Vale sanctions underground mine at Voisey's Bay

Mining giant Vale has approved construction of an underground mine at Voisey's Bay that will extend the life of the northern Labrador mine by about 15 years and provide hundreds more jobs.

A company spokesman said construction will begin next year, and is timed to ensure a continuity of supply for the new multi-billion-dollar nickel processing plant in Long Harbour.

"For us it's a natural evolution of the mine there," said Cory McPhee, vice-president of corporate affairs for Vale's base metals business.

"We've always known that the open pit was going to be exhausted at some point. And going underground was the next natural step. And that's the key to exploiting the resource that's available to us."

It will take about five years to complete the underground mine, which is about the same time the surface mine is expected to reach the end of its lifespan.

It's big news for employment opportunities in the region, since it will mean hundreds of construction jobs, and the number of full-time jobs at the mine is expected to grow from 450 to roughly 850.

The expansion will also offset the loss of nearly 500 jobs in Labrador West following the closure of Wabush Mines in 2014.

"The sanctioning of construction for the underground mine is good news for Labrador and the entire province," Natural Resources Minister Derrick Dalley stated in a news release Monday.

The underground mine will include the Reid Brook and Eastern Deeps nickel deposits, which is next to the current open pit mine.

Vale committed to developing the mine in an amendment to the Voisey's Bay Development Agreement in March 2013.

In February, Vale said it was awaiting an engineering study to determine the project's costs and development. 

McPhee would not say how much the company will spend to build the underground mine, saying only, "Vale will release the financial disclosures to the market in due course."

The demand for electricity at the site is also expected to grow substantially, but McPhee would not say how the company plans to address that need.

The site is currently powered by electricity from diesel generators, much like nearby remote Labrador communities such as Nain and Natuashish.

One of the options discussed in the past was the construction of a power line from Happy Valley-Goose Bay to the mine site, making it possible to connect remote communities in the area to the power grid.

"There'll be detailed engineering going forward and all of these things will be firmed up at that point in time," McPhee said.

Once up and running, the mine will have a capacity of approximately 40,000 tonnes of nickel per year.