Voisey's Bay Agreement # 4

For those who are interested in reviewing the Voisey's Bay Development Agreement, Sue's Blog has begun a series on it. The Intro, #1, #2 and #3 have been completed please take the time to go over the first four installments.


Intro
#1
#2
#3

Today we are going to look at what happens if the hydrometallurgical process is not commerically viable - the time frames for reporting same to government and what the potential is for copper processing in the future.

4.6 Processing Plant

4.6.2 If, pursuant to Section 4.7, it is determined that a Hydromet Plant is not technically or economically feasible, the Proponent shall construct a commercial hydrometallurgical nickel-matte processing facility or other similar facility incorporating a proven, state of the art technology to produce Finished Nickel Product (the "Matte Plant"). The Matte Plant will have a design capacity to produce annually approximately 50,000 tonnes of Finished Nickel Product, together with associated cobalt and product products. The Proponent estimates the Matte Plant will have a capital cost of approximately $670 million and during the estimated three-year construction period will generate approxiamtely 2500 person-years of employment. The Proponent estimates that the Matte Plant will employ approximately 350 people during operations.
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So when do these choices have to be made?
Under 4.7.1 It says the decision shall be made as soon as possible but not later than November 15-08. However if the decision has not been made on or before June 30-08 4.7.2 directs the Proponent to meet with the government and provide regular updates, as well - if the decision is not made by June 30-08 the Proponent shall begin to prepare Implementation Plans for both types of processing facilities (hydromet) and (matte) so that it will be able to deliver the Plan on or before December 31-08. In either case 4.74 and 4.75 guarantees the processing plant must be engineered and built by December 31-11.
I have shortened the content of these sections to make the point. I encourage you to read these sections in their entirety.
These particular sections encourage the Proponent to make a decision on the type of plant in an expeditious manner. No company wants the burden of having to create implementation plans for 2 types of plants - one of which they will never use. This is another example of how this contract favours Newfoundland and Labrador not the shareholders of INCO.
Another question which you may have is "...what if INCO just decides it does not want to build a hydromet?" We will deal with those guarantees in the next installment.
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What of a copper smelter? This is where Danny could demonstrate his business prowess as there is plenty of opportunity to gain a copper smelter for the province - preferably Labrador.
4.14 Copper Processing in the Province
We will get into the wording of this entire section in the next couple of installments. What we need to think about is the government's right under Section 31.1 of the Mineral Act to rescind the exemption order for copper if a third party wishes to establish a copper processing facility in Newfoundland and Labrador. With other copper potentials in the province and the possibility of developing the Lower Churchill the Premier must start seeking interests in this area. He can guarantee them a substantial base of copper from the Voisey's Bay reserves and guarantee them a reliable cost competitve source of clean power.


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