The long view

Ed Moriarty stepped into the role of executive director of Mining Industry NL in May 2013. Right away, he was impressed and energized by the people he had agreed to represent.

“They are can-do people, eternal optimists,” Moriarty says about the industry players he has engaged with. “They take a lot of risks but they look at the future and see big things.”

It may be easier than usual to stay positive in 2013, and “big things” is certainly the right phrase to use when talking about the Newfoundland and Labrador economy. Industrial development is at an all-time high, with $9.4 billion in major projects investment planned for 2013 (up 10 per cent from 2012) and a total of $54 billion worth of projects underway, approved, or in development.

Those numbers include projects in all sectors, including housing, transportation, education and recreation. But the amounts are especially impressive because of megaprojects like the $6.2 billion Muskrat Falls hydro development and the $14 billion Hebron offshore oil project. Throw in a long list of smaller developments, and it adds up to a mighty big inf lux of investor cash – and confidence.

Offshore projects remain the biggest ticket items within the province, accounting for a full 36 per cent of the $54 billion total; electricity 20 per cent; and mining about 18 per cent.

Optimism is high among the industry players, and projects of all sizes are surging ahead. Development has not been seen at this level in the province’s history, but that’s not to say it is without its challenges.

One potential hurdle, however, was cleared in December 2012, when the Muskrat Falls hydro project was officially sanctioned. A collective sigh of relief was no doubt expelled from everyone involved in industrial projects in Labrador and, to a lesser extent, on the island of Newfoundland. All of this constructing, digging, extracting, and refining, after all, needs energy to keep going.

“No one can predict the future, and there’s a lot of volatility in the market,” says Moriarty. “Anything [the industry players] can do to reduce uncertainty is crucial.” First power is due to be transmitted in 2017.

“Fortunately the stars have aligned so the Muskrat Falls project will come on line when we really need it,” says Nick McGrath, the provincial minister responsible for Labrador Affairs.

“For the mining companies to move forward, they wanted to know, first, ‘Is this energy available?’ And second, ‘Are we going to be able to afford it?'” The rates for Muskrat Falls power are being negotiated; once they are set, companies can move forward with detailed financial planning.

Construction on the massive project is well underway. “Every time I fly home, I f ly over the worksite,” says McGrath. “It’s always changing. Last year it was a forest and waterway. This year, it looks like a mine site as site preparation is being done. It’s changing every week.”

And attracting more and more workers. As of July 2013, 630 people were employed at Muskrat Falls. By 2015, that’s expected to rise to 3,100.

There’s no way around it: for Muskrat Falls, as for other industrial projects big and small, the issue of finding enough labour, particularly skilled labour, is a well publicized challenge.

In July, Vale laid off hundreds of workers from its Long Harbour site. Ironically, the company made the cuts because it did not have access to enough skilled labour. Vale decided to “shift focus” from its port site to the main construction site – there weren’t enough workers to keep both moving ahead. In doing so, some of the skill requirements changed, and 250 layoff notices were handed out.

Vale has confirmed it has applied for permission to bring in foreign workers if required; director of corporate affairs Bob Carter told media the company would go outside of Canada to find employees “only if we have to.”

“These are the kinds of dilemmas facing companies today,” says McGrath. “There is such a shortage, it’s like a dating game. Industry is making huge offers to the people they want. It’s an employees’ market.”

The Atlantic Provinces Economic Council reports the shortage of skilled workers has led to steeply increasing project costs. In Newfoundland and Labrador, wages went up by an average of 5.4 per cent in 2012, nearly double the national average.

“Access to skilled labour is always a challenge,” says Moriarty. “Hiring the right skilled person is always a challenge. When companies are so busy, meeting their internal skills development needs will also be a challenge.” Effective recruitment and retention strategies are no longer superf luous – they are key to survival, he adds.

Employees attracted to Labrador and other bustling communities need a place to live, ideally with their families and for the long-term. For a town the size of Happy Valley-Goose Bay, with about 8,000 residents, finding space for 3,000 Muskrat Falls workers is just about impossible.

Nalcor is working on a bunkhouse for its Muskrat Falls workers; that should take care of some of the pressure in Happy Valley- Goose Bay.

The town’s mayor, Leo Abbass, agrees, but notes the bunkhouse is not the only solution needed – after all, some of the Muskrat Falls workers will end up moving to the area with their families and becoming part of the community. The new service businesses and sub-contractors in town need a place to live, too. If industry is going to keep forging ahead, the town’s infrastructure has to keep up.

If the projections hold true, Newfoundland and Labrador will lead the Atlantic provinces in major project investment again in 2014. As the construction on the Long Harbour nickel processing plant winds down, Muskrat Falls and Hebron will be ramping up. Offshore, Hibernia Southern and the White Rose South Extensions will continue to be developed.

Alderon’s Kami mine site in Labrador West will be readying to start production in 2015. Voisey’s Bay underground mine – a project that will extend the life of the Voisey’s Bay mine by a dozen years (to 2035) and double the number of onsite employees (to about 900) – will also ramp up in 2015. A number of smaller-scale mining projects, such as the Newspar fluorspar mine reactivation ($154 million) near St. Lawrence, all help push the total even higher.

A call for expressions of interest in developing the Julienne Lake iron ore deposit, just 25 kilometres from Labrador City, was published in the fall of 2012. “It’s a huge deposit, on the scale of IOC; it will create hundreds of jobs,” McGrath says. “There was quite a bit of interest, globally. We are working through the expressions of interest.” An announcement about the development of the site will likely be made in the next year.

With provincial mineral exploration expenditures at an all-time high of $213 million, mining is certainly growing in importance to the province’s economy (the Atlantic Provinces Economic Council describes it as a “driving force” in its 2013 Major Projects I nventory). The price of minerals on the world market is changeable, but iron ore is looking strong enough that Labrador investment is still worthwhile.

Still, the Newfoundland and Labrador mining industry has a ways to go before it can match offshore oil in terms of investment, development, and royalty dollars. More than three dozen active exploration licenses are in place, with attached work commitments of $1.2 billion. Statoil announced in June it had found oil in one of its exploration wells at its “Harpoon” prospect.

“As an association, we’re building relationships with government, communities, and educational institutions … we have an active dialogue in terms of labour,” says Moriarty.

Industry players are taking a longterm view of development in Newfoundland and Labrador, he says. “We’re working to grow a sustainable industry.”

Stephanie Porter
About Stephanie Porter

Stephanie Porter is a freelance writer and editor living in St. John’s. In 2003, she helped launch The Independent, a spirited weekly newspaper distributed across Newfoundland and Labrador, known for its investigative news and features. Stephanie was managing editor of the paper until its untimely demise in 2008. She has also worked as a reporter and writer for Downhome magazine, the Express (also now defunct), The Globe and Mail and The Toronto Star, picking up Atlantic Journalism Awards for her feature and news writing. Stephanie is delighted to be a regular contributor to Atlantic Business Magazine. Photo Credit: Paul Daly.

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