Vale postpones Kronau potash project in Saskatchewan
Brazilian mining company Vale announced it will wait until market conditions improve to continue developing its Kronau project in Saskatchewan as low potash prices have made the mine uneconomic, the miner said in a public letter to the local community.
The $3.5 billion mining project is expected to produce 3-4 million tons of potash annually for more than 40 years. As of October, Vale had entered the final feasibility stage for the project and depending on the outcome a final investment decision to proceed into construction would have be made by 2016.
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“It’s still a very promising project with the economics and everything, there just isn’t an opportunity to start any new construction next year,” said Matthew Wood, senior project leader at Vale for the Kronau project.
Kronau was projected to create 2,000 construction jobs and 350 permanent jobs. Vale currently has a team of 30 people in Saksatchewan.
“We’re just sort of evaluating what we can do with those staff, whether we can reassign them other places, whether we can find other opportunities for them,” Wood said.
In 2012, Vale momentarily postponed the potash project at Kronau citing the need to curb “its appetite for an accelerated timeline.”
"We had originally planned for the project to start early construction potentially by 2013, and that has been postponed for the time being and the commitment to the project has not lessened, just maybe our appetite for an accelerated timeline has," said Lara Ludwig, the community consultation specialist with the Kroneau project.
Prices for potash are currently in a multi-year slump, with many producers of the fertilizer ingredient suffering due to weak demand and higher costs.
“Once they get going, then it’s going to help the surrounding towns with potash royalties and now everything’s put on hold,” said to Erwin Beitel, the reeve of the R.M. of Lajord which covers the communities of Kronau, Riceton, Gray and Davin.
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According to Beitel, Vale told leaders in the community several weeks ago that the project will be paused. He says they have no idea what the timeframe will be to start back up again, but he’s optimistic that it will.
“It’s just going to be a wait and see situation and who knows, in two years, four years, 10 years – they’ll come out. This has been suspended before and then started up again,” he said.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.