This article is from Business Excellence Magazine
When the world’s second largest diversified mining company Vale acquired the iconic Canadian nickel miner Inco five years ago it was the beginning of the largest investment in Canadian mining in the country’s history, as Cory McPhee explains to Gay Sutton.
Superficially, the icy northern reaches of Canada and the hot arid deserts of Australia have little in common other than the language. Look more closely, and both benefit from enormous mineral resources that account for a significant portion of the national economy and an even greater percentage of their exports. Moreover, some of these resources have been mined for more than a century and a half. In both cases a number of famous mining towns and cities have sprung up – providing services, products, homes and entertainment for those working in some of the world’s least hospitable places.
The city of Sudbury in Ontario is one such place. With long cold winters and brief but warm and humid summers, it began as a simple mining camp in the rich geological region known as the Sudbury Basin. Today Sudbury is a city of some 158,000 people and its economy has diversified to include financial services, business, tourism, healthcare and education. But mining continues to play a significant role. According to figures produced by the Greater Sudbury Development Corporation last year, Vale – which can trace its history back to 1902 when Inco opened its first mine in Sudbury – is still the city’s largest employer.
This year Vale is celebrating the fifth anniversary of its venture into Canada and the global nickel business in late 2006, an event that saw Vale, the world’s second largest mining company, acquire Toronto-based Inco. In that short space of time the company has announced and embarked upon an ambitious program of investment and expansion in Canada, and the Canadian operations have taken on a new role within the global business.
“Inco was primarily a long-time nickel miner, the second largest in the world at the time of the acquisition,” explained Cory McPhee, VP corporate affairs. “With the Vale acquisition we maintained the head office in Toronto and repositioned it to manage the entire Vale base-metals business worldwide.” Among the portfolio of operations handled from Toronto are mines in New Caledonia, Indonesia and Brazil, and refineries in Wales, London, Japan, South Korea, Taiwan and China.
With this new global remit and with the financial backing of parent company Vale, the Canadian operation has been making major investments. Firstly, the previous focus on nickel is being expanded. “While we’ve been mining in Canada for over 100 years, our existing facilities offer some exciting potential resources, not only in nickel but also in copper and we’re looking to exploit that potential,” said McPhee. “So we aim to grow the copper business both here in Canada and globally. We’re also committed to entering the fertilizer business here in Canada.” A potash project is currently under development at Kronau, near the city of Regina in Saskatchewan, and is scheduled to go into operation in 2016.
It is, however, in the investment plan for the existing Canadian mining business that the Brazilian-based parent company is demonstrating its greatest commitment. The current operations comprise some six mines, a mill, a smelter and a refinery in Inco’s original home town of Sudbury, and this is supplemented by a second Ontario-sited refinery and packaging facility at Port Colborne on Lake Erie. Mining, milling, smelting and refining also take place at Thompson, Manitoba, where some 40 percent of the refinery’s current throughput is transported from Voisey’s Bay, an exciting new Vale mine located in Newfoundland and Labrador which went into operation in 2005 and includes its own concentrator and port facilities. All of this, however, is scheduled for improvement.
“On 17 November 2010 we announced a $10 billion investment program for Canada over the next five years. So we’re now one year in, and it’s progressing according to plan,” said McPhee. The company has based its current investment plan on a comprehensive business overview and nationwide development strategy. “We’re looking at the entire base metals operation as an integrated flow sheet,” he explained. “So instead of erecting a fence or silo around each operation and duplicating the infrastructure we’re looking at the entire asset base as one continuous loop.”
These investments are aimed at preparing the business for mining in the long-term. Incorporating some of the latest technologies, the various projects will strengthen the business infrastructure, improve operational efficiency and reduce the environmental impact. A new $3.6 billion hydro-metallurgical refinery is currently under construction at Long Harbour, Newfoundland and Labrador. “The Long Harbour refinery is scheduled for completion by 2013. By 2015, following a period of commissioning in Long Harbour, we intend to close our current smelter and refinery in Thompson, Manitoba. Thompson will then transition to purely mining and milling. Meanwhile, we’re looking at a number of ways to extend the life of our mining activity in Thompson, including a potential $1 billion investment in a new mine.”
For the rest of this article, please go to the Business Excellence Magazine website: http://www.bus-ex.com/sites/default/files/Vale-NA-Jan12-Bro-s.pdf