Vale’s Long Goodbye: 2,814 days adding up to 7 years, 8 months and 15 days

The Sword of Damocles dangles no longer.

Today is the day Tito Martins, then president and chief executive officer of Vale Canada and executive director of base metals for the Brazilian international parent company, told us was coming on Nov. 17, 2010 – 2,814 days ago, or expressed another way, seven years, eight months and 15 days ago. The day the Thompson smelter and refinery officially cease production and Thompson ceases to be a fully integrated nickel operation for the first time since March 1961.

Mind you, July 31, 2018 – today – is something of an arbitrary bookkeeping sort of marker. At the time of Martins’ 2010 announcement, the closing date was announced as 2015, so we’ve had about three extra years of nickel smelting and refining. As for the actual ramp down, the last furnace tap from the one remaining furnace in operation and anode cast from the smelter and the last cathode pulled from the refinery happened earlier this month. The recently completed Thompson Concentrate Loadout Facility, a fully functioning de-watering and loadout facility, will continue to ship Manitoba-source nickel concentrate from the Thompson Mill for further processing to Vale’s hydromet processing facility in Long Harbour in southeast Newfoundland on Placentia Bay on the western Avalon Peninsula, about 100 kilometres from St. John’s, as milling and mining continue in Thompson, albeit with a much smaller economic, and employment footprint, with just under 600 unionized Steelworkers remaining at Vale here by the end of the year.

Nickel smelting and refining here in Thompson has been a long and glorious run of value-added jobs, producing some of the finest electrolytic nickel plating in the world since Sept. 10, 1960 when the Thompson Smelter produced its first Bessemer nickel matte, and about six months later on March 30, 1961, when the Thompson Refinery produced its first nickel cathodes. At its peak, the smelter operated five furnaces, four nickel and one copper, and between September 1960 and July 2018 produced more than 16.6 million anodes. Between March 1961 and July 2018, the refinery produced more than five billion pounds of electro-nickel, with more than 90 per cent of the nickel produced being plating-grade quality.

There were several key dates in Thompson’s early history: Borehole 11962 – the so-called “Discovery Hole” at Cook Lake, a diamond drill exploration hole – was collared Feb. 5, 1956 and assayed positive for nickel. There’s also the Dec. 3, 1956 signing of the founding 33-page typewritten double-spaced agreement creating Thompson between the Province of Manitoba’s F.C. Bell, minister of mines and natural resources, and International Nickel Company of Canada Limited’s Ralph Parker, vice-president and general manager, and secretary William F. Kennedy. And there was Manitoba Liberal-Progressive Premier Douglas Campbell driving the last spike in the Canadian National Railway (CNR) 30-mile branch line from Sipiwesk to Thompson Oct. 20, 1957.

Thompson, originally a townsite within the newly-created 975-square-mile Local Government District (LGD) of Mystery Lake, within the Dauphin Judicial District, from 1956 to 1966, became a town on Jan. 3, 1967 and a city just three years later on July 7, 1970.

But the key date in Thompson’s history, at least before today? That would be March 25, 1961, when Progressive Conservative Premier Duff Roblin “cut the nickel ribbon to officially open the town” of 3,800 residents Nickel Belt News founding publisher and then owner Grant Wright wrote a few days later on March 29, 1961. The Nickel Belt News came into existence on March 24, 1961 – one day before Roblin and a who’s who of government and mining crème de la crèmes – opened the $185-million smelter and refinery, the free world’s first fully integrated nickel operation and second in size in the “free world” only to Inco’s Sudbury operations. Brazilian mining giant Vale purchased Canadian nickel producer Inco Ltd. in 2006 in an $18.2 billion takeover.

“The establishment of this new, major industry is another step in the developing economic might of the nation,” said Roblin standing at the Inco refinery and smelter site here March 25, 1961. “Indeed, through its products it will contribute to the advancement of the free world. With the need to create new international markets to sustain our economic growth, the export of a finished product – electrolytic nickel – has important ramifications.”

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Closing Time: Last hoist for Thompson’s Birchtree Mine

On the surface, it was an unseasonably warm and brilliant orange early autumn day. Underground, it was closing time. Not last call, but rather the hard rock mining on-the-job equivalent: last hoist.

This day has almost come for Birchtree Mine in Thompson, Manitoba before. In fact, the day did come for Birchtree for most of a decade in the 1980s, as the mine was on “care and maintenance” because of unfavourable market conditions from December 1977 through 1989.

And on Oct. 18, 2012, Vale had announced care and maintenance was being considered for Birchtree Mine in 10 months time in August 2013. After finding $100 million in cost savings at its Manitoba Operations, bringing its cost per metric tonne for finished nickel to under US$10,000, Birchtree Mine would receive on May 6, 2013 a reprieve that lasted almost 4½ years. Until now.

As well as nickel, Birchtree has deposits of copper, cobalt, gold, silver, platinum and palladium. Re-opening of Birchtree was considered in 1981, but was deferred in favour of development of the Thompson open pit mine. Care and maintenance is a term used in the mining industry to describe processes and conditions on a closed minesite where there is potential to recommence operations at a later date. During a care and maintenance phase, production is stopped but the site is managed to ensure it remains in a safe and stable condition.

Preparation to place Birchtree on care and maintenance again some 28 years after its last mining production 12-year hiatus begins two days hence on Monday. Asset recovery is expected to be complete by mid-November, and the plan is for the mine to be officially on care and maintenance by Dec. 31. The current life of mine plan has long anticipated the closure of Birchtree Mine at some point around now. Vale, however, could, as was the case with Inco in 1989, reopen Birchtree Mine should nickel prices rebound more strongly than forecast in the next few years, and the company has said it believes there is a future for the mine.

The current London Metal Exchange (LME) price of nickel per pound would likely have to at least double from US$4.72 to make reopening Birchtree for a second time economically viable. While Thompson is noted for its high quality 99.9 per cent pure electrolytic nickel that is almost free of contaminants such as lead or zinc,  resulting in it often commanding a higher price than the LME price, Birchtree has relatively lower nickel grades. Nickel prices peaked at $25.51 per pound on the LME in May 2007, just months after Vale, the Brazilian mining giant, bought Inco in a $19.9-billion all-cash tender takeover offer deal in October 2006. Nickel prices have fallen nearly 70 per cent in the past six years as international supply far outstrips demand.

The nickel find near Manasan Falls, four kilometres east of Birchtree Lake and about five kilometres southwest of Thompson, that would become Birchtree Mine was first announced publicly to the world on April 22, 1964 by Henry S. Wingate, chairman of the board of the International Nickel Company of Canada (INCO) Limited.

There are several other key dates in Thompson’s early mining history: Borehole 11962 – the so-called “Discovery Hole” at Cook Lake, a diamond drill exploration hole – was collared Feb. 5, 1956 and assayed positive for nickel.

There’s also the Dec. 3, 1956 signing of the founding 33-page typewritten double-spaced agreement creating Thompson between the Province of Manitoba’s F.C. Bell, minister of mines and natural resources, and International Nickel Company of Canada Limited’s Ralph Parker, vice-president and general manager, and secretary William F. Kennedy. As well, there was Manitoba Liberal-Progressive Premier Douglas Campbell driving the last spike in the Canadian National Railway (CNR) 30-mile branch line from Sipiwesk to Thompson Oct. 20, 1957, and March 25, 1961, when Progressive Conservative Premier Duff Roblin cut the nickel ribbon to officially open the $185-million smelter and refinery, set to close also next August, as the world’s first fully integrated nickel operation, and with its 1,800 employees, second in size in the “free world” at the time only to Inco’s Sudbury operations. Vale’s Thompson operations, landholdings or mining rights, consist of at least 2,947 order-in-council (OIC) leases, mineral leases and mining claims “negotiated as part of an agreement entered into in 1956 between Vale Inco and the Province of Manitoba covering the development of the Thompson nickel deposits,” noted filings by the company in 2004 and 2008 with the U.S. Securities and Exchange Commission.

Thompson, originally a townsite within the newly-created 975-square-mile Local Government District (LGD) of Mystery Lake, within the Dauphin Judicial District, from 1956 to 1966, became a town on Jan. 3, 1967 and a city just 3½ years later on July 7, 1970.

Wingate, a lawyer, was born in Talas, Turkey, the son and grandson of American missionaries, and was raised in Northfield, Minnesota. He was with the New York law firm of Sullivan & Cromwell from 1929 to 1935, when he joined INCO as assistant secretary. The sinking of the Birchtree Mine development shaft began on Ink 6 in 1964. The three-compartment shaft was completed to 1,373 feet a year later.

Birchtree began production in 1966. Between 1965 and 1967 the production shaft on Pip 301 was sunk to 2,800 feet, with levels between 300 and 2,300 feet at 200-foot intervals. Inco announced plans in 2000 to move ahead with a $70.4-million deepening of Birchtree Mine to be completed in 2002 and help extend the mine’s life by at least 15 years. In its Exploration and Development Highlights 2001 report, the Manitoba Science, Technology, Energy and Mines Department estimated the shaft deepening would access proven reserves of 13.6 million tonnes of 1.79 per cent nickel and “extend Birchtree’s production to 2016.”

As a result of the Birchtree Mine closing, about 200 high-paid jobs are expected to disappear from the local economy over the next few months – a very big though by no means fatal hit to the local economy – including not only Vale employees but other mining sector contractors and support service positions.

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What happens to boom-and-bust if there’s no upswing? Thompson heading into uncharted economic territory

Thompson has been through tough times before. Pick a year: 1971 or 1977 or 1981 or 1999 perhaps. Take 1981 for instance. A “Hard Times” dance for striking Inco Steelworkers on Oct. 24, 1981 was packed to capacity. The Thompson Chamber of Commerce was in full panic mode as local merchants, along with striking miners, faced the prospect of a very bleak Christmas 1981. Numerous homes and businesses were boarded up. A dissident USW group was demanding a vote on Inco’s most recent offer (they got it and it was turned down). Nickel prices continued to slide, selling for just over $3 per pound, while worldwide demand had sagged 12 per cent below 1974 levels. The company was reporting a record third quarter loss of $US 29.4 million – its worst performance in 50 years. Canada and the rest of the world were sliding into a brutal recession. And so on.

Legends have made been made out of how resilient Northerners are and how Thompsonites persevered through the bad times until sunnier days dawned again. But that’s because a downturn in mining was always followed by an upswing, sooner or later. Boom-and-bust. Mining is a cyclical boom-and-bust business involving a finite resource, in this case nickel, which is eventually depleted. Thompson’s first mining bust came in 1971, scarcely a decade after the town was born, when Inco announced the closing of the Soab mines; Pipe Number 1 Mine was closed; and work was slowed down at the open pit as all production was cut and more than 200 jobs shed. By the end of 1971, Inco had laid off 30 per cent of its workforce here. “The Greens” on Nickel Road, part of the eight-building apartment complex made up also of “The Pinks” and “The Yellows,” as old-timers still sometimes call them, built by Malcolm Construction in the 1960s, wound up back in the hands of mortgagor Canada Mortgage and Housing Corporation (CMHC) and sat vacant for more than two years. Things improved in the mid-1970s but got tough again in both 1977 – with major job cuts at Inco – and again in 1981 with a bitter strike. But the good times always returned again to follow the bad. Just be patient and wait.

What if none of that is true this time? Does anyone seriously believe Vale’s Birchtree Mine, with about a couple of hundred jobs, is going to be open many years after the closure of the smelter and refinery next year and the 500 Vale jobs, give or take, about to disappear there one way or the other, as well as those of 250 to 375 contractors employed by the company.  The mine was previously on “care and maintenance” from 1977 to 1989.

What if there’s no bounce-back in mining?

While Vale’s $100-million-plus concentrate load-out facility and Dam B tailings expansion is welcome news looking toward the future of Vale’s Manitoba mining and milling operations here in Thompson, what if Vale’s proposed Thompson Foot Wall Deep Project, at the north end of Thompson Mine, previously known as Thompson (1D), with its 11 million tonnes of nickel mineralization, which forms a deep, north-plunging continuation of the Thompson deposit, doesn’t go ahead to help sustain the Thompson operation, given nickel is selling on the London Metal Exchange (LME) for US$4.96/lb. The refinery and smelter, which both opened March 25, 1961, are set to close next year and about 30 per cent of Vale’s production employees in Thompson work in the smelter and refinery.

Here’s a hint. Tourism, wolf or any other kind, is not going to save Thompson, if the goal is to maintain the city even at its current level of reduced economic vitality, much less return it to the glory nickel mining days of the 1960s. While hosting the 2018 Manitoba Winter Games next year will bring about 1,400 athletes and about 3,000 people overall – including coaches, officials and fans – into the city over an eight-day span, it is no long-term panacea for Thompson’s coming economic woes. Instead, it should hopefully be a nice one-time economic booster shot at a very welcome time.

Manitoba Chambers of Commerce president and CEO Chuck Davidson, who grew up in Northern Manitoba in both Flin Flon and Snow Lake, where he graduated high school, along with Opaskwayak Cree Nation Onekanew Chief Christian Sinclair, who co-chair the province’s Look North Task Force, which rolled out its new “Look North” website at http://www.looknorthmb.ca recently, both know that over the next two to three years about 1,000 jobs are going to disappear throughout Northern Manitoba, with a direct a loss of close to $100 million in annual income – and if you add-on a standard multiplier effect of three – an indirect loss of about $300 million is just around the corner.  Try triaging that with tourism.

I’m a local ratepayer and I work in both the private and public sectors in Thompson. I’ve lived here for a few months short of a decade. In the private sector, I work in the hotel industry, so I have a personal interest in seeing the tourism industry doing well in Thompson, and I do what I can for my part to facilitate that.  I also work in the post-secondary institutional public sector here as a public servant, so again, I very much want to see the people I serve every day do well. And while I think there are some good folks involved with both the Manitoba Chambers of Commerce provincially and the Thompson Chamber of Commerce locally, I’ve been around here long enough to remember ideas such as Barry Prentice’s airships to the arctic, which proposed using enormous cigar-shaped balloons, up to six storeys high, touted to offer cheap, reliable transportation for people and cargo, or Ernesto Sirolli, of Sacramento, California speaking to the local chamber, as the Italian-born founder of community economic development “enterprise facilitation.”

Sirolli developed the concept of enterprise facilitation more than three decades ago in Esperance, a small rural coastal community in Western Australia and now heads the Sirolli Institute in Sacramento. Esperance, an isolated coastal town of 8,500, had 500 people registered as unemployed in 1985, and a recent quota on fishing tuna that shrunk the local fishing industry.”Want to help someone? Shut up and listen!” Sirolli has famously said many times. “In 1975 I read Small is Beautiful by Ernest Schumacher. He was an economist who was critical of the Western approach to development in the Third World and he proposed a different approach known as ‘intermediate technology.’

“I was intrigued by his approach but what truly inspired me was something he wrote: ‘If people do not wish to be helped, leave them alone. This should be the first principle of aid,'” Sirolli said.

Tourism is often touted by politicians of various stripes as a fix-it for winding-down resource-based economies. But it just isn’t so. Tourism has some complementary economic role to play, more in Churchill than Thompson, but it will never replace high-value private sector mining jobs, such as exist at Vale’s above ground surface smelter and refinery operations, and underground at Birchtree Mine. Why is it so hard to say so out loud?

Same goes for the Thompson Economic Diversification Working Group (TEDWG), which was created in May 2011, six months after Vale announced the shutdown of the refinery and smelter in November 2010, and which has been lauded by what passes for thought leaders in Thompson as an example of how resource-based companies and the communities they operate in can work together to address the ramifications of changes in operations. “Unfortunately,” the Thompson Citizen rightly noted in a Feb. 8 editorial, “processes don’t mean much unless they achieve some tangible results and it’s difficult to see exactly what the time (and money, in Vale’s case) dedicated to the process has yielded so far.”

Vale paid out more than $2.5 million in cash to fund TEDWG, mainly using Toronto-based consultants rePlan, a Canadian firm with decades of experience helping resource-based companies and communities adapt to change. Within its first year, TEDWG had identified by the end of 2012 – more than four years ago now – five keys area of focus: a restorative justice facility, education and training, local and regional identity, housing, and economic development. Sirolli’s visit here in September 2013 came as local businesses stood at a crossroads as the implementation work coming out of TEDWG was supposed to begin.  Ask yourself where we are today with that agenda?

Prentice and Sirolli may well be visionaries, but well-meaning chambers of commerce folks? Not so much, I’m afraid.

Ask yourself about TEDWG right after you ponder for a few minutes whatever happened to the Thompson Community Development Corporation, better known as Thompson Unlimited, the city’s economic development corporation established in 2003 and disbanded last June by city council to be replaced by what? A City Hall operation to showcase Thompson’s rising taxes and water bills, along with falling housing prices and businesses closing?

Northern Manitoba needs much more than tourism. Lonely Planet, the world famous and largest travel guide on the planet, started by Tony and Maureen Wheeler more than 40 years ago, published an entry back in mid-2015 simply called “Introducing Thompson,” which can be found at: https://www.lonelyplanet.com/canada/thompson, and the result isn’t pretty. “Carved out of the boreal forest by mining interests in the 1950s, Thompson is a rather charmless town that travelers pass through en route to Churchill.”

True, two exceptions are named: “Thompson’s relatively new fame as ‘Wolf Capital of the World’ and a Boreal Discovery Centre that allows visitors to learn all about this predator, common in the wilderness around town, as well as other denizens of the boreal.” Well, the Thompson Zoo, which had opened in 1971, closed its doors going on five years ago now in the fall of 2012 and the resident animals decamped elsewhere. The future Boreal Discovery Centre on the site is, well, future. Lonely Planet is famous in its own words for telling travelers what a place is like “without fear or favor … we never compromise our opinions for commercial gain.”

Think of it this way. How many of us who now live in Thompson came to the city initially because we were drawn here by tourism of any kind? That’s what I thought. We came for a job and stayed for the job or jobs. Paint Lake, Pisew Falls and Sasagiu Rapids are nature’s bonuses, not the original draw here.

Along with Fodor’s and Frommer’s, Lonely Planet is one of the more respected and widely quoted travel guides in the world in what is a fairly crowded field.

Even Churchill, with its well established polar bear tourism, along with growing beluga whale and other eco-tourism, will be dead in the water if the Port of Churchill doesn’t get back to shipping something soon, and freight rail service is increased again. OmniTRAX, the Denver-based short line railroad, which owns the Port of Churchill, announced last July 25 it would be laying off or not re-hiring about 90 port workers, as it was cancelling the 2016 grain shipping season. At the time the cancellation was announced near the end of July, OmniTRAX did not have a single committed grain shipping contract. Normally, the Port of Churchill has a 14-week shipping season from July 15 to Oct. 31.

OmniTRAX bought most of Northern Manitoba’s rail track from The Pas to Churchill in 1997 from CN for $11 million. The track reached Churchill on March 29, 1929. The last spike, wrapped in tinfoil ripped from a packet of tobacco, was hammered in to mark completion of the project: an iron spike in silver ceremonial trappings. OmniTRAX took over the related Port of Churchill, which opened in 1929, when it acquired it from Canada Ports Corporation, for a token $10 soon after buying the rail line. The Port of Churchill has the largest fuel terminal in the Arctic and is North America’s only deep water Arctic seaport that offers a gateway between North America and Mexico, South America, Europe and the Middle East. OmniTRAX created Hudson Bay Railway in 1997, the same year it took over operation of the Port of Churchill. It operates 820 kilometres of track in Manitoba between The Pas and Churchill.

OmniTRAX had a terrible grain shipping season through Canada’s most northerly grain and oilseeds export terminal in 2015, moving only 184,600 tonnes as compared to 540,000 tonnes in 2014 and 640,000 tonnes in 2013.  In 1977 an all-time record 816,000 tonnes were shipped from the Port of Churchill. OmniTRAX is on a Canadian National (CN) interchange at The Pas and relies on CN for the grain-filled cars. OmniTRAX  considered 500,000 tonnes a normal shipping season. Wheat accounts for most of the grain loaded in Churchill, with some durum and canola also being shipped. In addition to grain and oil seeds, the shipping season has also included vessels loaded with re-supply shipments, such as petroleum products, northbound for Nunavut.

OmniTRAX moved between 2011 and 2014 to diversify the commodity mix the railway and port handle here in Manitoba in the wake of the federal government legislating the end of the Canadian Wheat Board’s grain monopoly, creating a new grain market. OmniTRAX said at the time transporting just grain would not be enough to sustain their Manitoba business over the longer term. The Canadian Wheat Board, renamed G3 Canada Ltd. by its new owners, has built a network of grain elevators, terminals and vessels that bypasses Churchill and uses the Great Lakes, St. Lawrence River and West Coast to move grain to foreign markets.

In 2013, worried about the viability of relying primarily on grain shipments through Churchill, OmniTRAX unveiled plans to ship Bakken and Western Intermediate sweet crude oil bound for markets in eastern North America and Western Europe on 80-tanker car Hudson Bay Railway trains from The Pas to Churchill and then from the Port of Churchill on Panamax-class tanker ships out Hudson Bay, the world’s largest seasonally ice-covered inland sea, stretching 1,500 kilometres at its widest extent, to markets in eastern North America and Western Europe.

However, the oil-by-rail to Churchill plan, unveiled in Thompson on Aug, 15, 2013, met a firestorm of public opposition, ranging from local citizens, members of First Nations aboriginal communities along the Bayline between Gillam and Churchill, with whistle stops in places like Bird, Sundance Amery, Charlebois, Weir River, Lawledge, Thibaudeau, Silcox, Herchmer, Kellett, O’Day, Back, McClintock, Cromarty, Belcher, Chesnaye, Lamprey, Bylot, Digges, Tidal and Fort Churchill, environmental activists, including the Wilderness Committee’s Manitoba Field Office, and even government officials – opposition fueled in part no doubt by the tragedy only 5½ weeks earlier at Lac-Mégantic, Québec where  a runaway Montreal, Maine & Atlantic Railway (MMA) freight train carrying crude oil from the Bakken shale gas formation in North Dakota – in 72 CTC-111A tanker cars – derailed in downtown Lac-Mégantic in Quebec’s Eastern Townships on July 6, 2013. Forty-seven people died as a result of the fiery explosion that followed the derailment.

Within a year, OmniTRAX shelved its oil-by-rail shipping plan from The Pas to Churchill in August 2014.

After more than a year of due diligence, OmniTRAX and the Mathias Colomb First Nation, Tataskweyak Cree Nation and the War Lake First Nation, known as the Missinippi Rail Consortium, signed a memorandum of understanding last December for the latter to buy OmniTRAX’s rail assets in Manitoba, along with the Port of Churchill, but the deal has not been completed to date, as the consortium looks for additional investors, and neither the provincial or federal governments are rushing for a seat at that table. Whatever other investors may be out there and how deep their pockets are remain to be seen. Just four days before the provincial election last April 19, OmniTRAX Canada filed a lawsuit on April 15, 2016 against the province, along with former NDP Premier Greg Selinger and former Thompson MLA and minister of infrastructure and transportation Steve Ashton, naming them as individual defendants, alleging they interfered in December 2015 in the sale of Hudson Bay Railway, a wholly-owned subsidiary of OmniTRAX Canada, to a consortium of 10 Northern Manitoba First Nations, led by Mathias Colomb Cree Nation, by disclosing confidential financial information about OmniTRAX Canada to consulting firm MNP LLP and Opaskwayak Cree Nation (OCN) at The Pas. That lawsuit remains outstanding.

As for the University College of the North (UCN), Northern Regional Health Authority (NRHA) and other provincial government departments and agencies in Northern Manitoba, they are are not going to offer economic salvation either.

While the public sector has some very good and well paid jobs and will continue to, the overall trend over the next several years is going to be away from growth and moving in the opposite direction toward job and budget cuts. The Pallister Tories have already told Helga Bryant’s NRHA to find about $6 million in savings in its $230-plus million annual budget. The province last month also announced it was scrapping for now at least a $9 million planned renovation of the Northern Consultation Clinic here in the basement of Thompson General Hospital. The clinic itself, which houses among other things, a number of resident and visiting medical specialties, who come through town on a rotating basis, sort of like a locum, remains open to see patients, often referred by a general or family practitioner.

“Barring a miracle, things in Thompson and in the north as a whole are not going to get better economically in the short term and it looks quite likely that they will actually get worse,” the Thompson Citizen observed editorially March 1. “What’s more, no white knight is going to ride in in the form of a company looking to employ lots of people in high-paying jobs that begin right away and last until the end of time.”

Every spring for the last 12 years, Toronto-based MoneySense magazine has published a closely watched annual survey, which ranks cities across the country from best to worst places to live in Canada – both overall and in specific categories. In the most recent survey, published last June in the summer issue of the magazine, Thompson got a nice bounce back up to 132nd spot in 2016 after its worst worst-ever finish in 177th place in 2015.

This year? Time will tell soon enough.

Same for Statistics Canada’s annual Juristat Crime Severity Index values, which will be released in July, for police services policing communities over 10,000 in population, with their Violent Crime Severity Index, Overall Crime Severity Index and Non-Violent Crime Severity Index values.

The crime severity indexes are calculated by assigning crimes different weights based on seriousness as measured by each crime’s incarceration rate and the average prison sentence courts mete out for each crime. The weighted offences are then added up and divided by population. The CSI is standardized to a base of 100 which is derived from the index values for the year 2006. While some of Thompson’s perennially high index numbers have improved marginally in recent years, the Violent Crime Severity Index did not, as we went from being fourth-highest in that category to third highest last year, behind North Battleford and Prince Albert in Northern Saskatchewan.

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Will we see the return of Inco Ltd. to TSX next summer as Vale re-thinks base metals?

Iron ore accounts for three-fourths of Brazilian mining giant Vale’s revenue.  With economic growth in China slowing and iron-ore production from Vale’s rivals in Australia speeding up, the benchmark price for the steel-making material has fallen to around $70-$75 per metric ton recently, little more than one-third of the 2011 peak of around $190 per metric ton. Mining analysts estimate that it costs Vale $67 to produce a metric ton of iron ore and ship it to China, making for a very tight profit margin at current commodity prices. Vale’s shares as of last week had fallen 42 per cent year-to-date. What to do?

Vale CEO Murilo Ferreira, in an annual presentation to investors Dec. 2, said the company is considering selling shares of between 30 per cent and 40 per cent of its base-metals division. The division is made up primarily of copper and nickel mines in Brazil, in Indonesia’s island province of Sulawesi, an hour’s flight north of Bali, on the southern tip of Grand Terre, the main island in New Caledonia, an overseas territory of France, east of Australia, and Canada, including nickel mining, milling, smelting and refining in Thompson, Manitoba, where copper and cobalt, along with associated gold, silver, platinum, sulphur, selenium and palladium deposits, are also mined.

The Initial Public Offering (IPO) would be intended, Ferreira said, to “unlock” value in the base metals division, although specifics haven’t been worked out nor has the sale been proposed to Vale’s board of directors. The Thompson smelter and refinery, which opened March 25, 1961, was the free world’s first fully integrated nickel operation and built at a cost of $185 million. Mining analysts believe Vale’s base metals division may be worth $30-billion to $35-billion, including the assumption of debt.

Rio de Janeiro-based Vale has mining operations on five continents in 38 countries. Its base metals business is headquartered in Toronto. Vale is the second largest mining company in the world by market capitalization, surpassed only by Melbourne, Australia-based BHP Billiton Ltd. (BHP), and the second-largest nickel producer after Moscow-based OAO GMK Norilsk Nickel. About 75 percent of Vale’s nickel production comes from Canada. Vale is the world’s largest iron-ore producer.

Ferreira said an IPO would hinge on a “fair price” for the base metals shares. Thompson Reuters data suggests such an IPO could  raise $5-billion to $8-billion, making it the biggest in Canadian history, eclipsing Manulife Financial Corp.’s record $2.12-billion IPO in 1999.

Vale would use the money realized from an IPO pay for key projects in the midst of sliding iron ore prices. While the base metals business is highly profitable for Vale, analysts see it as a lost division with the larger company focus on iron ore.

Nickel prices peaked at $25.51 per pound on the London Metal Exchange (LME) in May 2007 just months after Vale bought Inco Ltd. in a $19.9-billion all-cash tender takeover offer deal in October 2006.  In December 2008, nickel briefly dipped below $4 per pound and was $4.31 per pound on March 9, 2009 when the Dow Jones Industrial Average closed at a 12-year low of 6,547.05 – its lowest close since April 1997, losing 20 per cent of its value in only six weeks.

Scotiabank said in mid-April it now expects nickel to average $7.66 (U.S.) per pound this year. At the beginning of 2014, nickel was about US$6.50 per pound, compared to just under US$8 per pound a year earlier. The LME price today is $7.43 (U.S.) per pound, with the price being supported less by demand than supply restrictions because Indonesia, the world’s largest nickel producer, last January 2014 banned all exports of unprocessed nickel ore. Indonesia’s Constitutional Court recently upheld the legality of the ban. Nickel has risen 19 percent this year, the most among six main metals traded on the LME and has made the third-biggest gain in the Bloomberg Commodity Index of 22 raw materials.

The Wall Street Journal’s Paul Kiernan reported Dec. 2 Vale “failed to round up buyers for some nickel operations in Canada, according to two people familiar with the matter. Last year, Vale tried to get a partner to buy into the sprawling operation at Thompson, Manitoba, which includes two mills and a refinery, and this turned into an attempt to sell assets, one of the people said.” Vale’s Chief Financial Officer Luciano Siani is reported in the same story to have said the “Thompson complex isn’t for sale.”

Jennifer Maki, a chartered accountant who joined Vale in Canada almost 12 years ago in January 2003, was named Nov. 14  as Vale’s executive director of base metals as Peter Poppinga replaced long-serving José Carlos Martins as executive director for ferrous minerals.

Poppinga, who had replaced Tito Martins as chief executive officer of Vale Canada and executive director of base metals and information technology in November 2011, led 16 operating sites around the world and in Vale’s quest for asset base optimization over the last three years.

Maki, who has an undergraduate degree in commerce from Queen’s University in Kingston, Ontario, has served as executive vice-president and chief financial officer of Vale Canada since September 2007. Before joining Vale as an assistant controller for financial planning in 2003, she had worked as a chartered accountant for PricewaterhouseCoopers for almost 10 years.

In a March 2013 interview with Upfront, the in-house magazine of PricewaterhouseCoopers, her former employer, Maki observed, among other things, that Vale’s “workforce in Brazil, for example, is much more mobile and they’re much more willing to pursue opportunities outside of their home cities and towns than people are in Canada.” Maki, commenting on how Inco’s culture changed after its 2007 merger with Vale, said, ” We’ve probably become more performance driven by key performance indicators and metrics. You see it right through Vale from their compensation packages to how people are rewarded. I think part of that is coming from a country like Brazil, where there’s a very hungry group of people who have grown up in a developing country. I think they’ve instilled that here and made some major changes across our Canadian operations.”

Since last January, Maki has been the chief financial and administrative officer for base metals, as well as participating in the management of base metals businesses outside Canada. She has been a member of the Board of Commissioners of PT Vale Indonesia Tbk (PTVI) since 2007 and recently became its president commissioner.

Poppinga was born in Rio de Janeiro in Brazil. He holds a master’s degree in business administration from Fundacao Dom Cabral in Brazil. He received a degree in geology from the Federal University of Rio de Janeiro in 1980 and Friedrich-Alexander-Universität Erlangen-Nürnberg in Erlangen, Germany and a post-graduate degree in geology and mine engineering from Clausthal University of Technology in Clausthal-Zellerfeld Germany in 1984, with specialist diplomas in geo-statistics from the Universidade Federal de Ouro Preto in Minas Gerais, Brazil, and strategic mega trends from Asia Focus, Kellogg Singapore.

He speaks four languages including Portuguese, English, German and French. He worked for S.A. Mineracao da Trindade (SAMITRI) from 1984 until it was acquired by Vale in 1999, when he joined Vale as commercial director and general manager of the iron ore business in New York for Vale subsidiary Rio Doce America before moving to Rio Doce International, Belgium where he led Vale’s market and sales activities in Europe from 2000 to 2004. Between 2005 and 2007, he was president of Vale International S.A. in Switzerland, and from 2008 until the end of 2009 he was executive vice-president human resources at Vale (then Vale Inco) in Toronto.

In January 2010, Poppinga moved to Australia when he was named vice-president for base metals operations for the Asia and Pacific region where he was responsible for operations in Indonesia, New Caledonia, China and Japan.

Ferreira is a former CEO of Vale Canada, serving almost two years as the top Vale official in Canada, starting when the Brazilian mining giant finalized its purchase of Inco in January 2007. He had originally joined Vale in 1977. In 1998 he was appointed executive officer of commerce and finance at Vale do Rio Doce Alumínio S.A.-ALUVALE, a holding company of Vale that was merged into Vale in December 2003. Much of his experience is in aluminum and ferroalloys.

He was chief executive officer of Vale Inco, currently known as Vale Canada, in Toronto and executive director of nickel and base metals sales of Vale when he left the company for personal reasons at the end of 2008 and was replaced by Tito Martins. Ferreira rejoined Vale and replaced Roger Agnelli as CEO on May 22, 2011.

Vale is controlled by Valepar SA, which is owned by Previ, the employee pension fund of state-controlled Banco do Brasil SA; Bradespar SA, an industrial holding company; Mitsui & Co, Japan’s second-largest trading company; BNDES Participações SA, or BNDESpar, and Elétron – and the Brazilian government owns 12 so-called “golden shares” in Vale that gives it veto power over corporate decisions. Created on June 1, 1942 by the Brazilian government, Vale was privatized on May 7, 1997.

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Jennifer Maki takes over as Vale’s executive director of base metals as Peter Poppinga replaces José Carlos Martins as executive director for ferrous minerals; Vale CEO Murilo Ferreira joins Newfoundland and Labrador Premier Paul Davis in Long Harbour to mark nickel production at the new processing plant

Jennifer Maki, a chartered accountant who joined Vale in Canada almost 12 years ago in January 2003, was named Nov. 14  as Vale’s executive director of base metals as Peter Poppinga replaces  José Carlos Martins as executive director for ferrous minerals. Martins left the company as iron ore, which is the Brazilian mining giant’s main commodity, continues to slump in price with no end in sight.

Poppinga, who had replaced Tito Martins as chief executive officer of Vale Canada and executive director of base metals and information technology in November 2011, led 16 operating sites around the world and in Vale’s quest for asset base optimization over the last three years.

Maki, who has an undergraduate degree in commerce from Queen’s University in Kingston, Ontario, has served as executive vice-president and chief financial officer of Vale Canada since September 2007. Before joining Vale as an assistant controller for financial planning in 2003, she had worked as a chartered accountant for PricewaterhouseCoopers for almost 10 years.

In a March 2013 interview with Upfront, the in-house magazine of PricewaterhouseCoopers, her former employer, Maki observed, among other things, that Vale’s “workforce in Brazil, for example, is much more mobile and they’re much more willing to pursue opportunities outside of their home cities and towns than people are in Canada.” Maki, commenting on how Inco’s culture changed after its 2007 merger with Vale, said, ” We’ve probably become more performance driven by key performance indicators and metrics. You see it right through Vale from their compensation packages to how people are rewarded. I think part of that is coming from a country like Brazil, where there’s a very hungry group of people who have grown up in a developing country. I think they’ve instilled that here and made some major changes across our Canadian operations.”

Since last January, Maki has been the chief financial and administrative officer for base metals, as well as participating in the management of base metals businesses outside Canada. She has been a member of the Board of Commissioners of PT Vale Indonesia Tbk (PTVI) since 2007 and recently became its president commissioner.

Poppinga was born in Rio de Janeiro in Brazil. He holds a master’s degree in business administration from Fundacao Dom Cabral in Brazil. He received a degree in geology from the Federal University of Rio de Janeiro in 1980 and Friedrich-Alexander-Universität Erlangen-Nürnberg in Erlangen, Germany and a post-graduate degree in geology and mine engineering from Clausthal University of Technology in Clausthal-Zellerfeld Germany in 1984, with specialist diplomas in geo-statistics from the Universidade Federal de Ouro Preto in Minas Gerais, Brazil, and strategic mega trends from Asia Focus, Kellogg Singapore.

He speaks four languages including Portuguese, English, German and French. He worked for S.A. Mineracao da Trindade (SAMITRI) from 1984 until it was acquired by Vale in 1999, when he joined Vale as commercial director and general manager of the iron ore business in New York for Vale subsidiary Rio Doce America before moving to Rio Doce International, Belgium where he led Vale’s market and sales activities in Europe from 2000 to 2004. Between 2005 and 2007, he was president of Vale International S.A. in Switzerland, and from 2008 until the end of 2009 he was executive vice-president human resources at Vale (then Vale Inco) in Toronto.

In January 2010, Poppinga moved to Australia when he was named vice-president for base metals operations for the Asia and Pacific region where he was responsible for operations in Indonesia, New Caledonia, China and Japan.

Vale has mining operations on five continents in 38 countries. Its base metals business is headquartered in Toronto. Vale is the second largest mining company in the world by market capitalization.

Vale CEO Murilo Ferreira, who joins Newfoundland and Labrador Tory Premier Paul Davis, Minister of Natural Resources Derrick Dalle and Conservative Senator Norman Doyle in Long Harbour Nov. 19 to mark nickel production at the new processing plant, is a former CEO of Vale Canada. Ferreira served almost two years as the top Vale official in Canada, starting when the Brazilian mining giant finalized its purchase of Inco in January 2007. He had originally joined Vale in 1977. In 1998 he was appointed executive officer of commerce and finance at Vale do Rio Doce Alumínio S.A.-ALUVALE, a holding company of Vale that was merged into Vale in December 2003. Much of his experience is in aluminum and ferroalloys.

He was chief executive officer of Vale Inco, currently known as Vale Canada, in Toronto and executive director of nickel and base metals sales of Vale when he left the company for personal reasons at the end of 2008 and was replaced by Tito Martins. Ferreira rejoined Vale and replaced Roger Agnelli as CEO on May 22, 2011.

The event in Long Harbour Wednesday begins at 8 a.m. Central Standard Time at the processing plant in the product packaging area.

The Long Harbour Processing Plant  will employ about 475 people at full production. Long Harbour, a state-of-the-art hydrometallurgy, or “hydromet” for short, processing facility in southeast Newfoundland on Placentia Bay on the western Avalon Peninsula, about 100 kilometres from St. John’s, and Vale’s Voisey’s Bay mine  and concentrator in Labrador are an integrated operation. Nickel concentrate from Voisey’s Bay will be shipped to Long Harbour to be processed into finished nickel and associated copper and cobalt products.

Hydrometallurgy is a chemical process combining water, oxygen or other substances in a pressurized or other vessel to dissolve a metal from its ore, concentrate or an intermediate product (such as matte).

The nickel industry worldwide has traditionally smelted concentrates produced from nickel, copper and cobalt sulphide ores to make an intermediate sulphide product called matte.

Hydrometallurgy has been used for refining the matte to produce high purity nickel, copper and cobalt for the market. Thus, traditional production of these metals has occurred in two steps: smelting and refining. The new hydrometallurgical process that Vale developed and will use at Long Harbour process the nickel concentrate directly to metal products without first having to smelt the concentrate.

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Agreement-in-principle reached with federal government on environmental sulphur dioxide (SO2) airbone emission standards that will allow Vale’s Manitoba Operations smelter to stay open until 2018, mayoral candidate Luke Robinson and USW Local 6166 president Murray Nychyporuk say

Vale has reached an agreement-in-principle with the federal government that will allow it to continue to operate its 53-year-old smelter in Thompson until sometime in 2018, say mayoral candidate Luke Robinson and USW Local 6166 president Murray Nychyporuk.  Pending environmental sulphur dioxide (SO2) airborne emission standards that were due to come into effect  in a few months, as applied to Vale’s Manitoba Operations, would have required its closure if Vale couldn’t meet the standards. The new standards would require a reduction in airborne emissions of approximately 88 per cent from current levels at the Thompson operation, Vale has said previously.

More than 30 per cent of Vale’s production employees in Thompson work in the smelter and refinery. Employees hired before Oct. 1, 2011, have the option to transfer to the mill or underground to the mines from surface operations when the smelter and refinery close under the company’s transition plan.

The announcement that the smelter and refinery would close was originally made on Nov. 17, 2010, with Vale saying at the time it was “phasing out of smelting and refining by 2015” in Thompson. Mining and milling operations are slated to continue.

Almost two years later, in October 2012, Vale announced a possible one-year extension for the Thompson smelter and refinery, contingent on federal sulphur dioxide (SO2) emission standards approvals, to no later than Dec. 31, 2015 because of construction delays at the now open state-of-the-art hydromet processing facility in Long Harbour in southeast Newfoundland on Placentia Bay on the western Avalon Peninsula, about 100 kilometres from St. John’s. It will also process sulphide concentrate feed produced at Voisey’s Bay in Labrador, which has been processed in Thompson. The Long Harbour plant is Vale’s first processing facility in Canada located on tidewater. Long Harbour was originally scheduled for completion in the first quarter of 2013.

Robinson, a first-term incumbent councillor, running in the Oct. 22 municipal election for the open mayoral seat being vacated by Mayor Tim Johnston, who is not seeking re-election to council, against Dennis Fenske, another first-term incumbent councillor, who is Vale’s engineering supervisor of support services for central engineering and the project management office here, said Sept. 22 at a regular council meeting Vale has reached an agreement with the federal government on the sulphur dioxide (SO2) emission standards that will allow the smelter to stay open into 2018.  Robinson is a mechanical underground worker at Vale.

The Thompson smelter and refinery, which opened March 25, 1961, was the free world’s first fully integrated nickel operation and built at a cost of $185 million.

The Canada-Wide Acid Rain Strategy for Post-2000 was agreed to in 1998 by federal, provincial and territorial ministers of energy and environment to fulfill an earlier commitment in their 1994 “Statement of Intent on Long-Term Acid Rain Management in Canada,” which in turn built on the 1985 Eastern Canada Acid Rain Program.  Sulphur dioxide emissions in Canada have decreased 63 per cent since 1985, thanks mostly to a reduction of the amounts produced by base metal smelters due to a combination of a code of practice and implementation of pollution prevention plans, the Winnipeg-based Canadian Council of Ministers of the Environment reported last year. The president of the council is Manitoba NDP  Minister of Conversation and Water Stewardship Gord Mackintosh.

Their 2010-2011 progress report on acid rain strategy for after 2000, released early last year, reported that  Manitoba was the third-largest emitter of sulphur dioxide (SO2) in Canada in 2010, accounting for 14 per cent of the total, behind only Alberta at 27 per cent and Ontario at 20 per cent.

SO2 emissions from Manitoba in 2010 were down 44 per cent from their 2008 level, to 197,000 tonnes from 350,000 tonnes, thanks in part to the closure that year of Hudbay’s copper smelter in Flin Flon, which was expected to reduce total emissions of SO2 by 185,000 tonnes per year. That was the largest relative decrease in S02 emissions in any province over the same two-year period.

The scheduled closure of Vale’s smelter in Thompson is expected to reduce the amount of sulphur dioxide emitted in Manitoba by another 185,000 tonnes, the report said. Together, those two smelters in Flin Flon and Thompson had accounted for the bulk of the emissions produced by the nonferrous mining and smelting sector, which was responsible for 98 per cent of all SO2 emissions in Manitoba.

Liz Dykman, programs co-ordinator for the Canadian Council of Ministers of the Environment, told soundingsjohnbarker (https://soundingsjohnbarker.wordpress.com/) Sept. 25 the “2010/11 report is indeed the latest report on the Canada-wide Acid Rain Strategy for Post-2000.  A 2012/13 report is currently being drafted. CCME does not have any more recent reports on refinery and smelter mining operation SO2 emissions.”

USW Local 6166 president Murray Nychyporuk said in an interview Sept. 25 with soundingsjohnbarker he believes the deal with Vale the federal government, which was discussed by the bargaining teams during recent contract negotiations, is essentially an agreement-in-principle that would allow Vale to continue to operate the smelter and refinery through some point in 2018 on environmental grounds.

Nychyporuk said it’s not clear to him at this point if the deal would run right until the end of 2018 on Dec. 31.

He also said he understood agreement-in-principle means there will likely be some public comment period, for perhaps written comments or a town hall meeting, where people would have the opportunity to make representations on the issue of the new sulphur dioxide (SO2) emission standards not going into force for Vale next year, as previously expected, before the federal government grants its final environmental approval.

Nychyporuk also said it is important to keep in mind also that environmental approval is not the same thing as a business case for Vale keeping the smelter and refinery open into 2018, although he suggests it is unlikely the company would jump through all the necessary legal regulatory environmental hoops to keep the smelter and refinery open if they didn’t plan to carry on operating it during at least most of the extended three-year period. However, Nychyporuk said nickel is a cyclical market, subject to wide price swing flucations, and a big downturn in nickel prices, or the need to do major capital repairs at the smelter if something big should break down, could influence the company to close it before 2018 even with an environmental green light. Conversely, a strong market and high demand might mean Vale will want to keep the smelter and refinery open even beyond 2018, he added, saying there is just no way of knowning that this far in advance. “I don’t have a crystal ball,” Nychyporuk deadpanned.

Nickel was selling on the London Metal Exchange (LME) Sept. 25 for a  spot price of around US$7.82 per pound. At the beginning of 2014, nickel was about US$6.50 per pound, compared to just under US$8 per pound a year earlier. Nickel prices peaked at US$25.51 per pound on the LME in May 2007 just months after Vale bought Inco in a US$19.9-billion all-cash tender takeover offer deal in October 2006. Mining is a cyclical business involving finite resources. Manitoba Operations produces nickel, copper, cobalt and has associated gold, silver, platinum, sulphur, selenium and palladium deposits.

Mark Scott, general manager of mining and milling for Vale’s Manitoba Operations, sounded a cautionary note on the possibility of the smelter and refinery remaining open beyond next year when he spoke to about 30 members and guests at the Thompson Chamber of Commerce’s weekly luncheon May 28, saying the “base case remains” that they both “will close at some point in 2015.” In addition to sulphur dioxide (SO2) emission standards issues, there also remained questions over availability of nickel sulphide concentrate feed, Scott said.

Ryan Land, manager of corporate affairs and organizational development for Vale’s Manitoba Operations, said May 6,  “Vale remains very much committed to Thompson. Largely as a result of challenging market conditions, and in order to align with the ramp-up of projects (which at some point may include a concentrate load-out facility for Thompson), there may be an opportunity to keep the smelter and refinery in operation for an extended duration.

“As a result, we do continue to participate in discussions with the federal government and have requested further flexibility on the date for meeting the emissions targets. We did previously receive approval to operate the plants until the end of 2015, which is already very positive for the community and our employees. While we are hopeful that we can further extend the deadline, we will still transition to mining-and-milling-only at some point between 2016 and 2019.”

Land said in an e-mail follow-up Sept. 29, “We have a tentative agreement with the federal government to allow for the operation of the smelter up to Jan.1, 2019, until such time as the concentrate load-out facility is completed. This is subject to the completion of satisfactory terms within an Environmental Performance Agreement with Environment Canada, pending the submission and approval of a performance plan.”

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