In the face of volatile market conditions and operating cost challenges affecting the broader mining sector, work began last year to reinvent the business model for Base Metals through a comprehensive review of all projects and operations. A wide range of opportunities are being explored to drive value in the business.
Changes in our asset footprint, such as the commissioning of our Long Harbour project in Newfoundland, together with decisions to optimize and redistribute the flow of raw materials, have made the move from a two-furnace operation to a single-furnace operation at our Copper Cliff Smelter the next logical step for the business. The current and future mine plans in Ontario do not support a two-furnace operation.
A move to a single furnace is years away, but preparation for this move will mean changes to the Clean AER Project in the immediate future. The outcome of this move to a single furnace, combined with adjustments to the Clean AER Project, will be reductions in annual SO2 emissions more than 50% greater than contemplated in the original Clean AER plan at approximately half the capital investment. This represents a significant investment of $1B in our Ontario operations while reducing sustaining capital requirements by $1B over the next two years.
We do expect that over the next several years there will be fewer jobs in the smelter complex with a change to a single furnace – but given the lead time we will look for ways to minimize any impacts.
The new plan involves minimal short-term adjustments to Sudbury mine production. New high-value brownfield mine development projects such as Copper Cliff Mine will proceed and the Victor Capre project will be accelerated. Going forward, mining in Ontario, as it is in the rest of the global base metals business, will be driven by our commitment to pursue opportunities that generate value in the business. Total refined nickel production will not change.
A team has been formed to study the various aspects associated with this change and over the next year this team is tasked with putting together revised plans for a single furnace operation. At this time we don’t envision moving to a single furnace before 2016.