Alderon seeks a power deal with Nalcor

Ashley Fitzpatrick
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Company is meeting targets for development of Kami iron ore mine

President and CEO of Alderon Iron Ore Tayfun Eldem speaks with The Telegram at the Sheraton Newfoundland Wednesday. — Photo by Keith Gosse/The Telegram

The president and CEO of Alderon Iron Ore, Tayfun Eldem, says the company is poised to become the next major iron ore producer out of Canada.

That assumes all of the pieces required for development of its Kami iron ore mine site, near Labrador City-Wabush, continue falling into place.

One required piece is power. When Alderon’s executive chairman, Mark Morabito, spoke with reporters about the project in early June, he labelled power as the biggest issue for the project.

The company submitted a formal request for power to Nalcor Energy at the end of 2011, Eldem said Wednesday, speaking with The Telegram outside a Mining Industry NL’s investor forum presentation room at the Sheraton Hotel.

That application is still being assessed.

“We continue to work with Nalcor. Nalcor follows a very prescriptive, three-stage process in terms of project development. We’ve finished Stage 2,” Eldem said, explaining he expects the work to last another 90 days.

“What they’re doing right now is they’re trying to assess (first): is the power available — in terms of energy — which I think that they’re confident that they can supply the energy. And the second piece is: does the transmission infrastructure need any upgrades?”

The debate around the Lower Churchill development at Muskrat Falls has included discussion of whether the project would be used to supply power to mining projects in the iron ore-rich Labrador Trough.

“They now have a very clear idea of what it’s going to take for them to bring power to our site,” Eldem said.

“They’re moving into Stage 3, which then looks at what aspects they need to look at in terms of technical permitting, engagement and they’re about to start that process. At the end of that, then we’re going to go into a power purchase agreement with Nalcor.”

Power supply is not the only item the Alderon team has been working to put in place.

Alderon staff are finishing the project’s feasibility study — expanding, in detail, upon the preliminary economic assessment for the project. The feasibility study is expected to be released publicly next month.

Within two weeks, Eldem said, the company will submit an environmental impact statement for the project. The major document will detail the mining project for regulators and, again, be publicly available.

“We expect to be cleared from environmental assessment towards the end of next year,” he said.

At the same time, aboriginal consultations are ongoing with five separate groups — three based in Quebec and two in Newfoundland and Labrador.

“Those discussions are going very well,” Eldem said, adding impact benefit agreements may come into play.

The company hopes for a decision to come out of the environmental assessment as early as October 2013.

An approval would allow major construction to start.

“We are essentially executing the plan we set out for ourselves and we continue to hit every milestone as we’ve laid out,” Eldem said, adding he felt it was important to note the company has officially opened its Labrador City office and now has a senior manager based there, focused on developing a labour base for the project.

The aim of the company is to move the mine project into production by the end of 2015.

As for financing, the company is partnered with Altius, Hebei Iron and Steel, and Liberty Metals and Mining, a division of Liberty Mutual.

If approved, the company hopes to produce 16 million metric tonnes of iron ore a year from Kami.

afitzpatrick@thetelegram.com

Organizations: Labrador City, Sheraton Hotel, Stage 2 Liberty Metals Division of Liberty

Geographic location: Alderon Iron Ore, Wabush, Quebec Newfoundland and Labrador

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Recent comments

  • Dave Moore
    September 20, 2012 - 19:38

    Seems to me that NALCOR can ask as much as they like from Alderon. No need for a sweetheart deal. Who else would provide the power? Despite that, I suspect that the province's people will see only red in the ledger when all is said and done and a select few will cash in big over the deals that are arranged now.

  • Eli
    September 20, 2012 - 10:15

    The dirty linen driving Muskrat Falls gets muckier with each passing week. We're screwed people, plain and simple. Again I ask, where the hell are the MHA's? Vote or no vote, she can't pass something not approved by the majority of her "carcass". The MHA's have to be smoked out.

  • S Reid
    September 20, 2012 - 08:54

    If the Telegram had a journalist at the Alderon shareholders meeting he/she would have noticed the prominent members of the Liberal party who were there as shareholders. It would be worthwhile to ask some very prominent Liberals (more than one) if their ownership of Alderon shares is causing their muted position on Muskrat Falls. Don't want to upset the grassroots while still personally profiting?

  • Maggy Carter
    September 20, 2012 - 08:46

    The Kami iron ore project will prove to be a highly profitable investment for its owners - no different from Hebron or other major non-renewable resource developments in this province. When he was premier, Williams demanded that Exxon and its partners agree to royalty and other terms that would give Newfoundland a reasonable share of the wealth generated by Hebron. It would have been laughable to think that Exxon would turn around and ask government for an operating subsidy for their project. But that is no doubt exactly what Alderon and Williams are seeking for their Kami project. Mr. Eldom did not disclose the rate his company is seeking in its proposed deal with NALCOR - a deal that is tied to the development of Muskrat Falls. What we can easily guess however is that the rate being targeted by the company is well below the cost of producing power at Muskrat and well below the cost of power to ordinary homeowners in this province. In effect, Alderon and Williams are asking those homeowners to accept a series of huge rate increases for decades to come so their company can jack-up the already lucrative rate of return from their new development. Companies can ask what they want - however outrageous - and former premiers can choose to advise them on how to go about getting it, but ultimately it will be down to this sitting premier to decide whether our children's future should be ransomed in order to feed the greed of large corporations. Sadly, it appears that Dunderdale is ready to do exactly that. She is girding herself for a quick and dirty debate in the House of Assembly in which she will present a carefully constructed, one-sided argument for Muskrat that will all but ignore the real reasons for proceeding with the project. The question is whether there are enough back-benchers with some semblance of a conscience, some smidgeon of intellect, some modicum of back-bone who might be prepared to stand up to their own leader. If they don't do it for all the right reasons - safeguarding the public interest they were elected to serve - then maybe they can at least do it to protect their own interests. Even before the ceremonial switch is pulled at Muskrat, the true absurdity of this boondoggle will be evident to every voter in this province and there will be only disgust and contempt for anyone who had a hand in bringing it about.

  • Foghorn Leghorn
    September 20, 2012 - 08:43

    Reminds me of an old saying - I see, said the blind man!

  • John Smith
    September 20, 2012 - 08:23

    Well Brad, those costs are included. That line is so that they can transfer power back and forth between muskrat and the upper churchill to balance water flow at different times of the year. When the whole system is up and running they will be able to use the UC Bay D'espoir and muskrat as one large resovoir. It's interesting to see the same old commenters here, with the same old diatribe. We need to grow industry in the province, we need to develop our natural resources, we need to meet our future power needs. What is wrong with you people?You have no factual basis for anything you say. It sounds as if just because you hate Danny Williams and the PC party that we should close up shop and go sit on the wharf and draw welfare. Well, that may be OK for you guys, but I think there are others here who don't want to go back to that lifestyle. Develop or perish...

    • Eli
      September 20, 2012 - 10:06

      Develop or perish was Joey's desperate modus operandi and it sunk us! The Upper Churchill comes to mind with a Rubber Boot & Chocolate Bar enterprise as supporting failures. What history book are you reading from John?

  • Brad Cabana
    September 20, 2012 - 07:27

    There are so many particulars missing from this story. For instance, "They now have a very clear idea what its going to take to bring power to our site." What the CEO doesn't say is that a massive, new transmission corridor has to be built between the Upper Churchill facility and Lab West, because, in the words of Alderon's Morabito "Lab West is tapped out." In other words, Lab West's distributuion system is maxed and a separate feed must be built at $100's of millions of dollars.Are those costs included in DG3 numbers? Is the taxpayer paying that bill? The answer is likely no to the DG3 #s and yes to the taxpayers paying. Will the telegram ask those questions?

    • Ashley Fitzpatrick
      September 20, 2012 - 08:24

      Brad, of course we will ask the questions. Nalcor has previously said builds would come with power agreements. So it now falls to us to go to them and ask if they're prepared to take on building new infrastructure for the mines and at what cost.

  • Cold Future
    September 20, 2012 - 06:39

    Give Alderon a deal that they cannot refuse. Let them pay the full development cost of Muskrat power, about 30 cents per kwh. No more giveawys on the domestic rate payers backs. Let Vale be the last. We have in the past given away the ore and then given them a power deal to boot-time to stop that lame brained foolishness-long may the waters at Muskrat Falls flow freely.

  • William Daniels
    September 20, 2012 - 06:15

    If Danny wants to play let him pay. We are already subsidizing law firm.

    • wtf
      September 20, 2012 - 07:49

      ?????