Vale green lights underground mine at Voisey’s Bay
Brazilian mining giant Vale SA [VALE-NYSE] is moving to capitalize on a buoyant nickel price by proceeding with development of an underground mine at its Voisey’s Bay operation, Newfoundland and Labrador, Premier Dwight Ball said Monday June 11.
Construction of the underground mine will proceed this summer, a move that will extend the operating life of Voisey’s Bay by at least 15 years. It will result in:
- Close to $2 billion in capital investment by Vale;
- 16,000 person years of employment during the five-year construction period, peaking at 4,800 in 2020;
- Once operational, 1,700 in jobs at the underground mine and Long Harbour processing plant;
- 2,135 person years in indirect and induced employment annually;
- $370 million per year in labour income;
- $1 billion in economic activity annually that will result in $69 million per year in provincial tax revenue.
First ore production from the underground mine is expected no later than April 2021 and provides for continuity of operations at the Long Harbour processing plant.
The initial announcement that the Voisey’s Bay Project would proceed occurred 16 years ago in June 11, 2002. Since construction began at the site, the project has generated some 35,000 person years of employment. Mining operations began in 2005 and approximately $15 billion worth of nickel, copper and cobalt has been recovered.
Eduardo Bartolomeo, Vale’s Executive Director of base metals, said the Voisey’s Bay Mine is a “huge source of pride” for the company, including the established relationship with the Inuit and Innu communities.
“They are not only our neighbours, but also our employees, our service providers, our partners in so many aspects of our operation,” he said.
Bartolomeo said Vale has always been committed to Voisey’s Bay. However, a worldwide decline in the nickel price forced the company to put underground development plans on hold.
However, the outlook for nickel looks considerably brighter going forward, according to a recent commodity trends report by Desjardins Group.
“An uptrend in nickel prices has been noted since mid-2017, putting the metal above US$14,500 per tonne, over a 17% gain since the beginning of January, 2018,” the report said.
The considerable decline in inventories appears to support this growth, the report added. Inventories have now reached the level they were at in June 2014, when the price was US$5,000 higher. The strong demand expected for 2018 and 2019 could cause inventories to continue to shrink and prices to rise.
Desjardins is also bullish on the outlook for cobalt, a more secondary metal that recently saw its price nearly quadrupled from 2016.
Produced as a by-product at nickel and copper mines, cobalt has grown widely in popularity because of the growth in the electric vehicle battery market.
This increase could lead mining companies to invest in copper and nickel mines since it is mainly from such mines that cobalt is extracted, Desjardins said.