Deal reached over Vale Inco plant in Newfoundland

The Newfoundland and Labrador government said Thursday it has reached apact with Vale Inco on processing nickel at a high-tech plant planned for southern Newfoundland.

The agreement will allow Vale Inco to finish its plant in Long Harbour later than originally scheduled, although the new arrangement will involve greater local benefits, politicians said.

At a news conference lateThursday afternoon, Premier Danny Williams and Natural Resources Minister Kathy Dunderdale said Vale Inco has also agreed to drop clauses that it could have halted work on the $2-billion project if it could not find enough skilled labourers.

Construction on the hydrometallurgical plant is now expected to be completed in February 2013, 14 months later than expected. In a statement, the government said the delay is worthwhile because of "the increasedsize and complexity of the project's construction."

Vale Inco agreed to stop shipments of nickel concentrate from its massive Voisey's Bay mine in northern Labrador last week, amid an ongoing disagreement with the government over the final details of how the processing plant would work.

Vale Inco committed last fall to the Long Harbour project. It will use a water-based technology to process concentrate from the mine.

Inco was given a deadline of Dec. 31 to file its final plans for the Long Harbour hydrometallurgical plant. TheNewfoundland and Labrador government gave the company a three-week extension because it was not satisfied with a draft.

Until Thursday, the provincial government had not identified any of the issues that caused the delay. Vale Inco also has not commented on the reasons for the dispute.

Instead, Vale Inco has said it intended to proceed with the development, and start construction this spring.

Williams and Dunderdale said construction will still launch this spring, although they said Vale Inco's final implementation plan is now not due until March 31.

Target is for 450 workers

The plant, which Vale Inco had wanted to start operating in 2012, will have a permanent staff of about 450 workers.

During the three-year construction period, though, more than 3,000 workers are expected to be needed. The company expects an average of 1,630 workers to work during each year of that period.

The project will likely be a boon for skilled labourers who have been losing work and potential opportunities elsewhere.

Trades unions have expressed alarm at the rapid pace at which expansion projects in Alberta's oil industry a job magnet for workers from Newfoundland and Labrador, among other provinces have been abandoned since late last fall.

Voisey's Bay Nickel, a subsidiary of Vale Inco, began shipping nickel concentrate from the mine in late 2005.

Under an agreement with the province, the company has promised to process an equivalent amount of ore at Long Harbour drawn from other mines.