Vale cut not ‘fatal’ to city’s economy – by Harold Carmichael (Sudbury Star – January 12, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Vale’s decision to cut in half the proposed $2 billion it would spend on a massive pollution-reduction project at the Copper Cliff Smelter site will affect local mining supply and service companies, but it’s not a fatal blow, says Dick DeStefano.

DeStefano, executive director of the Sudbury Area Mining Supply and Service Association, said local companies had about a 25% of Vale’s Clean Atmospheric Emissions Reduction project, which will now cost $1-billion. The members reaction, he said, is the work will be made up somewhere else.

“I haven’t heard one complaint because they made a business decision,” said DeStefano. “No one has called me up saying ‘I am losing a pile of money.’ Our guys are saying ‘let’s move on. There are other markets in other places. If we don’t see it here, there are others. We have to live with it.’”

DeStefano said the good news Thursday is the increased push to develop the Victor-Capre Mine and the Copper Cliff Mine brownfield site, which he said, could lead to $500 million-plus of investment at each site, more than making up for the lost $1 billion from Clean AER.

While he accepts that the Clean AER announcement was a business decision, DeStefano said the Copper Cliff Smelter could run into problems down the road when it operates with just one furnace.

“What happens if there is an increase in (precious metals and platinum-group metals)?” he asked. “What happens with only having one furnace is they would have to ship (precious metals and platinum-group metals) out and it could be processed by Xstrata.”

Vale is an important customer for local mining supply and service companies, which do about up $800 million worth of business annually in Greater Sudbury with the mining giant, DeStefano said.

A total of 120 of the more than 300 local mining supply and service companies are members of the Sudbury Area Mining Supply and Service Association. Those 120 companies employ about 13,000.

David Davidson, senior metals analyst with Paradigm Capital Inc. in Toronto, said the Vale announcement Thursday should not be a shock as these are difficult times in the mining business worldwide.

“There’s not a lot of profit being made in any sector, whether it’s nickel or gold,” he said. “You do what you need to do to make things leaner and meaner. It’s not just Sudbury. It’s a global issue.”

Davidson predicts nickel — which was selling for US $7.92 pound Friday afternoon — will sell for $8-plus as 2013 progresses.

“The stainless steel industry is starting to pick up,” he said. “The first half of the year is good for stainless steel. There’s not a lot of scrap around.”

That lack of stainless steel scrap, Davidson said, will result in a healthy demand for new nickel in the months ahead.

Greater Sudbury native Stan Sudol, who runs the The Republic of Mining website, which is devoted to mining, said Vale’s announcement Thursday has both up and down sides.

“On the positive side, Vale is still committed to spending $1 billion, instead of the original $2 billion,” he said from Toronto. “And we will get cleaner air. (When completed, Clean AER will reduce sulphur dioxide emissions at Vale’s smelter by 70% from current levels, as well as dust and metals emissions reduced a further 35 to 40%.)

“The really great part of the announcement is they are accelerating Copper Cliff Mine and Victor-Capre. The Copper Cliff deposit is a brownfield site. Victor-Capre is very rich. It’s going to be a deep one. I think Victor-Capre and Copper Cliff (investment), they will really make up for that $1 billion they have taken away from the AER project and perhaps much more.

“There’s very rich platinum-group metals and copper at Victor-Capre. Anything that has rich PGMs is a wonderful bonus, especially in the Sudbury Basin. And Totten Mine is still coming on line.”

On the negative side, said Sudol, anytime you take $1 billion in proposed spending out of a community, it impacts business and residents. As well, Vale has also now demonstrated it is looking at other refining and processing scenarios across Canada and that could impact on the Copper Cliff smelting complex.

“With the completion of the new refinery in Newfoundland, some rationalization of the smelters in Sudbury and Thompson (Manitoba) was necessary,” he said.

But, the future of mining in Greater Sudbury hasn’t lost any of its lustre, said Sudol.

“There are still many, many new deposits to be discovered in the Sudbury Basin,” he said. “It’s not just the mines. You have a really large global exporting supply and service sector, a high concentration of mining education, and a lot of mining research including the new school of mining at the university (Laurentian). We are doing all that is right.

“Mining is our strength … We are the hard-rock mining capital. There’s still enormous potential in mining Sudbury and in finding new deposits.”

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