Melting glaciers left sand in the area during the last ice age.
Cardero Resources Corp. is one of the players trying to figure out if iron sands can become a viable mining operation. The process is very different from oilsands extraction.
This week a test plant started processing hundreds of tonnes of sand, and piled them into an old aircraft hanger.
"In the iron sands mother nature has done all the hard work," said President Glenn Hoffman. "There's no blasting, no grinding, no nothing, there's just the raw sand on the pile behind me."
The trick is separating the little grains of iron from the rest of the sand. Long conveyor belts move the sand through a drying furnace, then a series of magnets pull out the iron and leave the rest of the sand behind.
It takes about 40 tonnes of sand to get one tonne of iron ore concentrate.
Francis Mackenzie is the president of Grand River Iron Corporation, a producer of pig iron in Labrador.
He said that if the project is successful, the end product will be pig iron, which is used to improve the quality of steel that gets recycled.
"As we know steel is the most recycled material in the world," Mackenzie said.
Iron and Muskrat Falls
The company is hoping to use hydro electricity from the proposed Muskrat Falls dam to smelt the iron ore that is produced.
But the success of the product depends on its quality. The sand will need to go through a smelter to gauge the quality of the iron.
Hoffman said if the quality is good, it could mean hundreds of jobs.
"It will translate into ultimately, I hope, a nice commercial operation and bring a lot of jobs to the community," he said.
If everything works out, the company hopes to begin mining next year.