The Sudbury Star is the City of Greater Sudbury’s daily newspaper.
Making the Northern Industrial Electricity Rate Program permanent will help Sudbury’s two largest mining companies lower their costs and remain competitive globally, say their executives.
Sudbury Liberal MPP Glenn Thibeault announced Tuesday that the Government of Ontario will keep funding the program, which was to conclude in 2016, to the tune of about $120 million a year.
Twenty-three companies in Northern Ontario — including forestry companies and stainless steel producers — will benefit from the program.
Vale Ltd. will receive about $20 million annually to offset the cost of energy and Glencore’s Sudbury Integrated Nickel Operations will receive about $13 million.
Marc Boissonneault, Glencore vice-president of Sudbury Integrated Nickel Operations, said the program is one of the pieces of a puzzle that will allow his company to continue to mine beyond 2020.
Glencore has said its resources will run out in five years unless it develops two new mines, the Onaping Depth at its Levack complex and an extension of Nickel Rim Mine called the Nickel Rim Depth.
Glencore’s operating costs are about $500 million annually in Sudbury and it invests $100 million to $200 million in its operation, said Boissonneault after a news conference at Science North.
The $13-million energy supplement will add to what the company is able to yield in terms of profits from investments. Much of the value of what comes out of the ground is returned to Sudbury and to the region in the form of payroll, electricity, contractors and other expenses, said Boissonneault.
Glencore is looking at investing $1.3 billion to develop the two deep mines and to update its smelter to reduce emissions.
“So a program like this is one of the pieces of the puzzle to be able to make that happen,” he said.
Glencore is “highly committed to continuing to mine in Sudbury for longer than five years,” said Boissonneault. “We believe it can happen, but electricity rates on a global basis have to be in a competitive range.
“If one of your primary costs isn’t in a competitive range, then you’re not in a position to compete and you’re not in a position to invest.”
Both Boissonneault and Vale executive Mike McCann, the company’s director of smelting operations, said electricity is their companies’ second largest expense after labour.
McCann said making the Northern Industrial Electricity Support Program permanent will help Vale with strategic planning for the next 15 to 20 years.
“Now we have this permanency in our rate that allows us to really evaluate our projects, their economic viability, for us to reach out to the parent organization in terms of getting capital reinvested in Northern Ontario,” said McCann.
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