Vale green-lights underground mine at Voisey’s Bay

The natural resources industry of Newfoundland and Labrador — beaten down as it is by the steep decline in iron ore and oil prices — has received a most welcome board-level confirmation from Vale that it will indeed pursue underground mining at its Voisey’s Bay nickel-copper-cobalt mine in northern Labrador, once the open pit is exhausted in 2020.

Based on current resources, that would add at least another 15 years of life to the mine, which started operations in 2005.

The Voisey’s Bay site consists of a 6,000-tonne-per-day open pit and a concentrator that produces nickel-copper-cobalt concentrate, plus a copper concentrate, at a rate of 40,000 tonnes of nickel in concentrate per year. The remote, coastal site is accessible by air and sea, with concentrate stored and shipped out on a seasonal basis before the site is locked in by ice.

The decision to go underground at Voisey’s ensures a steady feed of nickel concentrate to Vale’s new US$4.3-billion Long Harbour Processing Plant (LHPP) in the town of Long Harbour on southeastern Newfoundland’s Avalon Peninsula.

Some 450 people work at Voisey’s Bay on a fly-in, fly-out basis and another 475 are employed at LHPP, an innovative hydrometallurgical plant that began operations in 2014, and is ramping up towards its nameplate capacity to produce 50,000 tonnes of finished nickel annually.

Initial work on the underground program at Voisey’s will start next year, creating hundreds of jobs, and once it’s fully operational next decade, full-time employment at Voisey’s Bay will almost double to 850 people.

Despite being 1,129 km apart, Vale considers Voisey’s Bay and LHPP as an integrated operation, with nickel concentrate from Voisey’s Bay sent by ship to Long Harbour for processing into finished nickel, plus copper and cobalt products. 

(Building a processing plant on the island of Newfoundland was famously a non-negotiable requirement set down by the provincial government before it would grant a mining permit for Voisey’s Bay. While the LHPP was conceived, built and tested, Voisey’s Bay concentrate was allowed to be shipped to the Inco/Vale nickel smelters in Sudbury, Ont., and Thompson, Man., as long as any such shipments were some day balanced with nickel feed coming into Newfoundland from outside the province. By next year, all of the feed processed by LHPP will come from Voisey’s.)

At the end of 2014, the remaining open-pit reserves at Voisey’s Bay stood at 14.7 million tonnes grading 2.4% nickel, 1.3% copper and 0.1% cobalt. Open-pit mining has targeted the rich Ovoid deposit, as well as the lesser Mini-Ovoid zone and the near-surface part of the Southeast Extension deposit.

Most of the remaining resource at Voisey’s Bay is contained at depth in the Eastern Deeps zone, 2 km southeast of the Ovoid, and in the Western Extension, which includes the Discovery Hill and Reid Brook zones. When open-pit mining began in 2005, these underground resources stood at 40 million indicated tonnes grading 1.9% nickel, 1.9% copper and 0.1% cobalt, plus another 6 million inferred tonnes at 1.9% nickel, 1% copper and 0.2% cobalt.

With the underground material grading quite a bit lower than the open-pit reserves, the plan has long been to ramp-up underground mining and concentrating rates to maintain that final output rate of 40,000 tonnes per year of nickel-in-concentrate.

This would mean scaling up and improving surface infrastructure and other facilities at Voisey’s. For example, the remote mine site has been powered by diesel all these years, but now Vale is studying hooking up the mine to the provincial grid.

Vale produced 67,100 tonnes of nickel globally in the second quarter of 2015, in line with the previous quarter, even with production interruptions in Sudbury and planned maintenance shutdowns in Indonesia and New Caledonia.

Vale is upbeat on nickel’s prospects, and sees the following pro-nickel developments: Chinese net imports of ferronickel and unwrought nickel have improved to their highest levels in over six years, as Chinese stainless steel mills increased imported nickel consumption; stainless steel scrap discounts in Europe have been reduced, indicating more scarcity of supply; and transaction prices for non-LME deliverable nickel units have improved, relative to the nickel price.