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Exploratory drilling program and surging demand for nickel are positive indicators for Vale, says Manitoba Operations boss

"You always want to be drilling in mining," Gary Annett tells Thompson Chamber of Commerce during June 1 presentation.
gary annett vale thompson chamber of commerce june 1 2022
Gary Annett, head of Vale’s Manitoba Operations, speaks to the Thompson Chamber of Commerce June 1.

Gary Annett, the head of Vale’s Manitoba Operations, spoke to the Thompson Chamber of Commerce on June 1, highlighting the exploration work currently going on as well as the company’s moves to take advantage of increasing demand for nickel as a key component in the production of electric vehicle batteries.

Now in his second stint as head of Manitoba Operations, Annett grew up in the Sudbury area and started his mining career as an underground miner before attending university and then returning to work in the management side of the industry.

Thompson’s mines currently produce about 15 per cent of the nickel for Vale’s North Atlantic operations, but Annett said that ongoing exploration could lead to as much as 30 per cent growth in production, depending upon what the drilling program finds.

As much as $260 million could be spent on drilling and exploration of the Thompson ore nbody in the next five years, said Annett, during which time the demand for nickel is expected to grow as more and more consumers switch from gas- and diesel-powered vehicles to electric models.

Thompson is in a good position to benefit from that transition due to the quality of its ore, although that does have drawbacks as well.

“What’s good about the Thompson mine or is it’s primarily nickel, and there’s not much other impurities in it,” said Annett. The lack of other minerals does introduce some instability, however, when the demand for nickel is down, as it has been for the past decade or so, because there aren’t other metals present in significant quantities to help make up for sluggish nickel demand.

Vale recently signed a long-term deal with Tesla to supply nickel for production of electric vehicle batteries and anticipates that segment of the market rising from about five per cent of its nickel sales now, to as much as 30 to 40 per cent over the next five years. Not all of that represents increased overall demand, however, as some may be accounted for by shifting from producing for other uses.

“People are starting to notice that there’s only so much class one nickel in the world to develop this technology,” said Annett.

At present, about eight to 12 drills are operating at any given time as the company seeks to prove if there is sufficient ore to justify expansion of mining in the Thompson area, which could prompt investment of somewhere around a billion dollars.

“It is one of the biggest programs I’ve seen in my 24-year career,” Annett said, which is a positive indicator. “You always want to be drilling in mining.”

Whether the exploration will lead to higher employment levels at the Thompson operations depends on what the results show, as Canadian operations are competing for capital investment with the company’s other divisions. 

Currently, there is about one contractor working in the local operations for every 1.5 permanent employees, though Annett said that doesn’t necessarily mean that most of the money they earn is flowing out of the community, as Thompson residents are among those employed by contractors that Vale works with.

Vale is also shifting to using more electric vehicles itself, having recently purchased seven of them for use underground, with plans to invest in more. 

The company is already in a good position because it is a low-carbon producer, which is an advantage when marketing its nickel to customers who want to source products in a way that does as little harm as possible to the environment.

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