Inco, government talks hint at deal — Hydrometallurgical plant may meet processing demand

Talks between Newfoundland’s minister of mines and energy and senior officers at Inco (N-T) continued in Toronto in late November, suggesting the two sides may be close to a deal allowing development to begin at the Voisey’s Bay nickel-copper deposit in Labrador.

The discussions between the minister, Roger Grimes, and Inco President Scott Hand started informally on Nov. 14 when Inco delivered a new development proposal to the government. The talks triggered speculation that Inco had floated plans aimed at ending the deadlock between the parties on the Voisey’s Bay development.

Those plans presumably addressed the government’s demand that Inco fully refine Voisey ores in the province — an issue the government has forced by refusing to grant a mining lease over the property.

In late 1996, Inco unveiled conditional plans for a smelter and refinery at Argentia, on the Avalon Peninsula. However, the company has insisted since early 1998 that a full smelter and refinery was not justified by the mineral reserve at Voisey’s Bay.

The government, insisting that Inco had made a definite commitment to the Argentia smelter, broke off negotiations in July 1998 and subsequently changed the province’s Mineral Act to give the minister authority to refuse to grant a lease. Mining leases are normally available to a mining claim holder, provided reguatory requirements are met.

Over the past two weeks, government representatives, including Premier Brian Tobin and Mines Minister Grimes, have made public statements that Inco is now considering some development option that would see a measure of processing in Newfoundland. The public statements have avoided any specifics about what Inco’s new proposals might be.

Newfoundland government offices referred enquiries to communications staffers in the premier’s office and at the Ministry of Mines and Energy, though none was available for comment at presstime.

Some of the speculation surrounding Inco’s proposals has turned on the premise that Inco would abandon its plans for a smelter, but build a hydrometallurgical plant in Newfoundland. Inco had previously dismissed the hydrometallurgical proposal on technical grounds, but a plant could have lower front-end costs than a smelter.

The cost of capital having been one of Inco’s major deal-spoilers, a lower-cost plant might be feasible, even if it meant higher operating costs.

The difficulty in using hydrometallurgy on Voisey’s sulphide mineralization is that most leaching technologies work on weakly bound metals, not on nickel and copper sulphides. Most conventional hydrometallurgical techniques would produce large quantities of sulphate or elemental sulphur if used on the sulphide mineralization seen at Voisey’s Bay.

Should Inco decide to take the hydrometallurgical route at Voisey’s Bay, there could be new delays to development of the project if the company’s environmental impact studies are considered inadequate and need to be revised.

In a related story, Inco has declared force majeure on some sales contracts, citing the work stoppage at its division in Thompson, Man. Inco locked out its employees there in mid-September, and talks between Inco and United Steelworkers local 6166 to reach a new collective agreement have twice broken down.

The language of the affected sales contracts does permit Inco to declare force majeure even though it had locked out its employees.

Pension provisions and wages are the two matters at issue in the dispute. The union is seeking pension benefits identical to those enjoyed by Inco’s Sudbury workers, who are also represented by Steel. Inco offered a flat $3,000 bonus and incentives based on nickel prices, but that proposal was turned down in a vote on Nov. 18.

A proposal from Inco for smelting and refining, or hydrotreating, Voisey ores could be a signal to the Thompson union that Inco is reconsidering plans to smelt Voisey nickel concentrate in Thompson. In previous contract negotiations — notably during the long strike at the Sudbury division in 1978 — the company made a point of signaling to the union that it has other facilities that could take the place of the operation embroiled in the dispute.