A weekend fire that destroyed a long-awaited apartment complex in Labrador City will have a profound impact in the booming mining town, the mayor said Monday.

The fire, which broke out early Sunday, destroyed a 108-unit complex that was poised to house miners and their families. It was still smouldering Monday morning, commanding the full attention of firefighters.

The fire broke out immediately next to Captain William Jackman Memorial Hospital, which was forced to evacuate patients to other locations. Smoke from the scene kept the hospital closed Monday.

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Captain William Jackman Memorial Hospital was closed because of smoke billowing from the nearby apartment complex. (CBC)

No one was injured. Mayor Karen Oldford, though, said the fire dealt a severe blow to Labrador City, which has been struggling to build housing to accommodate workers who have been headed to the boomtown.

"It's tragic on so many fronts," Oldford told CBC News Monday.

"We've been working on the housing file for so long here, and trying to move things ahead. Just when we were getting ready to make a difference — because 108 units would have made a big difference to the community — this happened."

The Iron Ore Company of Canada had been planning to use the 108 units for its workforce.  Power had just been connected to the structure, with the first tenants expected to move in before the end of the month.

Oldford said IOC is planning to hire 250 to 300 new workers.

There is little available land in Labrador City, with Oldford noting that mineral rights are attached to properties that otherwise would be appropriate for new housing.

A contractor based in Quebec owned the property.

The fire is under police investigation.