Vale to pay $230M to export nickel while N.L. processing plant ramps up

ST. JOHN’S, N.L.—Mining giant Vale S.A. will pay Newfoundland and Labrador $230 million for letting the company export more Voisey’s Bay nickel concentrate while a processing plant ramps up in the province.

Vale will be allowed to export another 94,000 tonnes that must be replaced later, Natural Resources Minister Derrick Dalley said.

The move will mean $200 million in compensation from Vale over three years.

Another $30 million in community investments from the company are to be negotiated with the province.

Complex design and other issues have delayed full operation of the Long Harbour processing plant, about 120 kilometres west of St. John’s.

The $4.3-billion facility will be an asset for years to come, Dalley said.

The announcement is on top of other export allowances in 2013 and 2002, totalling 633,000 tonnes in potential processing exemptions that must be replaced.

Stuart Macnaughton, Vale’s vice-president of operations in the province, said the added flexibility means mining at Voisey’s Bay in Labrador will continue while the plant in Long Harbour is finished.

“Had the export cap not been increased, we would have been left with no choice but to stop operating in Labrador for up to 18 months,” he told a news conference in St. John’s.

Mining at Voisey’s Bay would not have resumed until Long Harbour can process more nickel concentrate from that site, he explained.

Higher grade material imported from Indonesia is now predominantly used at the plant while Vale installs impurity removal circuits.

That equipment will allow Long Harbour to fully process Voisey’s Bay concentrate, a transition that’s expected to start in 2016 but not be in full swing until 2018-19.

Macnaughton also confirmed Vale is committed to building an underground mine at Voisey’s Bay, as first announced in 2013.

Volatile commodity prices pose a challenge but June 30 is still the target date to sanction that project, he said.

Nunatsiavut president Sarah Leo said she was disturbed that the province and the company would amend the development agreement without discussing it with her government.

“To come to any agreement with respect to the Voisey’s Bay project without consulting with the Nunatsiavut Government is in direct violation of the Labrador Inuit Land Claims Agreement,” she said in a statement. “This is not acceptable.”

Almost 500 people work at Voisey’s Bay.

Construction at Long Harbour employs about 1,500 people, and another 740 work in operations.

The extra cash is a bit of good news in oil-dependent Newfoundland and Labrador.

The province is now projecting a $916-million deficit this fiscal year since Brent crude prices plunged.

Labrador West has also suffered since the Wabush iron ore mine closed last year, wiping out 500 well paid jobs.

Cleveland-based Cliffs Natural Resources Inc. blamed high production costs and lower prices.

Liberal Opposition Leader Dwight Ball said he’ll be watching to see how the Progressive Conservative government decides to use the community funding from Vale.

“I am concerned … when a government gets its hands on $30 million in an election year, how they plan to spend it,” he said.

Premier Paul Davis is expected to call an election sometime this fall.