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Vale gets nod for underground mining at Voisey’s Bay

Voisey’s Bay concentrator complex. Vale SA’s open pit nickel mine in northern Labrador will be expanded to include underground mining, extending the life of the operation by 15 years, the Newfoundland and Labrador government announced Thursday.

The Voisey's Bay open pit nickel mine in northern Labrador will be expanded to include underground mining, extending the life of the operation by 15 years, the Newfoundland and Labrador government announced Thursday.

The provincial government said it has also agreed to allow mining giant Vale to delay completion of its $4-billion nickel processing plant in Long Harbour, which was considered the linchpin of the original development deal signed in 2002.

The processing plant was supposed to be built by 2011, but an amendment to the agreement in 2009 pushed the date to February of this year.

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Under the revised deal announced Thursday, Vale now plans to start operations at Long Harbour in the second half of this year using imported nickel matte. Nickel concentrate from Voisey's Bay will be processed at Long Harbour beginning in 2015, the province says.

The delay represents a touchy political issue in Newfoundland. The Liberal government led by Brian Tobin walked away from talks with Inco Ltd. – Vale's predecessor – in 2000 after he accused the company of seeking escape clauses that would allow it to process concentrate outside the province.

At the time, Mr. Tobin famously declared that "not one spoonful" of ore would leave Labrador unless it was fully processed in the province.

It hasn't worked out that way.

Under the terms of the latest agreement, the mining company can continue sending nickel concentrate to processing plants in other provinces until 2015 – 10 years after the Labrador mine started producing.

On Thursday, Conservative Premier Kathy Dunderdale said the latest delay enabled the province to obtain more jobs and benefits from Vale, including an additional $100-million for the province over three years.

As well, the province said the amount of imported nickel concentrate processed between 2013 and 2015 will be matched by an equal amount to be processed later at Long Harbour.

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Under the original deal, the province agreed to allow the company to send 44,000 tonnes of nickel concentrate outside the province while the processing facility was being built. The new amendment says an additional 99,000 tonnes can be processed elsewhere.

About 5,000 people are employed at Long Harbour. The open pit mine at Voisey's Bay employs 475.

The proposed underground mine could create up to 350 permanent jobs, the company says. That doesn't include the temporary construction jobs.

"This is another example of this government's continued commitment to ensuring that Newfoundlanders and Labradorians benefit from the development of our natural resources," Ms. Dunderdale said in a statement.

The proposed underground mine is expected to produce about 40,000 tonnes of nickel annually, starting in 2019, which is when the ore from the open pit is supposed to run out. That means the mining operation could keep producing beyond 2030, the province says.

"Underground mining is the next natural evolution in our operations at Voisey's Bay," said Jeff McLaughlin, a vice-president at Vale's Newfoundland and Labrador Ltd.

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"The agreement provides Vale with the necessary additional exemptions … that ensure continuity of operations at Voisey's Bay while construction continues on the Long Harbour processing plant."

The company did not say how much it would cost to establish the new mine, about 35 kilometres southwest of Nain.

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