Falconbridge Expands Raglan Nickel Mine in Northern Quebec
By Jocelyne Richer
09 Aug 2006 at 04:54 PM EDT
resourceinvestor.com
KATINNIQ, Que. (CP) -- Nickel producer Falconbridge Ltd. [TSX:FAL; NYSE:FAL] plans to expand its Raglan mine in northern Quebec with an investment of nearly $540 million over the next several years to boost production of copper and nickel, the company announced Wednesday.
The expansion will create about 50 new jobs as the miner launches two key studies to develop new reserves to replace ore mined since the mine opened in 1997 and boost metal output.
Falconbridge said the global nickel market is strong enough - with prices tripling to C$6 per pound from C$2 in 1997 - to justify such a large investment in a mine 1,800 kilometres north of Montreal, not far from the Arctic Circle.
Falconbridge said the first study will focus on new reserves and will cost about C$240 million over six years.
The second study will look at a 30% expansion in nickel ore production to 1.3 million tonnes a year from one million as early as 2009. That study will cost about C$250 million while raising the annual royalties Falconbridge pays to local Inuit communities.
The mine employs 500, including 14% of Inuit origin.
In a related development, Falconbridge also announced the start of major renovations to its Deception Bay loading dock at a cost of C$50 million to handle the planned increase in nickel production.
''These studies will enable the Raglan Mine to expand production while maintaining the flow of benefits to local Inuit communities, and also respecting the environment,'' Ian Pearce, the Toronto company's chief operating officer, told a news conference at Raglan.
Quebec Premier Jean Charest and Natural Resources Minister Pierre Corbeil also attended the expansion announcement.
''Falconbridge has strong roots in the immense Abitibi-Temiscamingue region of Quebec, through its predecessor company Noranda,'' Pearce said. ''In recent years, Quebec has demonstrated its unequivocal support for the mining sector and is today one of the world's most attractive jurisdictions for our industry.''
The Falconbridge nickel mining camp at Raglan is made up of three underground mines, one open-pit mine, as well as a processing mill, all connected by road to a landing strip at Donaldson and to harbour terminals at Deception Bay. Ore from the mine is crushed, ground and processed into nickel-copper concentrate at the Raglan plant.
Charest descended 300 metres below ground to tour the facility and its mineral extraction process.
Despite his attendance at the announcement, the Quebec government isn't kicking in any funding for the project. Rather, the premier's presence was intended to reinforce how much Quebec's economy relies on the health of the mining sector.
''I am pleased that our government could contribute because our policies establish the context that encourages investment,'' Charest said in a speech.
The Fraser Institute has ranked Quebec the best place in Canada and among the best locations in the world for mining investments, he said.
Falconbridge is one of the world's biggest nickel and copper producers, with 14,500 workers around the world.
Late Tuesday, Falconbridge's board of directors recommended that shareholders tender to a takeover bid by Swiss mining giant Xstrata [LSE:XTA], signalling an end to a months-long takeover battle among Canada's mining giants.
Xstrata, which already owns 24.5% of Falconbridge, is offering C$63.25 a share in cash, including a special dividend, for the rest. That offer expires Aug. 14.
Falconbridge had initially spurned Xstrata's offer, forming an alliance with fellow Canadian mining company Inco [TSX:N; NYSE:N] and U.S. copper miner Phelps Dodge Corp. [NYSE:PD] with plans to create the country's biggest nickel company. However, those plans dissolved after shareholders failed to support the merger.
On Tuesday, Falconbridge's board said that after examining alternatives for the company, it was satisfied that a more attractive offer is unlikely to emerge.
''Xstrata currently owns 24.5% of Falconbridge and since its offer is for any or all shares of Falconbridge, it appears likely that it will attract sufficient shares to gain effective control of Falconbridge on Aug. 14,'' Falconbridge CEO Derek Pannell said in a release.
The board of directors for Inco, which was also the subject of a hostile bid by Vancouver-based Teck Cominco [TSX:TCK.B; NYSE:TCK], said Monday it's open to negotiations with Teck that might boost its offer above that of Phelps Dodge.
Teck Cominco, which received an olive branch after months of being snubbed by Inco, said emphatically Tuesday that it is not in talks with Inco and has no plans to enter discussions or negotiations on a new and higher bid to its C$17.5-billion offer.
Teck's bid was conditional upon Inco dropping the Falconbridge tie-up.
Phelps Dodge has a separate friendly deal to merge with Inco - with or without Falconbridge - but many analysts say it has a poor chance of success because of shareholder opposition from shareholders of both companies.
© The Canadian Press 2006 |
