Birchtree Mine dodges a bullet: Vale says ‘care and maintenance’ no longer scheduled for August – by John Barker (Thompson Citizen – May 9, 2013)

The Thompson Citizen, which was established in June 1960, covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000. [email protected]

Reprieve comes less than four months before mine faced being mothballed

Birchtree Mine, which opened in 1968, is “no longer scheduled to be placed on care and maintenance in August,” Lovro Paulic, vice-president for Vale’s Manitoba Operations, told employees in an internal Manitoba Operations update circulated Monday. The company had announced last Oct. 18 care and maintenance was being considered for Birchtree Mine in 10 months time, leaving Thompson in a state of suspended animation of sorts over the last seven months. The mine was previously on care and maintenance from 1977 to 1989. The current life of mine plan anticipates closure of Birchtree Mine at some point in the next 10 years.

Vale, which is trying to find $100 million in cost savings at its Manitoba Operations in Thompson to help bring its cost per metric tonne for finished nickel to under US$10,000, says they have achieved 90 per cent of that goal over the last eight months – a cost savings of $90 million with $10 million still to go. The reprieve for Birchtree Mine is “as a direct result of our collective efforts” to achieve that cost savings, Paulic wrote to employees.

Vale is also looking to “secure a strategic investor” to more quickly develop its 1-D Lower ore body, a project first announced almost eight years ago on Aug. 19, 2005, and studied for close to a decade before that to determine if it could be mined profitably. The ore body is a complex structure and traditional bulk mining methods will not produce ore economically. The 1-D Lower ore body is located between the 3,600-foot and 4,160 foot levels at the north end of T-3.

“Pursuing an investment partner will enable us to move forward with unlocking the full potential of the resource more quickly than otherwise would be possible,” Paulic wrote. Drilling at 1-D continued over last winter to better delineate and define the mineral resource at depth, a critical factor in advancing the project.

Manitoba Operations produces nickel, copper, cobalt and has associated gold, silver, platinum, sulphur, selenium and palladium deposits.

The one-page May 6 update from Paulic makes no mention of the smelter and refinery, which could close as early as January 2015 – or a year or so later – depending on several factors. Vale is on record as saying they want to keep the smelter and refinery open here until Dec. 31, 2015. The two biggest factors determining whether the smelter and refinery will stay open beyond January 2015 are whether pending new federal sulphur dioxide (SO2) emission standards, expected to come into effect in 2015, which would require a reduction in airborne emissions of approximately 88 per cent from current levels at the Thompson operation are delayed, and how quickly Vale’s Long Harbour processing facility in Newfoundland and Labrador ramps up over the next few months. The lights and power are going on in Long Harbour now and some limited processing as early as September is possible.

Vale is building a state-of-the-art processing facility in Long Harbour in southeast Newfoundland on Placentia Bay on the western Avalon Peninsula, about 100 kilometres from St. John’s. The Long Harbour plant is Vale’s first processing facility in Canada located on tidewater. It will process nickel concentrate produced at the Voisey’s Bay, which has been processed in Thompson, the company says.

Cost overruns with construction delays are expected to drive the originally estimated $2.8 billion construction cost to more than $4 billion by the time it is ready to go into full operation. Long Harbor was originally scheduled for completion in the first quarter of 2013.

The closure of the Thompson smelter and refinery, the world’s first fully integrated nickel operation, which opened March 25, 1961, was announced by Vale on Nov. 17, 2010.

As a result of the planned smelter an refinery closure, the NDP provincial government introduced The Thompson Nickel Belt Sustainability Act, on June 2, 2011 during the fifth and final session of the 39th Manitoba legislature, and it passed third reading and received royal assent on June 16, 2011. The legislation, which has yet to be proclaimed, calls for the fund’s board to consist of at least five and not more than 11 directors appointed by the provincial cabinet for terms not to exceed three years. In making appointments to the board, the cabinet “must have regard to the desirability” of having a board that includes one or more representatives from the City of Thompson; Vale; organized labour; organizations that represent aboriginal peoples; the federal government and the general public.

Section 4 (a) of the Thompson Nickel Belt Sustainability Act, with its reference to the Thompson Nickel Belt Economic Development Fund, specifies the “operation of the fund is to be supported by amounts appropriated by the legislature for the fund, which amounts are to be determined with reference to the taxes paid by Vale under The Mining Tax Act.”

The money Vale pays now under The Mining Tax Act goes into the province’s general revenues and is not segregated in a fund or otherwise separated out.



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