KGHM praises hydro rebate, but mum on mine details

A KGHM executive praised the province's new Industrial Electricity Incentive Program, but remained tight-lipped on when the company's Victoria Mine, which will benefit from the program, is expected to go into production.

In February, KGHM manager Trevor Eagles told NorthernLife.ca the company was on schedule to complete a mining Shaft at the Victoria Mine, located 30 kilometres west of Sudbury, by 2019.

But Adrian McFadden, the company's vice-president of underground operations in Sudbury, was more vague when asked about timelines for the project.

While McFadden and a colleague confirmed KGHM has completed its feasibility study for the mine, and has obtained all of the necessary environmental permits, he said the company is now in the midst of a 10-year process it calls front-end loading.

“(It) means we do a lot of the work up front to try to take the variability and uncertainty out of this particular project,” he said.

McFadden did not provide a clear answer when asked how many more years the front-end loading process could last.

In February, Eagles said the company was expected to receive full project funding for Victoria funding from the KGHM board in May or June 2015.

But McFadden said that decision is more likely to happen in early 2016.

He said the Industrial Electricity Incentive Program will help make a strong case for the project by providing more financial certainty for hydro costs.

“This is a great opportunity not only for KGHM, but Ontario mining and the city of Sudbury,” McFadden said.

Derek White, KGHM International's president and CEO, echoed McFadden's points in a press release.

“The Industrial Electricity Incentive Program is a very important part of KGHM's decision to invest in developing our Victoria Mine by providing greater cost certainty to the project economics,” he said.

Ontario's Independent Electricity System Operator administers the program, which cuts hydro costs for selected new companies, or new projects, by as much as 50 per cent.

Ontario Energy Minister Bob Chiarelli was in Sudbury Thursday, May 14, to announce the special hydro rate contract with KGHM, and said Detour Gold saved around $10 million in hydro costs during its first year participating in the program.

Chiarelli said the program was established the create jobs by reducing operating costs for new companies, or for industrial expansions.

At peak operation, the Victoria Mine is expected to employ around 300 people.

KGHM estimates the Victoria deposit contains 14.2 million tonnes of resources. The inferred resources include 700 million pounds of copper, 700 million pounds of Nickel and 3.5 million ounces of platinum group elements.

KGHM will receive a reduction to its electricity costs at the Victoria Mine site until 2024 through the Industrial Electricity Incentive Program.