Voisey’s Bay heading underground - Deal includes $100 million from Vale over next three years

Ashley Fitzpatrick afitzpatrick@thetelegram.com
Published on March 30, 2013
(Left to right) Jeff McLaughlin, VP of Vale's Newfoundland and Labrador operations, Premier Kathy Dunderdale and Natural Resources Minister Tom Marshall
photo by Joe Gibbons

Vale is taking its mining operation in Voisey’s Bay underground.

Construction work for the underground mine is slated to start in 2015, with first ore expected by 2019.

The commitment to the mine extension came as part of a new deal struck between Vale Newfoundland and Labrador and the provincial government.

The deal assures the current mining at Voisey’s Bay can continue uninterrupted while the company’s new, $4.25-billion processing facility at Long Harbour is completed.

It means mining operations at Voisey’s Bay can continue until at least 2035.

“It’s an important mine and extending it is important for us and the industry, generally. It’s a fabulous win-win,” said Gerry O’Connell of Mining Industry NL, who spoke

with The Telegram immediately following the announcement of the deal.

 “(And) with these kinds of mines, you never know. I meant they could go on for — Sudbury’s been going for 100 years,” he said.

The move underground will produce 800 jobs during construction. That will be on top of the 475 jobs associated with the ongoing, surface mining operation.

The new deal

According to Vale’s vice-president

of provincial operations, Jeff McLaughlin, the underground mine will offer about 400 mining jobs once up and running.

He was with Premier Kathy Dunderdale and Natural Resources Minister Tom Marshall for the announcement of the new agreement between the company and the province at Confederation Building in St. John’s Thursday.

The new deal is actually an update to the Voisey’s Bay Development Agreement.

An earlier update to the same, in 2009, stated Vale was to complete construction of its new hydrometallurgical processing facility at Long Harbour by Feb. 28, 2013. It included a limit on how much Voisey’s Bay ore could be sent outside the province for processing in the interim.

The new deal pushes back that timeline, giving Vale until 2015 to get the plant at Long Harbour up and running on Voisey’s Bay nickel concentrate.

Until then, the company is being given a limited exemption to the earlier cap on exports, to the tune of 84,000 tonnes of nickel concentrate from 2013-2015, with options for a further 15,000 tonnes under specific conditions.

$100-M payment from Vale

All exported concentrate must be replaced by equal imports to Long Harbour in future years.

As well, the province will receive a $100 million payment from Vale over the next three years.

Vale will not be permitted to send anything from Voisey’s Bay out of province from 2015-2019, providing plenty of feed to get things moving at the Long Harbour plant.

The premier told reporters the company faces serious penalties if they do not process concentrate in the province to the levels agreed, though she is not able to say publicly exactly what those penalties are.

“If timelines aren’t met, then damages will accrue to the province and they are substantial enough benefits that I think the company will be well disciplined in terms of meeting the benchmarks that are set down,” she said.

As for environmental assessment, the original work completed for the Voisey's Bay mine included the possibility of the mine extending underground and no further assessment is planned.

McLaughlin said no decision has been made on how the mine extension will be powered.

Options of diesel, wind and small hydro projects are all being considered.

Opposition applauds extension

The announcement was made to a meeting room filled with mainly Tory members, receiving a response of applause, chair thumping and calls of: “Here! Here!”

That said, the celebration was not all on the Tory side.  

Minutes after the announcement, Liberal leader Dwight Ball said the deal “builds on what I always believed was a good deal in the beginning,” referencing the original Voisey’s Bay agreement from 2002.

“Certainly we’ve gained a lot of experience over the years and I think right now this is a good day for Newfoundland and Labrador,” he said.

He said he wants to know more about where the $100 million figure came from, whether or not it is a fair compensation for pushing back the timelines. He is also looking at the protections in place against further delays.

 “These details were vague today. We’d like to get some more specific answers around that,” he said.

NDP leader Lorraine Michael said she is “very glad” the underground extension at Voisey’s Bay is moving ahead.

She said she has questions about the $100 million payment to the province.

“I’m not sure what the reasons for the slowdown on the facility are and that’s something that I (also) want to pursue, and find out why they are basically two years behind getting that finished,” she said.

McLaughlin says Vale staff are focusing on getting into detailed engineering and design. He said some limited exploration and gathering of geotechnical information will be required as part of that process.

“I think that’ll be the focus of the next several years. But we’ve got a good, long-life mine there,” he said.