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Mine promises hope for Thompson

Ore is taken from Vale's Birchtree mine, one of three in the Thompson area.

THE CANADIAN PRESS FILES Enlarge Image

Ore is taken from Vale's Birchtree mine, one of three in the Thompson area.

THOMPSON -- As one door closes, will another open? That's the fundamental question facing this hearty northern mining city.

Nickel giant Vale's announcement that it will shut down its smelter and refinery at the end of 2014 (later revised to the end of 2015) raised grim speculation about Thompson's future.

But overlooked is the fact that while those surface operations are nearly tapped out, Vale is concentrating on its subterranean prospects.

"Our recent exploration activities have focused on increasing the confidence of near-infrastructure reserves and resources with the goal of maintaining current production levels from our existing mines," says Ryan Land, the personable manager of corporate affairs for Vale's Thompson operations. "This strategy will continue in the near term, and will be re-evaluated on an ongoing basis in response to nickel market conditions."

Not only does Vale still run three Thompson-area mines -- T-1, T-3 and Birchtree -- there remains the irresistible promise of a fourth, known as 1-D, a $1- billion-plus mega-development.

CBC reported earlier this winter that geologists believe 1-D contains at least 10 million tonnes of nickel ore. That would be worth $2 billion to $3 billion at today’s weak prices.

Drilling at 1-D is still showing "positive" results, Land says, with the company continuing an expanded exploration program this year to "improve the geological confidence" within the property's three main deposits.

"Results from our exploration program will continue to be assessed and incorporated into our long-term planning models," he says, "with the goal of maintaining a competitive and economically sustainable operation."

Vale announced in 2010 it would pursue development of 1-D, but in a weak nickel market the company is now looking for a partner to share in the cost -- and risk.

Time will tell if outside investors are prepared to step forward, but there's no doubt Vale's Thompson operations are in better shape now than they have been.

Land gives full credit to employees for lowering expenses and boosting productivity to the point that unit costs dropped about 25 per cent between 2012 and 2013.

"Their efforts and the improvements they delivered, which continue today, are what (allow) us to operate at the moment," he says, "and are the foundation for our long-term future as an economically viable operation."

This recuperated financial standing, Land says, has Thompson "in a much better position to stand on our own two feet" within the larger Vale company, which has told each division of its business to be self-sufficient.

"Our challenge now is to prove that the changes we've made are sustainable in the long term and that we can improve on them still further," he says.

Despite Vale's success in cultivating efficiency and bolstering nickel reserves, Thompsonites remain anxious over the pending smelter and refinery closure.

And with good reason. Those facilities employ some 500 full-time workers, representing one-third of Vale's Thompson workforce of about 1,500 in a city of 13,123 residents.

The silver lining is that the loss of 500 positions will not necessarily push 500 people out of The Hub of the North. Vale intends to keep its promise to ensure ongoing employment for all workers hired prior to Oct. 1, 2011.

"On a monthly basis, employees from the smelter and refinery are transferred to our mines and mill," Land says. "This process, together with natural attrition, should allow us to meet our commitment."

Where Land (or anyone else short of a fortune teller) cannot make guarantees is on the long-term mining outlook of Thompson.

Yet he offers reassuring words, saying Vale remains "open to all options that serve the best interest of our shareholders and the greater Thompson community."

"We have a rich history in Thompson, and we see the long-term value potential of maintaining a presence in the Thompson Nickel Belt with or without an outside investor," Land says.

In order to unlock that potential, Land says Vale must maintain cost competitiveness -- "a necessary and natural prerequisite" for the ultimate approval of the 1-D mine.

Here's hoping that as the smelter and refinery door closes, the one marked "1-D" will open. And soon.

 

Jonathon Naylor is editor of The Reminder newspaper in Flin Flon.

jonathon_naylor@hotmail.com

History

Updated on Thursday, March 27, 2014 at 9:33 AM CDT:
Corrects amount of nickel ore that 1-D is believed to contain, and corrects worth to $2-3 billion at today's prices

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