City inks cost-sharing agreement with Vale

A unanimous decision from council to support a cost-sharing agreement with Vale to rebuild a local road will pave the way to even more agreements of that kind, the city's general manager of infrastructure services said.

Council authorized the city to enter into an agreement with the mining company to undertake improvements to Municipal Road 4. Vale's Totten Mine is located off that road about nine kilometres from Highway 17 West.

Vale hopes to begin production at Totten Mine sometime later this year, and is projecting about 800,000 tonnes of ore per year to be hauled from the mine site to the processing facility in Copper Cliff. The mine has an expected life span of at least 20 years.

The total estimated cost of the road improvements is $20 million. Vale will foot 75 per cent of the bill, chipping in $15 million, while the city will be responsible for 25 per cent of the total cost, at about $5 million.

The cost is about $4 million more than the city had suggested in October, 2011 when it first approached council with the possible partnership.

A lot more work has taken place since that time, and it was discovered that peat deposits are more extensive than originally thought, and utilities will have to be relocated, Greg Clausen, general manager of Infrastructure Services, said.

At first, the plan was to just go around the utilities, but that is no longer a viable option.

“When we reported to council in October, it was based on the best information at that time,” Clausen said. “We won't know the actual cost of the project until all the tenders come in,” but staff is confident it will be in the $20-million range.”

Vale indicated that for their development of Totten Mine to be economically viable, unrestricted year-round use of Fairbank Lake Road (Municipal Road 4) is essential, according to the report.

It was Vale who approached the city to seek out this partnership. Currently, the road is subject to seasonal load restrictions during spring months, a time when the road is highly susceptible to increased permanent damage from heavy truck loadings.

In its current condition, the road has relatively low structural strength, as well as minimal gravel shoulders and roadside ditches. The intersection at Highway 17 has no traffic signals, and southbound traffic is controlled by a stop sign.

The proposed road upgrades will consist of strengthening the road base, paving and adding paved shoulders. It will also include straightening out existing sharp curves and removing small bedrock outcrops.

Traffic lights will be added at the Highway 17 intersection, complete with turning lanes, and widening of Highway 17 West will be done to accommodate an acceleration lane for large trucks.

According to the agreement, Vale will be responsible for funding 100 per cent of the improvements to the intersection at Highway 17 West. Any funding received from the Ministry of Transportation will also be applied to this portion of the project, and will not offset the city's funding portion.

If tender bids for the construction exceed the estimates, the city and Vale may agree to the additional project costs. The city will lift the season load restrictions for the 20-year expected life of the road.

“This is a real good news story for the city,” Clausen said. “We have a similar agreement in the very infancy stages that we're working on with QuadraFNX, and we're in discussion with Xstrata for another similar project. This is a great stride forward in trying to work with the mining companies and other industries where they need our roads, we can't afford the upgrades, and we work together for a win-win situation.”

The final project design should be completed by the end of January, Clausen said. Tenders will go out after that, and it is anticipated the contract will be awarded sometime in March to allow for a spring start to construction.

“We're hoping that we'll be far enough along in construction that we'll be able to lift the load restriction in spring of 2013 – that's our target, and if everything works out, that's where we'll be,” Clausen said.

“It's been a lot of hard work that has resulted in a lot of good dialogue between the city, Vale and Xstrata, and we are very optimistic these types of partnerships will continue moving forward.”

Posted by Arron Pickard