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Labrador Mining - A Reason to Rethink

Labrador Mining - A Reason to Rethink

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Published by Edward Hollett

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Published by: Edward Hollett on Sep 26, 2012
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01/17/2014

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Upper
 
Churchill
 
Power
 
 –
 
The
 
Unexamined
 
Alternative
 
Labrador
 
Mining
A
 
Reason
 
to
 
Rethink?
 
A
 
Discussion
 
Paper
 
on
 
Muskrat
 
Falls
 
Volume
 
II
 
by
 
JM
 
September
 
2012
 
 
Labrador
 
Mining
 
 –
 
A
 
Reason
 
to
 
Rethink?
 
A
 
Muskrat
 
Falls
 
Discussion
 
Paper
 
 –
 
Volume
 
II
 
Page
 
1
 
Part
 
I:
 
Introduction
 
The
 
Author
 
began
 
to
 
research
 
the
 
Muskrat
 
Falls
 
project
 
in
 
late
 
2011.
 
The
 
reason
 
was
 
initially
 
that
 
of 
 
self 
awareness,
 
as
 
I
 
have
 
had
 
a
 
long
standing
 
interest
 
in
 
the
 
Lower
 
Churchill
 
development.
 
Very
 
quickly,
 
concerns
 
regarding
 
the
 
demand
 
forecast,
 
and
 
the
 
lack
 
of 
 
a
 
proper
 
screening
 
assessment
 
of 
 
all
 
possible
 
options
 
compelled
 
the
 
Author
 
to
 
produce
 
a
 
175
page
 
submission
 
to
 
the
 
Public
 
Utilities
 
Board
 
[Ref.
 
1].
 
Within
 
this
 
work,
 
there
 
was
 
an
 
attempt
 
to
 
review
 
several
 
topics
 
that
 
were
 
outside
 
the
 
terms
 
of 
 
reference
 
of 
 
the
 
Public
 
Utilities
 
Board,
 
including
 
the
 
Emera
 
partnership.
 
Since
 
the
 
February
 
submission,
 
my
 
research
 
has
 
been
 
sporadic,
 
but
 
has
 
continued
 
to
 
focus
 
on
 
those
 
areas
 
not
 
reviewed
 
by
 
the
 
PUB.
 
This
 
series
 
of 
 
discussion
 
papers
 
is
 
intended
 
to
 
facilitate
 
debate
 
on
 
these
 
issues.
 
Volume
 
I
 
of 
 
this
 
series
 
[Ref.
 
3]
 
investigated
 
the
 
option
 
to
 
import
 
power
 
from
 
Hydro
 
Quebec.
 
It
 
concluded
 
that
 
even
 
if 
 
the
 
power
 
were
 
purchased
 
at
 
market
 
rates,
 
it
 
would
 
represent
 
a
 
lower
 
cost
 
alternative
 
to
 
the
 
Muskrat
 
Falls
 
development.
 
The
 
rumored
 
increases
 
between
 
the
 
DG2
 
and
 
DG3
 
cost
 
estimates
 
[Ref.
 
7]
 
would
 
only
 
increase
 
the
 
preference
 
for
 
Hydro
 
Quebec
 
power
 
purchase
 
over
 
the
 
Muskrat
 
Falls
 
option.
 
Volume
 
II
 
will
 
review
 
the
 
development
 
of 
 
mining
 
prospects
 
in
 
Labrador.
 
It
 
will
 
outline
 
the
 
potential
 
mining
 
projects
 
and
 
determine
 
what
 
would
 
be
 
a
 
range
 
in
 
energy
 
requirements
 
to
 
meet
 
the
 
growing
 
industrial
 
base.
 
It
 
will
 
then
 
compare
 
it
 
to
 
the
 
forecasted
 
island
 
demand.
 
This
 
essay
 
will
 
not
 
arrive
 
at
 
any
 
formal
 
conclusion.
 
Rather
 
it
 
is
 
intended
 
to
 
provide
 
the
 
reader
 
insight
 
into
 
the
 
impact
 
Labrador
 
mining,
 
and
 
to
 
a
 
lesser
 
extent
 
the
 
Emera
 
partnership,
 
may
 
have
 
on
 
the
 
energy
 
balance
 
and
 
the
 
resulting
 
rate
 
structure
 
for
 
the
 
province.
 
As
 
both
 
were
 
specifically
 
excluded
 
from
 
the
 
terms
 
of 
 
reference
 
of 
 
the
 
Public
 
Utilities
 
Board
 
[Ref.
 
4]
 
it
 
has
 
been
 
subject
 
to
 
little
 
to
 
no
 
public
 
review.
 
I
 
am
 
hopeful
 
that
 
by
 
reading
 
this
 
essay
 
that
 
it
 
becomes
 
clear
 
to
 
the
 
reader
 
that
 
the
 
Emera
 
partnership,
 
as
 
well
 
as
 
potential
 
sales
 
to
 
mining
 
companies
 
will
 
affect
 
the
 
resulting
 
rate
 
paid
 
by
 
the
 
island
 
consumer.
 
It
 
may
 
in
 
fact
 
lead
 
to
 
higher
 
long
 
term
 
rates
 
to
 
the
 
island
 
consumer.
 
The
 
omission
 
of 
 
these
 
from
 
the
 
oversight
 
offered
 
by
 
the
 
Public
 
Utilities
 
Board
 
is
 
considered
 
by
 
the
 
Author
 
as
 
error
 
of 
 
 judgment
 
by
 
the
 
Government,
 
and
 
a
 
deviation
 
from
 
the
 
principles
 
of 
 
the
 
Electrical
 
Power
 
Control
 
Act
 
[Ref.
 
5].
 
Part
 
II:
 
Muskrat
 
Falls
 
First
 
 –
 
The
 
Lowest
 
Cost
 
Option?
 
Just
 
prior
 
to
 
the
 
Decision
 
Gate
 
2
 
(DG2),
 
Nalcor
 
made
 
the
 
decision
 
to
 
proceed
 
with
 
the
 
Muskrat
 
Falls
 
first
 
option.
 
In
 
November
 
of 
 
that
 
year
 
the
 
“deal”
 
was
 
announced,
 
which
 
was
 
underpinned
 
by
 
the
 
partnership
 
with
 
Emera
 
who
 
were
 
responsible
 
for
 
the
 
construction
 
of 
 
a
 
subsea
 
transmission
 
link
 
to
 
Nova
 
Scotia
 
[Ref.
 
6].
 
The
 
messaging
 
from
 
Nalcor
 
has
 
been
 
very
 
consistent
 
from
 
the
 
beginning.
 
Muskrat
 
Falls
 
is
 
the
 
lowest
 
cost
 
alternative
 
to
 
meet
 
the
 
provinces
 
growing
 
electrical
 
need.
 
Although
 
only
 
40%
 
of 
 
the
 
energy
 
will
 
initially
 
be
 
used
 
for
 
the
 
island
 
demand,
 
 
Labrador
 
Mining
 
 –
 
A
 
Reason
 
to
 
Rethink?
 
A
 
Muskrat
 
Falls
 
Discussion
 
Paper
 
 –
 
Volume
 
II
 
Page
 
2
 
the
 
domestic
 
requirement
 
will
 
progressively
 
increase
 
until
 
the
 
entire
 
Muskrat
 
Falls
 
output
 
is
 
required
 
in
 
2052.
 
This
 
was
 
effectively
 
demonstrated
 
within
 
the
 
July
 
11,
 
2011
 
presentation
 
Nalcor
 
made
 
to
 
the
 
Public
 
Utilities
 
Board
 
[Ref.
 
8].
 
Even
 
though
 
only
 
40%
 
of 
 
the
 
energy
 
will
 
be
 
initially
 
used
 
by
 
the
 
island
 
consumer,
 
when
 
the
 
project
 
was
 
presented
 
by
 
Nalcor
 
it
 
was
 
made
 
clear
 
the
 
island
 
consumer
 
would
 
be
 
responsible
 
for
 
paying
 
for
 
the
 
entire
 
project.
 
A
 
power
 
purchase
 
agreement
 
(PPA)
 
was
 
proposed
 
between
 
Nalcor
 
and
 
its
 
subsidiary
 
Newfoundland
 
and
 
Labrador
 
Hydro
 
(NLH)
 
where
 
the
 
latter
 
party
 
would
 
sign
 
up
 
to
 
a
 
“take
 
or
 
pay”
 
contract
 
premised
 
upon
 
the
 
predicted
 
demand
 
profile
 
illustrated
 
in
 
Figure
 
1.
 
For
 
the
 
information
 
of 
 
the
 
reader,
 
the
 
“take
 
or
 
pay”
 
agreement
 
will
 
state
 
that
 
the
 
block
 
of 
 
power
 
is
 
provided
 
to
 
Newfoundland
 
Hydro
 
for
 
resell
 
to
 
the
 
island
 
consumer.
 
Even
 
if 
 
the
 
demand
 
does
 
not
 
grow
 
in
 
accordance
 
with
 
Figure
 
1,
 
NLH
 
will
 
be
 
responsible
 
for
 
paying
 
for
 
that
 
block
 
of 
 
power.
 
If 
 
demand
 
growth
 
does
 
not
 
match
 
that
 
provided
 
in
 
Figure
 
1,
 
the
 
resulting
 
incremental
 
unit
 
cost
 
(on
 
a
 
$/MWh
 
basis)
 
would
 
be
 
increased
 
to
 
meet
 
the
 
overall
 
financial
 
obligation.
 
Effectively
 
this
 
means
 
that
 
the
 
consumers
 
of 
 
the
 
province
 
will
 
be
 
taking
 
risk
 
on
 
the
 
construction
 
costs
 
for
 
the
 
Muskrat
 
Falls
 
generating
 
facility
 
(MFGF),
 
the
 
Labrador
 
Island
 
Link
 
(LIL),
 
and
 
as
 
difficult
 
as
 
it
 
is
 
to
 
comprehend
 
a
 
portion
 
of 
 
the
 
risk
 
in
 
the
 
construction
 
costs
 
of 
 
the
 
Maritime
 
Fixed
 
Link
 
(MFL).
 
Figure
 
1:
 
Island 
 
– 
 
Labrador 
 
Electrical 
 
Supply 
 
Balance
 
[Ref.
 
8] 
 
Although
 
it
 
is
 
clear
 
that
 
the
 
risk
 
in
 
this
 
deal
 
sits
 
entirely
 
with
 
the
 
Newfoundland
 
ratepayer,
 
it
 
is
 
not
 
clear
 
where
 
any
 
potential
 
upside
 
from
 
market
 
activities
 
(black
 
area
 
of 
 
Figure
 
1)
 
will
 
be
 
directed.
 
From
 
the
 
information
 
provided
 
by
 
both
 
Government
 
and
 
Nalcor
 
it
 
is
 
obvious
 
that
 
any
 

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