Harnessing Churchill River’s potential needed to develop mining sector

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In the early 2000s, the idea of building an aluminum smelter in Labrador was shelved, and Yvonne Jones often wondered what else could have been if the region’s resources had been tapped into at the time.

With Newfoundland and Labrador now planning to develop more hydroelectric power on the mighty Churchill River, the Liberal MP for Labrador hopes the next industrial vision to come along can be realized.

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The smelter project would have been a joint venture between aluminum titan Alcoa and the provincial government, but the province walked away from the deal after a feasibility study was done. The company wanted the government to foot too much of the energy costs associated with the development.

The enterprise would have required developing the Lower Churchill Hydro Project as a power supply for the processing facility and the province felt there was a better way to do that.

‘Slipped through the hands’

Alcoa moved on to build an aluminum smelter in Iceland, opening it in 2008. It also built a 690-megawatt hydroelectricity generating station – the largest power plant in Iceland, which also features the largest dam of its type in Europe – around 75 kilometres to the west to run the plant.

The hydro plant, which was criticized for its impact on the environment, was a joint project with the Icelandic government and the country’s national power utility.

Two years ago, Jones visited the nearby town of Egilsstaðir and saw the dramatic effect the smelter has had on the local economy. Before the project, Egilsstaðir was a small rural community of a few hundred people.

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“I wanted to see how this project had panned out because it slipped through the hands of the people of Labrador and the people of Newfoundland,” she said in an interview with The Telegram.

The community is now a modern hub that has grown to more than 2,600 people, with another 1,000 or so people from surrounding communities also benefitting from the direct and indirect work created by the smelter and the accompanying power plant.

“The fishery is healthier there than it’s ever been in their lives,” added Jones. “I shook my head as I walked away because this could have been in my backyard, but, at the time, we couldn’t make it happen.”

The new MOU

With the governments of Newfoundland and Labrador and Quebec signing a memorandum of understanding to further develop power on Churchill Falls, Jones said the long-term benefits for the people of Labrador and the province as a whole must be always kept in focus. That means not just maximizing the monetary return for government coffers, she said, but also prioritizing how the power generated is to be used.

“We’re going to double our capacity from 2,000 to 4,000, megawatts of power, so what will be available to support the mining industry, to support new developments and manufacturing?” she asked. “These are the kinds of questions that we want to pose and have some response to through this project.”

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‘Will unlock new mining opportunities’

After four days of debate in the House of Assembly, the provincial government got the go-ahead it wanted on Jan. 9, 2024, with all Liberal, NDP and Independent members voting in favour of continuing to negotiate more definitive agreements on the development with Hydro Quebec.

The PC caucus, concerned there were still too many unanswered questions about the deal, walked out of the House in protest before the vote. While the other parties have agreed to an independent review, the Tories do not believe the review will be neutral enough.

In a media scrum outside the House on Jan. 8, Premier Andrew Furey said the further development of hydropower from Churchill Falls will mean “tens of thousands” of jobs from megaprojects and new power for Labrador West.

“New power for Labrador West will unlock new mining opportunities and all the direct jobs that come with that,” said the premier. “So, not just to build the new mines, but to work in the mines and all the indirect and induced job opportunities that come with that.”

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Furey added the Churchill Falls development represented an opportunity for Newfoundland and Labrador to lure expatriates back home and to retain the future homegrown skilled labour force.

‘Pivotal moment’ for mining

The prospect of new power produced by the Churchill River is more than welcome to the mining industry.

Mining Industry NL, a not-for-profit association representing all sectors of the mineral industry, called the signing of the MOU “a pivotal moment for the mining sector.”

Replacing the 1969 Upper Churchill Contract – which heavily favours Quebec, combined with the development of the Gull Island project and an expansion of the Churchill Falls plant’s capacity – could be an economic catalyst for new and expanding developments in Labrador, the association stated in a press release issued on Dec. 13, 2024, in response to the news of the MOU.

Amanda McCallum, Mining Industry NL’s executive director, said the production of an additional 1,990 megawatts of power under the new agreement is about more than just significantly increasing capacity. The clean energy produced would be crucial for both pursuing new developments and growing current ones.

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“When it comes to infrastructure development for emerging projects or for projects to be able to expand, they need access to clean energy to meet decarbonization goals,” McCallum said in an interview with The Telegram on Jan. 11.

“Mining projects are big industrial projects and there certainly are projects that haven’t been able to expand or to advance because there’s just been no access to (clean) power.”

Speaking to the need

Tacora Resources, for example, is one of the major companies currently operating in Labrador, with Scully Mine, its iron ore mining and processing facility just north of Wabush.

McCallum noted that while Tacora currently uses about 50 megawatts of power, they need 200 megawatts in order to accomplish the expansion the company has envisioned.

Champion Iron Limited, the proponent behind the proposed Kami iron ore project southwest of Wabush and Labrador City, is another significant development waiting to happen. McCallum noted that, while that project still needs access to capital to get going, it will also need access to clean power to proceed.

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Those are just two examples that speak to the need to develop more power like that which is being proposed with the Churchill Falls MOU, she added.

“There’s a lot of (mining) activity happening in this province — probably more than what the general public is even aware of,” said McCallum.

Mining contributes 7.3 per cent of the provincial GDP and, according to Mining NL, provided around 8,000 person-years of employment in 2024

Making more clean power available for industrial development in Labrador will further stimulate economic growth, which McCallum said will be good for Newfoundland and Labrador as a whole.

Attracting international investment

The untapped potential of Labrador also fits in well with the critical minerals plans that both the provincial and federal governments have in place.

“Critical minerals, such as nickel, copper and cobalt, these metals and minerals are in Labrador and exploration continues to make new discoveries,” said McCallum. “The big picture is that, in order for projects to be able to move forward, that access to power is an enabler.”

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In addition to access to deep-water ports, having stable regulatory regimes and having open and authentic dialogue with Indigenous communities, McCallum said developing a new source of reliable clean power will also make Newfoundland and Labrador more attractive to international investment in energy-intensive industries such as the mining and mineral resources sectors.

“When we’re more competing on a global picture to attract investment, we can tick these boxes and we can cite these as benefits to the province,” she said.

“It really makes us a little bit more well-positioned, so we can compete globally, which is really important for the industry.”

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