The underground expansion will increase the mine’s life by 15 years and create 1,700 new jobs in Newfoundland and Labrador.
The Voisey’s Bay mine in Newfoundland and Labrador is set to receive a C$2-billion investment from owner Vale (NYSE:VALE), which hopes to take advantage of a resurgent nickel price.
At a press event in St. John’s on Monday (June 11), the premier of Newfoundland and Labrador, Dwight Ball, basked in the announcement.
“[The] government made a commitment to the people of the province that the Voisey’s Bay nickel deposit would be developed in a manner that maximizes benefits for Newfoundland and Labrador. We had fundamental requirements that Voisey’s Bay nickel concentrate would be processed in the province to a finished nickel metal product,” said Ball.
The nickel-cobalt mine, located in the northern part of the Labrador region of the province, is currently an open-pit mine that employs 500 workers, more than half of whom are aboriginal.
The expansion will target underground operations and will increase the mine’s operating life by 15 years, creating an additional 1,700 jobs in the underground mine and at the Long Harbor processing plant on the island of Newfoundland where the ore is shipped.
As announced on Monday, construction will proceed this summer, and will continue for five years. First ore production is expected “no later than April 2021.”
According to the government of Newfoundland and Labrador, the project will create 16,000 person-years of employment over that period.
In longer terms, the upgraded mine will provide 2,135 person-years of employment annually, giving locals C$370 million a year in labor income, and generating C$1 billion in economic activity every year throughout its life, with the province receiving C$69 million through tax revenue.
How the company will finance the C$2-billion development has not been detailed.
The mine was originally opened in 2005, and has generated C$15 billion worth of nickel, copper and cobalt over its lifespan.
Plans to expand the mine were put on ice after a downturn in global nickel prices stuck around. But the recovering value of the base metal means profitability is returning to the commodity, which is sought after as a vital component in electric vehicle batteries alongside cobalt and lithium.
Vale’s head of operations in Labrador, Peter Langlois, said the company was well aware the open pit would eventually run dry.
“Going underground was the next natural step and that’s the key to fully exploiting the resource that’s available to us. We are now ready and will immediately begin to ramp up the workforce and execute work to support the underground development, which will allow us to extend the life of the mine well into the future,” said Langlois.
No doubt shoring up the company’s decision to go ahead with the expansion was news that it has signed a US$700-million deal to sell cobalt, which is also produced at Voisey’s Bay.
The price of nickel is currently trading at US$6.91 a pound, and cracked US$7 earlier this year. The base metal has been crawling its way back upwards from a low of US$3.50 as recently as 2016.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.