Union, government still high on underground prospects for Voisey's Bay mine

There's now uncertainty about a planned expansion of the Voisey's Bay mine in northern Labrador, but government leaders and the union representing workers remain hopeful it will proceed.

"During my conversation with them it didn't look negative. They said it's part of a process," Euclide Hache of the United Steelworkers union told CBC News Wednesday.

• Voisey's Bay underground mine on hold

Natural Resources Minister Siobhan Coady is also being careful not to raise alarm bells.

"I remain hopeful that they will find that going underground in Voisey's Bay is the right business decision for them," she said.

60-day review

Vale confirmed last week that a review of its global base metals operations is underway, and this includes a 60-day re-assessment of the planned underground mine at Voisey's Bay.

The expansion was sanctioned two years ago, and considerable engineering and site development work has been completed.

The review, however, follows the appointment of a new CEO,Fabio Schvartsman, in Mayand is in response to depressed markets for nickel and other minerals.

• Vale gets extension for exporting Voisey's Bay ore

It's a setback for a mining industry in Newfoundland and Labrador that has been reeling for several years, but Hache and Coadybelieve the underground mine remains a viable project.

"I understand why they had to take a step back and review everything," saidHache, whois the staff representative for the USW in Labrador, which includes some 300 workers at Voisey's Bay.

"The fundamentals of the mine are quite good," Coady added.

Big player in Newfoundland and Labrador

Vale is one of the world's largest mining companies, and is a big player in Newfoundland and Labrador.

The company opened the Voisey'sBay mine in 2005, using an open pit method to extract minerals such as nickel, copper and cobalt. Roughly 450 people work at the mine.

• Vale sanctions underground mine at Voisey's Bay

Vale also spent billions to construct a new nickel processing plant in Long Harbour, Placentia Bay. According to a Vale spokesman, the plant currently employs about950 peopleand processesnearly all of the concentrate that comes from Voisey's Bay.

Prior to its completion, Vale exported the concentrate to its processing facilities in Ontario and Manitoba under a special agreement that requires the company to import an equivalent amount for processing at Long Harbour in the future.

The open pit mine is expected to be exhausted in three to five years, and the proposed underground mine would extend the life of the operation by about 15 years and addhundreds of long-term jobs.

Cancelling the expansion would trigger a variety of penalties under the company's development agreement with the province, and Coadysaid "we'll make sure they're held accountable."

But she cautioned that it's too early to go down that road.

• Vale, province celebrate first production at new nickel plant in Long Harbour

She said it's business as usual at the mine, and she expects an answer sometime this fall about how the company plans to proceed.

Vale said the underground mine would go into production in 2020, but Coadysaid it's possible that schedule may change following the review.

"If there's anything other than that, of course we have remedies under the development agreement and we'll be reviewing those," she said.

Vale has not released any estimates, but the Atlantic Province's Economic Council has pegged the cost of the underground mine expansion at nearly $2 billion US.