The provincial government has 'significant concerns about Vale's commitment to the Thompson mining operations' and says it will be meeting on an urgent basis with Vale Canada President Peter Poppinga to discuss issues relating to Thompson, Steve Ashton, Thompson's NDP MLA and minister of infrastructure and transportation, said Oct. 22.
"Following meetings with Murilo Ferreira, the CEO of Vale in 2011, and a further meeting between the Premier (Greg Selinger) and the CEO in Brazil in May 2012 we have been engaged in discussions with Vale in relation to the fund and other issues regarding the Thompson operation," Ashton said. "We have made it clear that the Province of Manitoba is committed to continue working for value added jobs from the nickel resource in Manitoba.
"There was progress on these discussions. However the recent announcement on Birchtree and the delay in a decision on the 1 D project has raised significant concerns about Vale's commitment to the Thompson mining operations. It is important to note that only two years ago Vale stated that "current plans at the company's Birchtree Mine see operations continuing well beyond 2020. At the same time, Vale is aggressively pursuing new mine development opportunities in northern Manitoba at both the Thompson 1-D and Pipe-Kipper deposits."
Birchtree Mine, which opened in 1968, is being "considered for care and maintenance" in 10 months time next August, Vale said Oct. 18. The mine was previously on care and maintenance from 1977 to 1989.
"1-D project will not be proceeding along the timeline originally envisioned, Lovro Paulic, general manager of smelting and refining, Don Wood, general manager of production services and Mark Scott, general manager of mining and milling, wrote to employees here Oct. 18."
The 1-D mineral resources remain, however, an important part of a mining and milling future for Thompson. In the near-term future our plan is to continue drilling at 1-D to better delineate and define the mineral resource at depth, a critical factor in advancing the project. With this additional information in hand, and hopefully a more stable price environment, we expect to be in a better position to make a decision on proceeding in the next two years," Paulic, Wood and Scott wrote.
In response to Ashton's comments, Ryan Land, corporate affairs manager for Vale's Manitoba Operations, said Oct. 22: "We understand the Province's concerns and we are committed to continuing work with them – just as we are committed to our operations here in Thompson. Having said that, our nickel operations here face some significant short-term challenges with a weakening market and lower-than-anticipated commodity prices. The same is true for diversified miners operating around the world – it's not unique to Vale. We understand that the care and maintenance scenario being considered for Birchtree Mine is not the news the community wanted to hear, but it is representative of the challenges we face and the decisions we need to make if we are to position ourselves for decidedly more positive longer-term outlook. The only way to achieve that future for our operations in Thompson is to control costs and improve efficiencies in all aspects of our business. That's the challenge we've taken on."
The NDP provincial government introduced The Thompson Nickel Belt Sustainability Act, on June 2, 2011 during the fifth and final session of the 39th Manitoba legislature, and it passed third reading and received royal assent on June 16, 2011. The legislation, which has yet to be proclaimed, calls for the fund's board to consist of at least five and not more than 11 directors appointed by the provincial cabinet for terms not to exceed three years. In making appointments to the board, the cabinet "must have regard to the desirability" of having a board that includes one or more representatives from the City of Thompson; Vale; organized labour; organizations that represent aboriginal peoples; the federal government and the general public.
Section 4 (a) of the Thompson Nickel Belt Sustainability Act, with its reference to the Thompson Nickel Belt Economic Development Fund, specifies the "operation of the fund is to be supported by amounts appropriated by the legislature for the fund, which amounts are to be determined with reference to the taxes paid by Vale under The Mining Tax Act."
The money Vale pays now under The Mining Tax Act goes into the province's general revenues and is not segregated in a fund or otherwise separated out.