Glencore Spending Almost $1 Billion in Hunt for More Ore

Glencore (LSE:GLEN) is dropping almost $1 billion to hunt deep underground for more ore in Sudbury.

The Onaping Depth project, which is being run by Glencore-owned Sudbury Integrated Nickel Operations, will entail going over 2 kilometers below the surface. The company will be using the latest and greatest machines to find the ore deep below, hence the $700-million price tag.

The ore deposit that Glencore is after is located beneath Craig mine in Onaping, also owned by Glencore. According to Peter Xavier, the company’s vice president of Sudbury operations, it has taken extensive planning to ensure safe and economic excavation.

“I think deep will be the new norm and certainly in Sudbury, that’s where the future lies,” Xavier told CBC.

Onaping Depth is expected to begin production by 2023, ramping up to full speed by 2025. The timeline matches up perfectly with Glencore’s other Sudbury operations — its Fraser and Nickel Rim South nickel-copper mines are estimated to conclude operations by 2025.

According to Xavier, Onaping Depth will kick into action at just the right time for the company to maintain its mill and smelter operations, while also keeping its 1,300 Sudbury-based employees on the team.

“Because it comes at the tail end of our existing operations, it would be more accurate to say it sustains our existing presence,” he said.

Xavier went on to say that because of the Sudbury Basin’s polymetallic diversity, Glencore will still be able to find profit in resources like platinum, copper and palladium if nickel is down on its luck.

“That mitigates a little bit of the challenges of the fact that we’re going to depth to extract these ore bodies where in some parts of the world, it’s literally dirt on surface,” he explained.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.