Some of the faces have changed, but
Discussions fell apart early this year when Inco refused the province’s requirement that it guarantee construction of a commercial processing plant within a specific timeframe, even if such a facility would render the project uneconomic. Since then, a new government headed by Premier Roger Grimes has taken power, replacing hard-liner Brian Tobin, now a federal cabinet minister. On the Inco side, Scott Hand has replaced Michael Sopko as chief executive of North America’s largest nickel producer.
The discussions are being held behind closed doors, though Mines Minister Lloyd Matthews recently told a business audience in St. John’s that the government’s position hasn’t changed (Mathews is the sixth minister to hold the Voisey’s Bay file.) “Unless there is a deal whereby Inco agrees to have full processing in Newfoundland and Labrador, there cannot be a Voisey’s Bay project. And by full processing, I mean processing to a point where a finished nickel product is exported.”
Having said that, the minister conceded that project delays have triggered concerns, among national and international investors, about the investment climate in the province. “The sooner we reach a deal with Inco, the sooner we send a positive message to the rest of the world.”
Matthews also indicated that the people of the province want to see the project move forward. “One has to remember that the ore in Voisey’s Bay renders no value to anyone as long as it sits in the ground. The project has the potential to bring substantial direct and indirect benefits to the province and its citizens, and notably to the Inuit and Innu communities of Labrador. I say it’s time to roll up our sleeves, focus on the task at hand, and try to reach a deal that the people of Newfoundland and Labrador will support.”
A deal would also trigger more exploration spending in the province, which has slumped to about $22 million from highs many times that in the mid-1990s. “With an agreement on Voisey’s Bay, we expect this number to grow by at least $10 million annually,” the minister said. “This, in turn, will create new opportunities in our mineral sector.”
For its part, Inco had previously proposed to develop Voisey’s Bay in two stages. The first phase, budgeted at $750 million, would involve construction of a 6,000-tonne-per-day mine and mill at Voisey’s Bay. Another $95 million would be spent on a major underground exploration program.
On the processing side, a $180-million process research and development program would include construction of a pilot plant in the province. The facility would evaluate the company’s new proprietary hydrometallurgical technology to process Voisey’s Bay ores. If all goes well, this would be followed by construction of a full-scale plant.
At Inco’s annual meeting in April, Hand told shareholders that informal talks with government officials led to renewed optimism that solutions can be found to resolve the impasse at Voisey’s Bay. “There are doubtless challenges ahead, but I believe we’re all willing to find a solution that works for all of us. It’s not a question of whether, but when, we develop Voisey’s Bay.”
Hand added that Voisey’s Bay could conceivably be developed at the same time as the Goro nickel project in New Caledonia, and that new partners may be brought in for both projects.
The US$1.4-billion Goro project is expected to produce 54,000 tonnes nickel and 5,400 tonnes cobalt annually at a cash cost under US$2,200 per tonne. Construction is slated to begin this year, with commercial production to follow by late 2004.
Inco says Goro’s laterite ores have responded well to its pressure-acid-leach (PAL) technology, which differs from the PAL system that has been used, with limited success, in Western Australia (see page B1).
Gordon Bacon, vice-president of technology and engineering, said the US$50-million pilot plant is working well, with overall recoveries of 96% for nickel and 94% for cobalt. He added that Inco’s growing expertise in hydrometallurgical techniques will benefit research into the treatment of Voisey’s Bay ores.
The most contentious issue yet to be resolved at Voisey’s Bay is Inco’s proposal to transport concentrates from Voisey’s Bay for final processing at its Sudbury smelting complex in Ontario, during the initial phase of operations. Matthews indicated that this option will be considered, albeit with conditions. “If some concentrate needs to be exported while the mine-mill and processing facility is being developed, we would seek to ensure that, over the life of the project, an equivalent amount of ore will be processed in the province.”
If a deal is finally made, the minister said the province could have the first hydrometallurgical refinery capable of processing sulphide ores. “This plant could be used to process ore from other parts of the world long after our ore resources have been depleted.”
Construction costs for a commercial hydrometallurgical plant are estimated at $1 billion. A further $1.2 billion in capital expenditures would be made over the 30-year life of the project for expansions and sustaining capital.
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