Citing volatile market conditions and cost challenges, Vale announced today that it plans to move to a single-furnace operation at its Copper Cliff smelter in Sudbury.
Northern Life newspaper reports the move will have immediate effects on the company's $2-billion Clean Atmospheric Emissions Reduction (AER) project.
In mid-October, facing weaker metal prices, Vale undertook a comprehensive review of all its projects and operations. The first step, announced Oct. 18, was that operations at its Frood site of the Stobie Mine would be suspended as of the end of the year.
Although 85 jobs were affected by the decision, there were no layoffs. At the time, Vale said it remained committed to the Clean AER project, although it shifted the completion date from late 2015 to 2016.
The goal of the changes, said Base Metals CEO Peter Poppinga, was to “deliver a business model that is simpler, self-funding and self-sustaining.”
The Base Metals division could no longer expect to rely on financing from Vale's larger iron ore business, he said. By the end of this year, the division is expected to fund itself entirely.
Today's statement said moving to a single furnace at Copper Cliff is the next logical step. Vale does not expect that to happen before the end of 2016.
“Changes in our asset footprint, such as the commissioning of our Long Harbour project in Newfoundland, together with decisions to optimize and redistribute the flow of raw materials, have made the move from a two-furnace operation to a single-furnace operation at our Copper Cliff Smelter the next logical step for the business.
“The current and future mine plans in Ontario do not support a two-furnace operation.”
Although the move to a single furnace is years away, preparation for it means immediate changes to the Clean AER Project.
The outcome, combined with adjustments to Clean AER, will be reductions in annual sulphur dioxide (SO2) emissions of more than 50 per cent greater than in the original project plan at approximately half the capital investment.
Originally slated to cost $2 billion, the move cuts the investment to $1 billion over the next two years.
Jobs will be affected by the change, the company said, but just how many has not been announced. Northern Life will update the story as more information comes available.
“We do expect that over the next several years there will be fewer jobs in the smelter complex with a change to a single furnace – but given the lead time we will look for ways to minimize any impacts,” the statement reads.
The new plan involves minimal short-term adjustments to the Sudbury mine production. New high-value brownfield mine development projects, such as Copper Cliff Mine, will proceed and the Victor Capre project will be accelerated.
Total refined nickel production will not change.
A team has been formed to study the various aspects associated with this change and over the next year this team is tasked with putting together revised plans for a single furnace operation.