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Mining Power Issues

Ring of Fire development takes time, says Wynne – by Brent Linton (Thunder Bay Chronicle-Journal – June 16, 2015)

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

It was clear that Ontario’s premier had on her mind the slow-moving development of the Ring of Fire and the contentious sale of Hydro One during her visit to Thunder Bay on Monday.

Kathleen Wynne brought up the ownership of the massive electrical utility during a speech she gave in the city. “By broadening the ownership of Hydro One, we are able to make the infrastructure investments that communities across the North need to thrive,” she said.

“We are ensuring that the regulation that is in place now remains in place in terms of the setting of rates, in terms of the building of transmission, in terms of services across the province. That was very much a critical part of that decision to broaden the ownership of Hydro One.

“In terms of these investments in infrastructure there are consultations that are going to happen across the provinces. I believe there is one in July happening in Thunder Bay . . . because the decisions have not all been made how those investments are going to be made.”

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[Sudbury] Laurentian prof says it’s time for the ‘40% mine’ (CBC News Sudbury – June 9, 2015)

http://www.cbc.ca/news/canada/sudbury

Reducing energy usage by 60% has multiple benefits, Dean Millar says

Energy conservation is the key to maintaining the viability of older mines and ensuring the profitability of new ones, a professor at Laurentian University says.

Dean Millar, who was recently named a distinguished lecturer by the Canadian Institute of Mining, Metallurgy and Petroleum, will be touring the country to spread the word that employing modern technology in the age-old business of extracting minerals from the ground has multiple benefits.

“The 40-per-cent mine is shorthand for the idea that we could reduce energy consumption to support mine production to a level of 40 per cent of what it currently is by the year 2040 by using renewable energy technologies, by embracing energy efficiency and the state of the art in poly-generation (the sequential production of electricity and thermal energy in the form of heat or steam, or useful mechanical work, such as shaft power, from the same fuel source) and other modern technologies which are routinely used in other industries and bring them to mining,” said Millar.

People in the industry scoff at the notion initially as a “load of rubbish,” Millar said.

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Why Kathleen Wynne’s Hydro One sell-off is a sellout – by Martin Regg Cohn (Toronto Star – May 19, 2015)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

The reality about the partial sale of a key government asset is that the Liberals are choosing privatization because it is not an unpopular as taxation.

Selling Hydro One is no ordinary sales job for Kathleen Wynne. For a premier who places a premium on conversations, consultations and consensus, the proposed sale is a done deal. Wynne is pushing her privatization plan through the Legislature with minimal discussion, leaving key questions unanswered.

Amid the Hydro One hyperbole and hypocrisy — the Liberals and Progressive Conservatives keep reversing stances — here’s the good, the bad, the ugly, and the reality on electricity. The Liberals are using their majority to rush the sale without providing the fine print on secret deals with the unions, or protection of the public interest.

A government-appointed panel on privatization, headed by ex-TD Bank chief executive Ed Clark, concluded last November that “Hydro One transmission should remain in public ownership as a core asset.”

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[KGHM International] Energy plan to help new Sudbury mine – by Carol Mulligan (Sudbury Star – May 15, 2015)

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

A provincial government program to help new or expanding companies create jobs and cut electricity rates will help move the development of KGHM International’s Victoria Mine project forward.

Energy Minister Bob Chiarelli was in Sudbury on Thursday to announce details of the two-year-old Industrial Electricity Incentive (IEI) Program and how it will benefit the mining company.

The IEI Program captures surplus electricity capacity in Ontario and “redelivers” it to the industrial and business community in the form of significant cost discounts, helping them be more competitive, said the minister.

Sudbury can “legitimately be called the mining capital of the world,” Chiarelli told a small audience. Ensuring mining companies and industry have access to a reliable and affordable source of electricity is a priority for his government.

Existing northern miners, such as Glencore and Vale, are already benefiting from the Northern Industrial Electricity Rate Program, which is cutting about 25% of their electricity costs.

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Industry welcomes extended industrial electricity rate – by Jonathan Migneault (Northern Ontario Business – April 29, 2015)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

The Ontario government has announced it plans on making the Northern Industrial Electricity Rate (NIER) Program permanent.

Sudbury MPP Glenn Thibeault made the announcement in Sudbury while Northern Development and Mines Minister Michael Gravelle held a press conference on the issue in Thunder Bay on April 17.

“Many of the major industries have been talking to me about the importance of this program,” Thibeault said.

Ontario is committing to an ongoing program, beyond March 2016, with continued investment of up to $120 million per year. The government will also undertake a review on the efficiency and effectiveness of the program and options for a sustainable approach.

The Northern Industrial Electricity Rate Program was introduced as a three-year program in 2010, and was extended in 2012, for qualifying Northern industrial customers. It aims to offset higher energy costs in the North due to climate and distance to markets.

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Highway 407 debacle looms over Hydro One sell-off – by Martin Regg Cohn (Toronto Star – April 16, 2015)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

How can the Liberals credibly persuade the province to try another hydro hopscotch?

A Hydro One sell-off will be a tough sell for Kathleen Wynne. As it has been for every other premier making a similar sales pitch.

Wynne’s Liberal predecessor, Dalton McGuinty, ultimately had second thoughts about putting hydro utilities on the market in 2010. A Progressive Conservative government also abandoned a sale in 2002. Hanging over any hydro sale are memories of the botched Highway 407 fire sale, which enriched foreign investors and infuriated Ontarians.

Now, after all that renouncing and denouncing of privatizing, can the governing Liberals credibly reverse course? How do they persuade the rest of the province to try another hydro hopscotch?

For Thursday’s announcement, Wynne is getting political cover from a panel of outside experts that includes ex-politicians of the left and right, headed by ex-TD Bank CEO Ed Clark (himself a former federal deputy minister).

The panel’s diversified composition is a counterpoint to the forces of ideology and personality that drove ex-PC premier Mike Harris to begin dismantling Ontario Hydro nearly two decades ago.

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Liberals will sell 60% of Hydro One to fund transit infrastructure – by Robert Benzie, Richard J. Brennan and Rob Ferguson (Toronto Star – April 16, 2015)  

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Premier Kathleen Wynne’s Liberals will sell off 60 per cent of the province’s $16-billion Hydro One transmission utility

Premier Kathleen Wynne’s Liberals will sell off 60 per cent of the province’s $16-billion Hydro One transmission utility to bankroll new transit infrastructure, the Star has learned.

Queen’s Park will retain a 40 per cent stake and minority shareholders will be limited to a 10 per cent ownership, sources say. At the same time, Hydro One Brampton and Hydro One Networks’ distribution arm will be spun off into a separate company and sold outright for up to $3 billion.

The Hydro One changes — and a plan to allow the sale of beer in about 300 supermarkets — are key recommendations in a major report to be released Thursday by Wynne’s privatization guru Ed Clark, the former TD Bank CEO.

Insiders confide that Wynne will immediately accept Clark’s findings and move forward ahead of Finance Minister Charles Sousa’s April 23 budget.

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Does the sale of Hydro One assets add up? – by Martin Regg Cohn (Toronto Star – March 30, 2015)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

If cabinet opts to sell off part of the Hydro One transmission network, it will be a live wire.

With cabinet set to huddle soon over privatization, here’s a cheat sheet for ministers listening on the inside. And the rest of us watching from the outside.

All the buzz about booze has drowned out the static over privatizing our publicly owned electricity system. If cabinet opts to sell off part of the Hydro One transmission network, it will be a live wire.

A cabinet decision on expanded beer sales will be easier to swallow: The government is merely liberalizing — not privatizing — the Beer Store, because that quasi-monopoly is already privately owned. That’s why the debate over booze will be largely sociological, not ideological.

But when it comes to electricity, ideology is always an undercurrent. Remember the old Ontario Hydro? In 1906, the Progressive Conservatives had the vision to set up Ontario Hydro as a publicly owned enterprise. A century later, a more myopic PC party dismembered and disowned it, with no discernible benefits.

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PC blunder over Highway 407 looms over Liberals on Hydro – by Martin Regg Cohn (Toronto Star – March 30, 2015)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Unless we learn the lessons of the 407 fiasco, we are condemned to be fleeced again — this time on Hydro One.

If you build it, they will come. And pay the toll. When Highway 407 opened in 1997, drivers not only came, they kept coming back — transforming the toll road into a short-lived success story.

Two years later, the storyline changed: The PC government of the day took an abrupt detour by brokering a 99-year lease of the highway for a fraction of its true value. If you lease it — and undervalue it — they will profit. At our expense.

The 407 deal is now considered a financial blunder on a par with Newfoundland’s lease of Churchill Falls to Quebec, and China’s surrender of Hong Kong to Britain, for equally ill-fated 99-year leases.

As today’s Liberal government ponders selling off part of Hydro One’s transmission lines, after more than a century of public ownership, the 407 debacle looms over the debate. Unless we learn the lessons of that fiasco, we are condemned to be fleeced once again.

If the toll highway hadn’t been handed off for a pittance in 1999, it could have been paid off by now. Imagine driving free on the 407, instead of being hit up for steadily increasing tolls that have flowed to the consortium’s overseas owners for years.

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Mining firms in Sudbury benefit from energy program – by Carol Mulligan (Sudbury Star – April 8, 2015)

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.

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Ontario gives northern industry permanent relief from energy costs (CBC News Thunder Bay – April 7, 2015)

http://www.cbc.ca/news/canada/thunder-bay

The Northern Industrial Electricity Rate Program will carry on indefinitely, province says

A program that reduces energy costs for northern industries — like mining and forestry — will carry on indefinitely, the Ontario government says.

Speaking at a news conference at Resolute Forest Products’ Thunder Bay pulp mill on Tuesday, Northern Development and Mines Minister Michael Gravelle told reporters that Ontario would commit up to $120 million a year permanently to the Northern Industrial Electricity Rate Program, which was to expire in March of 2016.

First introduced in 2010, the program is a benefit to companies such as Resolute, Goldcorp, AV Terrace Bay, and North American Palladium, Gravelle said.

“It positions them to certainly be able to maintain operations but also potentially expand and create more jobs,” he added. The program can help cut up to 25 per cent from energy costs incurred by qualifying businesses. “It reduces our costs significantly on our site,” said Goldcorp’s Musselwhite mine general manager Bill Gascon.

“Our second highest cost on our site in production is energy — behind labour — so it’s huge for us. We’re a very energy intensive industry.”

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Live wire act [Mining power costs] – by Chris Windeyer (CIM Magazine – March/April 2015)

http://magazine.cim.org/en/

No other significant cost factor varies so widely as electricity – internationally, more than 800 per cent variation in the price of electricity from one jurisdiction to another is accepted as normal. So what can miners do to turn such risks into opportunities? The cost of electricity is generally the second biggest cost factor that miners face. Only the workforce costs more. In Canada alone, miners (excluding coal) spent $2.4 billion on energy costs in 2012, according to figures from Natural Resources Canada.

That was up from a 2011 tally of $2.2 billion that included coal. At the same time, no other significant cost factor varies so widely – internationally, more than 800 per cent variation in the price of electricity from one jurisdiction to another is accepted as normal. So what can miners do to turn such risks into opportunities?

“If you’re sitting in northern Quebec and you have access to the hydro grid, there’s nothing that will beat Hydro Quebec’s rates,” says Steve Letwin, CEO of Toronto-based Iamgold, which owns mines in Quebec, Suriname, Mali, and Burkina Faso. Letwin says Quebec’s electricity costs 3.5 cents per kilowatt- hour (kWh), compared with off-grid Africa, where Iamgold relies on diesel and heavy fuel oil, and costs can reach 30 cents per kWh.

The recent decline in oil prices has knocked those off-grid costs down to around 21 cents per kWh, which Letwin says translates into cash cost savings of around $200 per ounce. At Iamgold’s Essakane mine in northeast Burkina Faso, currently operating with costs of around $1,000 per ounce, Letwin says halving the mine’s power costs would bring cash costs down to about $800 per ounce; it is roughly the same impact as doubling the grade.

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Ontario’s Power Trip: No windfall in selling off part of Hydro One – by Mike Hilson and Tom Adams (National Post – March 19, 2015)

The National Post is Canada’s second largest national paper.

A proposal leaked out from Ontario Premier Kathleen Wynne’s government to privatize a portion of Hydro One, the Crown-owned electricity transmission and distribution company. Although the Premier stressed that the decision wasn’t final and that it will remain regulated to protect ratepayers, she has been clear about her motivation.

Referring to the ongoing Advisory Council on Government Assets headed by former TD Bank CEO Ed Clark, she stated that the reason for the asset review is to leverage dollars to invest in transit and transportation infrastructure across the province.

The prospect of an IPO for Hydro One had commentators, opponents and supporters debating whether to cash in on the “windfall” and how much the haul might be. Generally agreed is the proposition that a sale would, as one columnist wrote, “generate a one-time cash haul for the government.”

The government’s proposal and the discussion around it has so far almost completely ignored the basic facts of financial life underpinning Ontario’s electricity system.

Hydro One’s numbers seem impressive – it claims $22.55 billion total assets and net equity of $7.93 billion – but there is a catch. Hydro One’s entire value is already spoken for.

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Where’s the logic in Ontario’s power play? – by Konrad Yakabuski (Globe and Mail – March 16, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

The mandate Ontario’s Liberal government handed former TD Bank chief Ed Clark was flawed from the outset. Selling off prized electricity assets to pay for transit projects smacked more of a cash grab than a considered approach to maximizing value and making sound energy policy.

In the end, Mr. Clark’s panel recommended last fall that Ontario maintain full ownership of Hydro One’s transmission assets, made up of 30,000 kilometres of high-voltage lines across the province, and privatize the utility’s distribution arm, which serves 1.4 million Ontarians. “There is far less reason to regard distribution as a core strategic asset than transmission,” the panel said.

As The Globe and Mail revealed last week, however, Premier Kathleen Wynne’s government is now thinking of both selling up to 60 per cent of the transmission business to investors and privatizing the distribution arm in order to spur a sector-wide consolidation among the spate of “local distribution companies” that interface with electricity customers across the province.

Both are interesting ideas. But the devil is in the details. And when it comes to Ontario governments meddling in the electricity sector, the details always seem to ruin everything.

On what grounds can the provincial government justify using proceeds from selling electricity assets to fund transit?

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Spring budget is Liberals’ fire sale to cure 12 years of mismanagement – by Christina Blizzard (Toronto Sun – March 14, 2015)

http://www.torontosun.com/

TORONTO – The deficit-plagued Liberal government of Kathleen Wynne is hanging the “For Sale” sign on government assets. The Liberals’ spring budget won’t be so much a fiscally responsible financial document outlining the government’s plan to prudently manage government programs as it will be a fire sale to help fund the Liberals’ 12 years of mismanagement.

Suddenly, Hydro One is for sale. And the government is going to open up wine and beer sales to large grocery stores and rake in millions in franchise fees.

This all has a Nixon to China flavour to it. If a Conservative government suggests changes to liquor sales or selling off utilities, it’s accused of being in the pockets of big business.

When Mike Harris’ government suggested selling off parts of Hydro One more than a decade ago, it was slammed for trading away the province’s “central nervous system.”

The difference back then was that Harris suggested selling off Hydro One because his government philosophically believed the private sector could do a better job. In hindsight, looking at the mess Hydro One is in, Harris was right.

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