MONTREAL – Global mining giant Vale’s decision to review its global operations in light of depressed nickel prices is causing anxiety among Indigenous workers at its Voisey’s Bay mine in Labrador.
As part of its 60-day audit, the Brazilian miner (NYSE:VALE) has put on hold a decision about an underground expansion project at the Atlantic mine that would create more than 400 jobs and extend its life for 15 years.
“These are some of the higher paying jobs you find in our communities,” said Darryl Shiwak, Lands and Natural Resources Minister for the Inuit people of Nunatsiavut.
“So with the high unemployment rate and the amount of seasonal work, these jobs are extremely important.”
More than half of the workforce in the remote area accessible by plane is Inuit or Innu, while more than 80 per cent of contracts are with Indigenous-owned and operated businesses.
Pending the outcome of its review, Vale’s vice-president of corporate affairs and communications, Cory McPhee, said the miner will be in a better position to know what the path forward for the underground project looks like.
But detailed engineering and procurement related to the mine’s expansion which began last year is ongoing. Open pit operations in Voisey’s Bay and Long Harbour are continuing as normal, without layoffs, McPhee said.
The union representing workers at the site said there’s still time for Vale to approve the underground expansion before the life of the open pit mine expires early in the next decade.
“We do have some time although not very much. The window is very small,” said Darren Cove, president of United Steelworkers Local 9508.
Cove said there are no current worries about layoffs even though a Vale mine in Sudbury, Ont., closed in May due in part to low ore availability, while a Manitoba facility will shutter Oct. 1.
Excess nickel inventory that has caused prices to plummet is prompting global producers to be conservative about spending but the long-term outlook is bright because of the metal’s use in electric car batteries and stainless steel, say mining analysts.
Theophile Yameogo of Ernst & Young said he expects demand will pick up strongly after 2020 if electric vehicles sales accelerate and account for seven per cent of cars sold.
“The future is definitely very positive,” he said from Toronto.
The market has faced a decade of chronic surplus production spurred by investment in new mines after prices peaked at more than US$20 per pound in 2027.
They have hovered around US$4 of late and are expected to gradually increase to reach US$6 to US$7 by the end of the decade and rise by 50 cents to US$1 per year over the next five years, said Scotiabank commodity economist Rory Johnston.
He said companies are just being cautious.
“I don’t see it so much as an exit from current production capacity, just a slow down on investment in new capacity until the market gets a better sense of where nickel prices are going to be going in the longer term.”
Canada is the world’s third biggest nickel player, producing about 10 per cent of global supply.