Despite a layoff of hundreds of workers at the Bloom Lake iron ore mine in northern Quebec, an industry official and an analyst say prospects for iron ore mines in neighbouring Labrador still look bright.

Cliffs Natural Resources, the company which owns Bloom Lake, announced on Monday it was halting its expansion plans at its iron ore mine, just across the border from Labrador, citing weak demand as the reason for the shutdown.

But at the nearby Iron Ore Company of Canada in Labrador City, Heather Bruce-Veitch, the company's human resources manager, said business will carry on as usual, with no layoffs planned.

"I think the key message for us is despite the recent slow down in Chinese growth, iron ore markets, the mid and long term, really still look very strong," said Veitch.

China's demand a large factor

Iron ore prices dropped dramatically in August, and price fluctuations for the commodity have been happening ever since.  Patricia Mohr, a Scotiabank vice-president and commodity specialist, said a slowdown in global economic growth, especially in China, has played a large factor in iron ore prices.

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Patricia Mohr says despite the Bloom Lake layoff, prospects for the iron ore industry look good. (CBC)

"In fact, it's all rather a small world these days," said Mohr. "The demand in China has a direct impact on prices paid for a good portion of the iron ore mined in Labrador and northern Quebec."

Fortunately, added Mohr, iron ore prices and demand are slowly on the rise again.

"So all is not lost," said Mohr.  "And we continue to be fairly bullish on the outlook for China and it's economy going forward."

Cliffs Natural Resources also owns Wabush Mines, and company officials said no cutbacks are planned there. As well, officials said the company plans to resume its expansion to the Bloom Lake mine in 2014.