At a time when a lot of Canadian political leaders are upset and preoccupied with U.S. President Donald Trump’s tariff agenda on Canadian steel and aluminum, Newfoundland and Labrador Premier Dwight Ball had bigger fish to fry on Monday.
Ball held a press conference, with three former premiers in attendance (Brian Tobin, Clyde Wells and Roger Grimes) and Brazil-based Vale’s executive director of base metals Eduardo Bartolomeo, to announce the company is going ahead with the approximately $2 billion expansion at the Voisey’s Bay nickel mine.
The underground mine is expected to produce first ore by 2022 and extend the life of Voisey’s Bay until at least 2032.
That’s a much different, and for the province, much better, announcement than what Vale made in November of 2017.
Back then Vale said it was putting the expansion (the company sanctioned it in 2015) on hold due to depressed nickel prices.
Expanding Voisey’s Bay open pit mine into an underground operation does a number of things for Newfoundland and Labrador that will make Ball and his governing Liberals smile at a time when its economic meal ticket – the offshore oil industry – is just recovering from a prolonged downturn.
Here are some of the economic highlights of the Voisey’s Bay expansion, as per yesterday’s government press release:
- 16,000 person years of employment during the five-year construction period, peaking at 4,800 in 2020
- 1,700 in jobs at the underground mine and Long Harbour processing plant once the mine is in operation
- 2,135 person years in indirect and induced employment annually
- $370 million per year in labour income
- $1 billion in economic activity annually that will result in $69 million per year in provincial tax revenue
On the same day the Voisey’s Bay expansion was announced, Vale also announced it had struck a US$690 million deal with two companies to sell cobalt from the Labrador mine, which will help finance the underground expansion.
So what made Vale decide to build the mine after backing off almost eight months ago?
Nickel prices have a lot to do with it. The London Metal Exchange has it a tonne of nickel priced at approximately US$15,300, up from US$10,700 per tonne last November.
Production cuts by China – the world’s top nickel producer – and bullish views on the future of electric vehicles (nickel, manganese and cobalt are the crucial elements in batteries favoured by most of the world’s automakers) – seem to be the key forces driving up the price of nickel.
And by finally committing to going underground at Voisey’s Bay, Vale must be confident those nickel prices will be strong for the life of the underground mine.