Vale to begin $2bn Voisey Bay expansion, signs offtake

Brazil-based miner Vale today received permission to begin underground mine construction at its Voisey Bay facility in Canada and signed a $690mn cobalt agreement for future production.

Construction will begin this summer at Voisey Bay in the province of Newfoundland and Labrador, which has operated as an open pit mine since 2005. Underground operations are set to commence in 2021. The expansion will cost Vale nearly $2bn in capital investment.

Voisey Bay has produced roughly $15bn of nickel, copper and cobalt since beginning operations. The conversion is expected to take five years with construction peaking in 2020.

Vale also concluded an agreement to sell 75pc of the cobalt by-product produced from the mine starting 1 January 2021 with Wheaton Precious Metals and Cobalt 27 Capital. Wheaton will pay $390mn, with Cobalt 27 making up the remaining $300mn in upfront payments, while both agreed to additional payments of 20pc of average of the cobalt price upon delivery.

Vale maintains responsibility over approximately 40pc of cobalt output but will use the cobalt stream to preserve its options with regards to nickel production, which is key in electric vehicle manufacturing.

During the transition from open pit to underground mining, production will drop to 38,000 t/yr between 2018-2020. Afterward, Voisey Bay is expected to expand capacity to 45,000 t/yr nickel, 20,000 t/yr copper and 2,600 t/yr of cobalt from 2024 onward.

Currently, the mine has a 6,000 t/day capacity of nickel-cobalt-copper or copper-concentrate. Nickel concentrates are shipped to Long Harbour for hydrometallurgical processing.