Business

Tension on the tundra

Inco faces a delay at its Voisey's Bay nickel project

JOHN SCHOFIELD,PETER EVANS September 8 1997
Business

Tension on the tundra

Inco faces a delay at its Voisey's Bay nickel project

JOHN SCHOFIELD,PETER EVANS September 8 1997

Tension on the tundra

Business

Inco faces a delay at its Voisey's Bay nickel project

BY JOHN SCHOFIELD

The sound of children’s laughter punctuated the brisk Labrador breeze as native families huddled around campfires and talked into the night. For a protest, the mood was remarkably festive. But when a group of about 100 Innu and Inuit staged a peaceful march last week through a remote exploration camp on the edge of the massive Voisey’s Bay nickel deposit, tensions suddenly flared. The natives were demonstrating against efforts by Toronto-based mining giant Inco Ltd. to build a road and airstrip on the site. When about 30 protesters entered the camp, RCMP officers moved in and arrested three, including Innu leader Katie Rich. Over the next two days, demonstrators smashed windows, cut phone lines and hurled rocks at police. But Inco’s most serious setback came later in the week, when the Newfoundland Court of Appeal approved an Inuit request for an injunction to halt the construction work. “This is an instance,” the three-judge panel ruled, “where it can truly be said justice delayed is justice denied.”

It was a rare victory for northern Labrador’s downtrodden natives, and a blow to Inco’s hopes for bringing what is touted as the world’s largest nickel find into production by 1999. The court decision immediately cooled tempers at the site. The 40 Inuit, camped on a hill overlooking Inco’s Anaktalak Bay operations, returned home immediately, followed by 270 Innu and most of the 57 RCMP officers sent in to keep the peace. Inco and the natives must now wait as long as six weeks for the courts to decide whether the 12-km-long road connecting Inco’s two exploration camps should be included in an environmental review. Without an airstrip, Inco will be hard-pressed to deliver the workers, food, fuel and equipment it needs to develop the mine. Despite the delay, Inco insisted it will meet its 1999 deadline to commence production. “It would be wrong to pretend it isn’t tight,” said spokesman David Allen, “but we’ve been assured it’s achievable.”

Investors appear less optimistic. On the day of the court decision, shares in Inco fell $1.50 to $39.05. They closed the week at $37.55. “Owning a piece of ground is worthless unless it’s producing rev-

enue for you,” said a Bay Street analyst. “Right now, Voisey’s Bay is producing the square root of zero.” Inco is under enormous pressure to generate cash because of the $4.3 billion it paid to acquire the Voisey’s Bay discovery from Vancouver-based Diamond Fields Resources Inc. in 1996. After last week’s snag, some analysts predicted that production might not begin until 2001.

Inco is faced with satisfying the concerns of not one but two native groups—and negotiations with both the Innu and Inuit aimed at arranging a compensation package have bogged down. In addition, both the Labrador Inuit Association and the Innu Nation want a full environmental assessment before any work goes ahead. To make matters worse, Inco is faced with a brutally short construction season. Winter typically arrives by late October, and the ground remains frozen solid until late June. The longer production is delayed, the more Inco is gambling with nickel prices. The going rate for a pound of nickel is now $4.10— down $2.15 since early 1995, in part because of increased shipments from Russia.

Newfoundland Premier Brian Tobin plays down the importance of the 1999 start-up. “Frankly, the whole history of large resource developments is that these delays happen,” he says. But Tobin is clearly growing impatient with the Innu and the Inuit. In recent weeks, he has threatened to pull out of land-claims talks and give the courts the final say.

Without a doubt, Newfoundland has a lot riding on the project. Analysts at the Royal Bank and elsewhere predict that Newfoundland’s economic growth will outpace all other provinces in 1998 and 1999—but only if nickel production at Voisey’s Bay and offshore oil production go ahead. Construction at Voisey’s Bay is expected to create up to 600 jobs, while the mine itself will employ as many as 500 workers. The ore will be shipped to a nickel smelter at Argentia, Nfld., an old U.S. naval base about 130 km west of St. John’s, which will employ another 900 people. “There’s no question,” says Tobin, “that when you couple Voisey’s Bay with the development of the offshore oil and gas resources, you begin the process of changing Newfoundland from a have-not to a have province.” Privately, the Innu and Inuit admit the project is impossible to stop. They say they are fighting to ensure that they share in its benefits, and that the land surrounding Voisey’s Bay is not destroyed. Inco officials have made much of their intention to develop a mine with state-of-the-art environmental safeguards. The natives, however, are demanding a full environmental review that includes the road and airstrip, which they argue could damage rivers in the area and destroy the habitat of the arctic char that are an important part of the native diet. Last month, Justice Raymond Halley ruled that the construction work on the road and airstrip did not have to be included in the environmental review, even though a federal environmental panel had earlier recommended a full hearing. Last week’s injunction halted construction pending an appeal of Halley’s ruling.

What concerns the natives most is the staggering scale of the $2-billion project. For at least the first six years of operation, the company will scoop nickel, copper and cobalt from a gaping hole almost a kilometre in length and 350 m wide. Once the open pit is exhausted, Inco will begin production from a nearby mine reaching one kilometre underground. Over the project’s anticipated 20-year lifespan, the mine will pro-

duce 270 million pounds of nickel a year. Unlike the days when entire cities sprung up around massive mineral finds, the 500 employees at Voisey’s Bay will be housed in a makeshift trailer town and will be flown regularly to and from their home communities. When the work is done, Inco plans to put back some of the topsoil, smooth out the rough edges, and let the pit fill up with water.

The compensation packages that Inco is negotiating with the Inuit and Innu—known around the bargaining table as impact benefits agreements—are intended to minimize the environmental effect of the mine. They will likely also include job guarantees and provisions for skills training, financial compensation and other benefits. Inco says it was close to an agreement with the Inuit, but talks broke down recently, reportedly over money. The Innu are further from a compensation deal, and separate land-claims settlements for both groups could take even longer. Winston White, a spokesman for the Labrador Inuit Association, says the organization is still looking for a better offer in such areas as self-government and revenue-sharing.

The natives are prepared to wait for the right deal— no matter how long it takes. ‘We are tired of being treated like garbage,” said Paul Rich, band council chief in the Innu village of Shetashashit, as he sat amid the protesters’ white tents. “This resource is taken from our own backyards. We want to make sure we get as much benefit as we can—not just for us, but for future generations.” The Inuit, traditionally less militant than the Innu, are just as determined. “This is our home,” says William Barbour, 38-year-old president of the Labrador Inuit Association. “It was taken away from us in the first place, and now we have to go looking for things that are ours. Does this development go ahead without our consent? The answer is no.”

The land-claims and compensation agreements, if signed, would offer some hope of a better life for the natives of northern Labrador. For the Innu in particular, the past 50 years have been marked by grinding poverty, pain and struggle—much of it focused on the tiny coastal community of Davis Inlet. Since the once nomadic Innu were forced to resettle there 30 years ago, the village of 400 has been torn by drug and alcohol abuse, family violence and suicide. Even now, Davis Inlet has no sewage system and the homes lack running water. After years of campaigning for better conditions, and battling over issues such as low-level military test flights over their land, the Innu have learned to become fighters. Innu Nation president Rich, 37, has earned a reputation as one of the country’s toughest native leaders.

Next year, the Innu at Davis Inlet are due to finally begin moving to new homes in Sango Bay, 10 km southwest, built with $85 million from Ottawa and St. John’s. With that hard-won victory under their belts, they are ready to go head-to-head with Inco. ‘Without an impact benefits agreement, without land claims, the Voisey’s Bay project will not be going ahead,” says Rich. For the world’s largest nickel company, that reality is as cold and harsh as the Labrador winter.

PETER EVANS

Voisey's Bay