Power Line on Hold After Galore Creek Is Shelved in Northwestern B.C.
By The Canadian Press and Resource Investor
28 Nov 2007 at 08:12 AM GMT-05:00
resourceinvestor.com
VANCOUVER (CP) -- A recently approved electricity transmission line heralded as a boon for economic development in northern B.C. is on hold.
Energy Minister Richard Neufeld says the province's decision to review the C$400-million Northwest Transmission Line comes shortly after mining companies Teck Cominco [TSX:TCK-B, TCK-A; NYSE:TCK] and NovaGold [AMEX:NG; TSX:NG] shelved their Galore Creek project as costs ballooned from US$2 billion to close to US$5 billion.
''If there are some other consortiums that come forward with money and guarantees they will take the electricity, and all of those kind of things, then of course, we'll sit down and talk with them,'' Neufeld said Tuesday. ''But in the meantime, I think it's the prudent decision by government to say it's on hold.''
Rick Van Nieuwenhuyse, President and CEO of NovaGold, told Resource Investor that the company’s investment in the power line is indeed on hold in conjunction with the project itself, since "Galore was the reason they were building the 287kv line."
But he added: “We have their assurance that when we start the project again, they will advance the power line.”
Galore Creek was to have been the main consumer of the power coming over the transmission line and its developers had also agreed to put up C$158 million toward building it.
But without a major industrial customer in place, the proposed high-capacity line no longer makes economic sense, Neufeld said.
RI highlighted three company’s operating near Galore Creek who could be impacted, both negatively and positively, by the decision yesterday: Copper Canyon [TSX-V:CPY], Copper Fox [TSX-V:CUU] and Romios Gold [TSX-V:RG].
After speaking with the companies today about whether a consortium could be formed to fund the power line down the road, the consensus was that anything was possible but this wouldn’t be considered until NovaGold and Tech indicate their next move.
The indefinite shelving of the power line is a blow to B.C.'s resurgent mining sector and throws a wrench into the province's plans to reduce several communities' dependence on diesel power - a goal that ties in to the government's plans to dramatically reduce greenhouse gas emissions by 2020.
The line was given a green light by the province on Oct. 1 and had been scheduled for completion by 2011.
The proposed line would have run 335 kilometres from Terrace to Meziadin Junction and north to Bob Quinn Lake. It was to provide access to the provincial grid for industrial customers such as Galore Creek and potentially allow several small communities in the region to hook into the system.
When the province announced plans to go ahead with the line, Premier Gordon Campbell said it ''will not only stimulate job creation, but also reduce greenhouse-gas emissions by improving access to renewable resources and decreasing reliance on diesel-electric power generation for industry and communities.''
The proposed 287-kilovolt line is a high-capacity line that can be justified only by having a major industrial customer at the other end, Neufeld said.
''The beauty of building the line was that we could have energized those communities off that line. It would have been very expensive. But in light of greenhouse-gas reductions and getting people on the grid, we thought it would be prudent to do that,'' Neufeld said.
The province will continue to look for ways to reduce diesel fuel use, he said.
In the meantime, some early-stage exploration and development projects are likely to be shelved, said Len Boggio, senior partner with PricewaterhouseCoopers mining group in B.C.
''A number of projects rely on the provision of power in order to make them economically feasible,'' Boggio said. ''And without the power line, they just simply won't be.''
NovaGold spokesman Doug Brown said the company expected to talk with the province about the transmission line as the company winds down Galore Creek.
There are currently 400 employees and contractors involved with construction at the project, which has created strong demand for workers, supplies and services such as catering and helicopter transportation.
NovaGold last year struck a participation agreement with the Tahltan Central Council, which represents the Iskut and Tahltan bands. The agreement's provisions included payments of at least C$1-million a year to a Tahltan Heritage Fund during mine operations. |
