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]
Pending federal sulphur dioxide (SO2) emission standards issues remain, as do questions over availability of nickel sulphide concentrate feed
“On the business side of things, the often talked about last year $100-million challenge, was, we have to say, a roaring success,” Mark Scott, general manager of mining and milling for Vale’s Manitoba Operations, told about 30 members and guests at the Thompson Chamber of Commerce’s weekly luncheon May 28, as he delivered a presentation entitled, “Standing on our own Two Feet.”
At the same time, however, Scott sounded a new cautionary note on the possibility of the smelter and refinery remaining open beyond next year, saying the “base case remains” that they both “will close at some point in 2015.”
Pending federal sulphur dioxide (SO2) emission standards issues remain, as do questions over availability of nickel sulphide concentrate feed, he said. The announcement that the smelter and refinery would close was originally made on Nov. 17, 2010, with Vale saying at the time it was “phasing out of smelting and refining by 2015” in Thompson.
Almost two years later, in October 2012, Vale announced a possible one-year extension for the Thompson smelter and refinery, contingent on federal sulphur dioxide (SO2) emission standards approvals, to no later than Dec. 31, 2015 because of construction delays at the now open state-of-the-art hydromet processing facility in Long Harbour in southeast Newfoundland on Placentia Bay on the western Avalon Peninsula, about 100 kilometres from St. John’s. It will also process sulphide concentrate feed produced at Voisey’s Bay in Labrador, which has been processed in Thompson. The Long Harbour plant is Vale’s first processing facility in Canada located on tidewater. Long Harbor was originally scheduled for completion in the first quarter of 2013.
Pending new federal sulphur dioxide (SO2) emission standards, pursuant to The Canada-Wide Acid Rain Strategy for Post-2000, set to come into effect in 2015, are still set to come into effect, Scott stressed, although Vale and federal government officials continue to talk about the possibility of extending that deadline.
The Canada-Wide Acid Rain Strategy for Post-2000 was agreed to in 1998 by federal, provincial and territorial ministers of energy and environment to fulfill an earlier commitment in their 1994 “Statement of Intent on Long-Term Acid Rain Management in Canada,” which in turn built on the 1985 Eastern Canada Acid Rain Program.
Ryan Land, manager of corporate affairs and organizational development for Vale’s Manitoba Operations, had said May 6 that “largely as a result of challenging market conditions, and in order to align with the ramp-up of projects (which at some point may include a concentrate load-out facility for Thompson), there may be an opportunity to keep the smelter and refinery in operation for an extended duration.
“As a result, we do continue to participate in discussions with the federal government and have requested further flexibility on the date for meeting the emissions targets. We did previously receive approval to operate the plants until the end of 2015, which is already very positive for the community and our employees. While we are hopeful that we can further extend the deadline, we will still transition to mining-and-milling-only at some point between 2016 and 2019,” Land said at the time three weeks ago.
Scott, however, said May 28, “as of today, the base case remains the smelter and refinery will close at some point in 2015.”
About 32.1 per cent of Vale’s Manitoba Operations current workforce – or 450 of about 1,400 employees – work in the smelter and refinery. Employees hired before Oct. 1, 2011, have the option to transfer to the mill or underground to the mines from surface operations when the smelter and refinery close under the company’s transition plan.
The Thompson smelter and refinery, which opened March 25, 1961, was the free world’s first fully integrated nickel operation and built at a cost of $185 million.
Vale began looking for $100 million in cost savings at its Manitoba Operations to help bring its cost per metric tonne for finished nickel to under US$10,000 on Sept. 6, 2012, when Peter Poppinga, who less than a year earlier had replaced Tito Martins in Toronto as chief executive officer of Vale Canada, and also became executive director of base metals globally for Brazilian-based mining giant Vale, told company managers “that every aspect of the base metals business is under review,” including Manitoba Operations.
In the first eight months, Vale’s Manitoba Operations achieved 90 per cent of that goal – a cost savings of $90 million – which resulted in a reprieve for Birchtree Mine, “as a direct result of our collective efforts” to achieve that cost savings, Lovro Paulic, vice-president of Manitoba Operations, the highest ranking local company official, wrote to employees May 6, 2013. Birchtree had a Sword of Damocles hanging over it for almost seven months – from Oct. 18, 2012, when it was scheduled to be placed on care and maintenance as of last August, Paulic, Don Wood, general manager of production services, and Scott had written in a joint letter to employees – until Paulic’s subsequent letter May 6, 2013.
In terms of Birchtree Mine, “it is paying its own bills; it is generating positive cash flow. It has for the last year,” Scott said May 28, adding there are 182 people working at Birchtree currently.
Scott said compared to its original projected 2013 budget, prepared in mid-2012, Manitoba Operations actual cash spending, when it was tallied at the end of last year, came in 23 per cent under what was originally budgeted. Productivity last year was up 17 per cent from 2012, he said, resulting from a nine per cent production increase, based on producing “more than nine million pounds of metal more than was in last year’s budget,” Scott said.
The “Thompson Foot Wall Deep Project,” at the north end of Thompson Mine, previously known as Thompson (1D), entered the Front End Loading (FEL) 3 study stage, which looks at its feasibility, in Vale’s four-stage project development system May 27, Scott said. FEL studies typically look at planning and design early in highly capital intensive projects lifecycles when the ability to influence changes in design is still relatively high and the cost to make those changes is still relatively low. FEL 1 is the scoping study; FEL 2 is a “pre-feasibility” study stage; and stage four is the actual execution of the projection.
There are, however, several “important and very real hurdles left for us to get over with that project before it enters the execution stage,” Scott added. As well as positive results from the FEL 3 feasibility study, the Thompson Foot Wall Deep Project will require the approval of Vale’s board or directors in Brazil before it can move into the fourth and final execution stage, Scott told the audience.
The engineering component of the Thompson Foot Wall Deep Project FEL 3 will take a year to do, Scott said, followed by at least a year of reports being written, reviewed and approved from mid-2015 through mid-2016, before a final yes-or-no decision is made on whether to execute the project, said Scott.
If mining goes ahead at the Thompson Foot Wall Deep Project, nickel will be extracted down to 5,700 or 5,800 feet, Scott said, via ramp from the existing T-3 shaft. From T-3, the ore would be transferred via underground tunnel to T-1.
It can conservatively cost about $350 million in building more ramps and tunnels further underground, with air and ventilation going in over the next few years, and mining starting perhaps in 2018 or 2019, as opposed to going big and dropping another shaft underground in a far more expensive seven-year project that would cost about $1.2 billion.
In contrast to areas where they cut back last year from what originally forecast, in terms of exploration, Vale’s Manitoba Operations spent about three times what they had originally budgeted, Scott said, describing it as “a great vote of confidence from our organization in Manitoba Operations last year.” He said they drilled about 200,000 feet of diamond drill holes last year.
There are three mineralized sulphide domains in what has been often referred to just as the 1D Lower area: the Foot Wall, Mid Band and Hanging Wall bands, which are quite complex geologically and geometrically with varying percentages of nickel in the orebody in different places. Eleven million tonnes of ore are contained in the Foot Wall Deep and Mid Band zones, Scott said, stressing that’s not the same as 11 million tonnes of recoverable nickel. While the percentage of nickel in the orebody varies, it averaged about 1.8 per cent last year in what Manitoba Operations mined, Scott said, and that’s the plan for the next 15 years, although he wouldn’t get more specific in response to a question about the percentage of nickel in the ore.
About a million tonnes of ore are mined out of T-3 annually, Scott said, and while he didn’t want to give a precise estimate how much longer the Thompson Foot Wall Deep Project would extend the life of the mine – in response to a question from Thompson Chamber of Commerce president Oswald Sawh – he did say it equaled about 11 additional years in the area from the 4,200 to 5,800-foot level that wasn’t in the current life of mine plan.