The Iron Ore Company of Canada will not extend a summer shutdown, relieved workers were told Friday. (CBC)

Months of anxious speculation have ended on a happy note in western Labrador, as the Iron Ore Company of Canada has ruled out extending a summer shutdown.

IOC, whose mine in Labrador City is the region's most significant employer, had said earlier this year it may need to extend a five-week summer shutdown to deal with a slumping global demand for steel.

But on Friday, IOC said it will be able to resume production in August, and put to rest fears that the shutdown could have been extended by as many as 13 additional weeks. The five-week shutdown will coincide with many employees' vacations.

"With the contracts they got through the year, they think five weeks will be sufficient to do that," said George Kean, president of the United Steelworkers union local.

"Even though the markets are extremely volatile throughout the world, they're hoping that this will do it for 2009 … This is a big relief, not only for our membership, but the whole community and I think for the province as a whole."

The possibility of an extended shutdown had been taking its toll on some business owners.

Nick McGrath, who runs a restaurant in neighbouring Wabush, noticed people had been cutting back on dining out. He thinks things will rebound.

"Knowing now that it's five weeks, a lot of people I think will look at that in an optimistic way and say, 'so we're going to take our five weeks holidays and then we move on,'" McGrath said.

"I think it's good news and hopefully you'll see the economy jump in Labrador West again."

IOC shelved expansion plans last year, as the global economic crisis took hold. A boom in the region quickly evaporated, with newly hired workers — many of whom bought expensive houses to work in the area — suddenly facing fears of unemployment.

Wabush Mines, which operates a competing mine near IOC, has already laid off scores of workers, to deal with a sudden slump in market conditions.