Your editorial of March 20, “Tobin vs. Schulich,” causes me to write my first-ever letter to the editor of a mining publication. While the editorial position of The Northern Miner on any issue involving any government has been quite predictable over the years, in this instance, the editorial is notoriously biased and poorly researched, and is blatantly unfair to the government of Newfoundland and Labrador, its premier, Brian Tobin, its policy advisors (which includes me) and its highly reputable consultants. I would go further and state that it is also unfair to Inco and its subsidiary Voisey’s Bay Nickel Company, which proposes to establish a mining and nickel-processing operation in our province.
Ms. Danielson downplays the size and economic potential of the Voisey’s Bay deposit, discredits Inco’s previous commitment to build a smelter-refinery complex in the province, and portrays Newfoundland and Labrador as a “banana republic” that has been abandoned by the mining industry. This is a gross misinterpretation of the facts and cannot go unchallenged.
Firstly, let me address the nature and size of the Voisey’s Bay deposits. The Voisey’s Bay nickel-copper-cobalt deposits represent a world-class resource by any standard. Inco estimates the total resources and reserves at Voisey’s Bay to be 150 million tonnes, 32 million of which are high-grade nickel contained in the Ovoid that can be easily and cheaply mined by open-pit methods. Similar world-class base metal deposits in Canada, and elsewhere, have been the basis for the development of smelting and refining facilities. The lead smelters at Bathurst, N.B., and Trail, B.C., the copper smelters at Noranda, Que., and Timmins, Ont., and the nickel smelter-refinery complexes at Sudbury, Ont., and Thompson, Man., are all fundamentally based on the existence of large world-class orebodies at these locations. These metal-processing facilities form a very important part of the Canadian mining and metals industry and will, in most instances, outlast the orebodies on which they are based. These important metal-producing facilities in Canada exist today because the governments of the day sought to obtain long-term economic benefits from the development of these large, unique, world-class orebodies. The government of Newfoundland and Labrador has the very same objective for the world-class Voisey’s Bay deposits.
Contrary to Ms. Danielson’s understanding, an exciting exploration program is ongoing at Voisey’s Bay, led by a very professional team. While the geology is complex, it is being unraveled, and I am confident that more discoveries will be made. I would also like to point out that the resources outlined at Voisey’s Bay today are greater than were the known resources at Thompson when Inco committed to build the smelter and refinery complex in Manitoba.
Ms. Danielson challenges the province’s expert advisors on the Voisey’s Bay project and appears to question their very existence or the existence of their reports. The province’s advisors and consultants are also world-class, highly reputable Canadian and international consultants in the fields of mining, metallurgy and economic analysis. They include Strathcona Mineral Services, Hatch Associates and Resource Strategies. Anyone in the mining world would recognize these firms. They have been privileged to share confidential information provided by Inco, therefore their reports and advice cannot be made public at this time. Doing so would serve no legitimate purpose, in my view, as we hope to continue discussions with Inco. Besides, some aspects of Inco’s proposal will likely change in the future, as [they have] during the past year. Suffice it to say, we have received very sound advice from these highly reputable professional firms, and we are accepting and acting on that advice.
Ms. Danielson states that Inco only unveiled “plans” to build the downstream- processing facilities and did not really “promise” to build a smelter and refinery. I invite Ms. Danielson, or anybody, to review the various public statements made by senior Inco officials since 1996. I do not need to quote them here. In numerous statements, the commitment is clear. Inco also conducted an exhaustive site-selection process in Newfoundland and Labrador to determine the location of the smelter refinery complex; conducted an exhaustive environmental assessment of the selected site at Argentia; requested that the province take the necessary action to make 200 megawatts of power available for the facility; asked the federal government to freeze the required and adjacent land at Argentia; and held many public meetings and events in our province to outline its intentions and to address environmental and socio-economic issues related to the proposed smelter-refinery complex.
I firmly believe that Inco did all this in the full belief that a smelter-refinery complex in Newfoundland was economically feasible and desirable for the Voisey’s Bay project. Inco, the world’s largest nickel player, is not in the habit of making proposals or making commitments that are not economically feasible nor in the company’s long-term best interest.
In 1999, Inco changed its proposal for nickel processing from a smelter to a hydrometallurgical plant. This is equally acceptable to the province, and is obviously the way of the future for the processing of nickel sulphides. It is environmentally cleaner, more efficient and less expensive. Some would argue that this should have been Inco’s choice of technology in the first instance.
Nevertheless, Inco’s most recent proposal is to process nickel metal in Newfoundland, albeit with a different and newer technology than originally proposed. This technology is not yet proven for nickel-sulphide deposits such as Voisey’s Bay, but Inco is highly confident that this technology will work when properly piloted at an appropriate scale. Our consultants and advisors are also confident. However, we are disappointed that Inco is not able to make a firm commitment at this time, in spite of its high degree of confidence in the technology. Presumably, at some future date, Inco will be confident enough in its technology to make that firm commitment. Given the history of the smelter-refinery issue, a Voisey’s Bay deal based on the new hydrometallurgy technology will require more than a “handshake” and a “best efforts” in order for the people of the province, its government and its advisors to recommend or accept this proposal.
In my view, a deal could be made very quickly with a firm commitment from Inco to produce nickel metal in the province, with its choice of technology. This is in Inco’s best interest, as well as the province’s and even Mr. Schulich’s.
Ms. Danielson goes on to imply that mineral exploration and the mining industry in Canada have packed up and gone elsewhere because of the Voisey’s Bay issue, and that there is very little exploration at Voisey’s Bay or in Newfoundland and Labrador in general because of our mineral legislation. Nothing could be further from the truth.
While exploration in Canada has seriously declined in recent years, there are a variety of reasons for this, including declining metal prices, the fall-out from the Bre-X scandal, and foot-loose investors being attracted to high-tech, dot-com companies for high-risk investments.
In Newfoundland and Labrador, the mineral exploration scene is quite active, energized by a healthy mixture of major and junior companies and a large group of young, aggressive prospectors. In fact, it is one of the bright spots in exploration in Canada. This is because we have a solid reputation as a mining-friendly province: we have one of the best mineral-tenure systems in Canada; we have an excellent and dedicated Geological Survey; and we have some very exciting new mining developments on the horizon. Mining and exploration companies that have closely followed the Voisey’s Bay issue understand the province’s position quite well and are capable of intelligently debating all sides of the issue. Unfortunately, The Northern Miner and its editor have failed to explore all
sides of the issue, and thereby provide the unbiased, balanced reporting expected of the mining and business press. This serves no productive purpose and, in my view, detracts from possible actions by the parties to resolve this important issue for our province, for Inco and its shareholders, and for mining in Canada.
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