The Mighty Sudbury Basin – Politically Secure, Enormously Pro-Mining and Geologically Rich – is on a Mine Building Boom – by Nick Stewart (Part A)

This article was first published in Northern Ontario Business, a newspaper that has been providing northerners with relevant and insightful editorial content, business news and information for over 25 years.

While much of southern Ontario’s manufacturing economy is taking a beating, Sudbury and its mineral industry is riding high with record capital investments in mining. Here’s a round-up of what’s going on with the big and small producers.

Xstrata Nickel

The world’s fourth-largest nickel miner has a series of major local investments on the go and recently received approval from head offices in Switzerland for $455 million to move them forward.

Of that total, $280 million will be spent on developing the new Fraser Morgan mine, which goes into operation in 2010, producing 7,000 tonnes of nickel per year. Up to $70 million has been spent on the project to date.
The remaining $175 million will go towards the local Strathcona Mill, which currently handles 2.4 million tonnes of ore. The investment will expanded that to 3.4 million.

These are just a small part of Xstrata’s local growth plan, which includes bringing its flagship Nickel Rim South mine into production in 2009, having first hit upon its value in 2001. Once fully operational, it will annually produce between 12,000 and 15,000 tonnes of nickel, 50,000 tonnes of copper and several hundred ounces of precious metals.

The new mine is expected to carry a final price tag of $800 million, with $500 million US spent on the project thus far.

“For Xstrata Nickel, that will probably be the best mine we’ve ever developed in Sudbury in terms of value,” says Mike Romaniuk, vice-president of Ontario operations for Xstrata Nickel.

By 2010, the Fraser Morgan and Nickel Rim South mines will nearly double the production numbers at the Sudbury operations, which are expected to produce from 17,000 to 20,000 tonnes this year.

Other projects include improving the smelter, which is set to expand its capacity from 65,000 tonnes per year to 85,000 tonnes per year.

All these projects require a bigger workforce. This year, Xstrata Nickel’s Sudbury operations will surpass 1,900 employees and will reach 2,000 by 2009, a marked jump over the 1,400 seen in 2006.

Xstrata is also armed with a $25 million exploration budget this year and still has plenty of property left to find the next big deposit, having drilled less than half their total land holdings in the
Sudbury camp.

With various operations winding down by 2018, Xstrata wants to find another mine by 2010, given that it typically takes eight years to bring a mine into production.

Vale Inco

The planet’s second biggest nickel miner has a slew of massive projects in the pipeline, all scheduled to come on stream within a few years. In total, Vale Inco will also spend the majority of a $600 million capital budget in Sudbury this year with 500 new people coming into the workforce.

The $400-million Totten Mine, now under construction, is the nickel producer’s first one in the Sudbury camp in 35 years.

The former-producing mine was closed more than 30 years ago, and is set to begin full production in 2011. With an expected lifespan of 20 years, the mine will create 150 jobs.

The Copper Cliff Deep project, still in the feasibility stage, would see the shafts from the North and South mines replaced with a new, single shaft. This would allow for access to deeper ore zones, including the Kelly Lake deposit, first discovered in 1997.

It’s estimated to contain 10.5 million tonnes of ore at 1.7 per cent nickel, 1.3 per cent copper and 3.6 grams per tonne of precious metals. If approved, the mine could begin production by 2013, with a staff of 450. Hatch Engineering is handling the feasibility work, with final approval for the project to be submitted later this year.

The Coleman Mine will see $132 million in investment to develop the 170 ore body, which features reserves of two million tonnes. Grades include 7.5 per cent copper, 0.5 ounces per tonne of precious metals, and 1 per cent nickel.

Development work has already begun and will continue through to 2012, when production is set to start, creating 76 full-time jobs for 10 years. The Redpath Group is building the mine, which involves 12,000 feet of lateral development and extending existing ramps.

Yet another look is being given to the historic Creighton Mine, Vale Inco’s oldest and deepest Sudbury mine.

With new mineralization found between the 7,000- and 10,500-foot levels, estimates have shown there’s the potential to practically double proven and provable reserves at Creighton from 17 million tonnes to 32 million. Grades would range from 1.9 to 2.2 per cent nickel and 2.0 to 2.3 per cent copper.

This means an extra 30 years of mining with the potential for more as work continues. Assay results are being analyzed from a deep exploration drilling earlier this year.

Local projections are up to produce a target of 298 million pounds of nickel through 2008, an increase from the production of 250 million pounds in 2007.

Vale Inco is also on the prowl for potential acquisitions, having raised $12 billion through a July share offering tabbed for takeovers and expansion. Acquisition talks between Vale and Xstrata collapsed earlier this year.