Brazil’s mining giant Vale (NYSE:VALE) is moving ahead with construction of an underground mine at its Voisey’s Bay mine, located in the Atlantic province of Newfoundland and Labrador, extending operations by at least 15 years.
Transiting Voisey’s Bay nickel mine from open-pit operations to underground will cost about $2 billion and is expected to extend its productive life to 2035, Newfoundland and Labrador Premier Dwight Ball said Monday.
Over the five-year construction, to begin this summer, more than 16,000 person-years of employment will be created, he said.
Once operational, and including the Long Harbour processing plant, direct employment will hit 1,700 jobs, Ball noted.
Vale’s commitment to Newfoundland and Labrador highlights the strength of our mining industry – one of the best in the world. pic.twitter.com/e1sZxZvyMi
— Natural Resources (@NR_GovNL) June 11, 2018
First ore from the underground section is expected no later than April of 2021, Ball added.
The mine, which opened in 2005, currently employs about 500 people. More than half of the workforce in the remote area accessible by plane is Inuit or Innu, while more than 80% of contracts are with Indigenous-owned and operated businesses.
Vale will partly finance the expansion through a pioneering agreement to sell future production of cobalt from the Canadian operation to Wheaton Precious Metals and Cobalt 27. Both companies will make a combined purchase equal to 75% of Voisey’s Bay cobalt production from Jan. 1, 2021 onward.
The streaming deal – making an upfront payment in exchange for future production – is for $690 million of cobalt and comes as speculation rises over a shortage of the metal needed to make batteries that has been pushing companies to secure long-term supply.
Prices for cobalt, which is primarily extracted as a by-product of nickel and copper ores, have been drifting lower since hitting near 10-year peaks on the LME in March, but is still up nearly fourfold from its 2016 trough. Nickel, in turn has soared 75% over the past 12 months on the back of environmental production cuts across top producer China, plunging inventories and strong steel prices.
As a result, Vale has already suspended the sale of a stake in another of its nickel mines — New Caledonia, located on the remote South Pacific island.
Until now, streaming deals have been focused on precious metals, but skyrocketing prices for cobalt, one of the crucial elements in batteries for cellphones and electric vehicles, could add this new commodity to the mix.