructure.

The government had set aside a maximum of $20-million from its Northern Plan Fund to contribute to a study to determine the optimum rail option for iron-ore miners in the Labrador Trough region to reach ports to service international markets competitively.

It is intended that these funds be allocated towards evaluating the anticipated transportation needs between the Labrador Trough and the port of Sept-Îles. The study would consider the concerns of all potential users and, in doing so, ensure a multi-user system favouring joint investment.

Champion chairperson Michael O’Keeffe said this was a significant decision that would lead to the creation of jobs and investment.

“It will stimulate further investment into the region and help to establish Quebec as a region of international significance for the mining industry. At a time of uncertainty in investment markets regarding the outlook for iron-ore, this decision will be seen as a defining point in the history of the mining industry in Québec,” he said.

Champion CEO Thomas Larsen added that the multi-user rail initiative, combined with the financial and operational expertise that Champion has after its recent merger, provided the company with a potentially clearer path towards transporting its product to the Port of Sept-Îles in a competitive and cost-efficient manner.

There is a high level of interest in the Labrador Trough as the world’s major steel industry groups already see the potential of the region to supply high-quality iron-ore, with a range of listed and private iron-ore groups active in the region.

The Labrador Trough hosts one of the world’s largest iron-ore deposits, producing some 50-million tonnes a year. Global majors including ArcelorMittal and Rio Tinto have assets in the region, and WISCO, Mitsubishi, Posco, Tata Steel, Cliffs Natural Resources, Alderon Iron Ore, China Steel and Hebei Iron & Steel are also involved in joint venture partnerships in the wider region.

Canadian National Railway (CN) last year shelved the feasibility study for the construction of its proposed C$5-billion rail line and terminal handling facility to serve the Quebec/Labrador iron-ore range, owing to adverse market realities forcing project developers to defer expected project start-ups.

The feasibility study was started in August 2012 by CN and its partner La Caisse de dépôt et placement du Québec, along with a group of six mining companies.

CN had won backing from a group of mining companies to study the feasibility of a proposed rail link in northern Quebec to ship iron-ore from the isolated region. Among the miners that participated in the study were Cliffs Natural Resources, Labrador Iron Mines Holdings, New Millennium Iron, Alderon Iron Ore and Cap-Ex Ventures.

A joint review of the project, together with the mining companies, had indicated that mine construction schedules and diverging needs for each specific individual project would make it difficult to obtain the critical volumes of iron-ore necessary to support the building of new rail and terminal infrastructure by CN.

Progress on the new multi-user dock by the Port of Sept-Iles is also progressing with construction scheduled to wrap up during the summer.