The mining industry needs to do a better job selling Muskrat Falls to the public, says Alderon’s executive chairman, but not all of the iron ore company’s shareholders agree.
Alderon executive chairman Mark Morabito said Wednesday the province’s proposed Muskrat Falls hydroelectric project is crucial to the company’s $989-million Kamistiatusset project, which the company predicts will create 1,500 full-time jobs — 480 at the mine and concentrator in the Labrador Trough, the rest indirectly through local service and support industries.
“Power’s definitely the biggest issue for us,” said Morabito after Alderon’s annual general meeting Wednesday morning at the Sheraton Hotel in St. John’s.
“There is enough power to start our project’s first phase without relying on power from Muskrat, but we need another transmission line in from Churchill, because Lab West is just completely tapped out. It has been for years, but our project’s going to push it over the top. We need that transmission line to be put in place,” said Morabito.
Alderon’s Kami project isn’t the only one, said Morabito.
“All of the new up and coming projects in the Labrador West area, and there are a number of them, if they’re going to become mines and generate significant revenue to the province, which they do when they’re on stream, they’ll need that power,” he said. He added that the whole mining industry has been too quiet on Muskrat Falls. “I include myself as well. We haven’t done a good job of explaining to the public just how important that power development is to mining development in Labrador. And I truly believe, and I think the numbers demonstrate this, that Labrador is the new Hibernia.”
The chairman said Labrador’s onshore resources are the future of the province.
“I think 20, 30 years from now there’ll be any number of mines up there, generating billions of dollars of tax revenue that’ll benefit mostly the island,” he said. “That’s where everybody lives in Newfoundland and Labrador. So that’s schools, hospitals, roads, you name it. We’re talking big revenue, but none of it’s going to happen, none of it, without power.”
But a shareholder at Wednesday’s meeting said he doesn’t think it’s the mining industry’s job to make the case for Muskrat Falls, pointing to Morabito’s statement in a press release Tuesday applauding provincial government’s “vision and foresight to develop the Muskrat Falls power project.”
“As an investor, frankly, I don’t care where the power comes from for a project,” said the shareholder. “And as we both know, the Muskrat Falls project has become very political. And I really have difficulty when a company that I own a small piece of, when its leadership makes political statements.”
The shareholder, who said he considers himself Conservative politically but has doubts about the feasibility of the Muskrat Falls project, said he’s reconsidering his investment over the matter.
“It’s one thing if Muskrat Falls were built and they said we’re going to be their first customer and so on and so forth,” he said. “This project hasn’t even been sanctioned. Why are they involving themselves in the political process?”
He’s also worried about the project’s $6.2-billion price tag (Manitoba Hydro’s report forecast a cost of more than $6.6 billion).
“If this thing goes over budget by, I don’t know, 25, 30, 40, 50 per cent, who’s on the hook for it? You and me. This is our money being spent,” he said. “This is not like, for example, Fortis, owner of Newfoundland Power, doing a project. They would make a determination and me as a shareholder can determine whether I want to be part of that project by buying their stock. We don’t have a choice here.”
The investor said the appointment of Danny Williams — who announced the Muskrat Falls project before he stepped down as premier — to Alderon’s board raises questions for him about the mining company’s endorsement of Muskrat Falls, but Morabito said Alderon would be pro-Muskrat Falls either way.
“Whether Danny came on board or not wasn’t going to change our view,” he said.
Williams, who attended the meeting, said Alderon is in favour of the project because it’s good for the development of the province’s mining industry, not because he’s on the board.
“If you look at the total projects that over there, not looking at Alderon alone, estimates have been between $10 (billion) and $15 billion worth of new revenue to the province,” he said. “If we don’t have the juice or we don’t have the power there, well then those companies that are looking over there are going to be looking westward for Quebec power. So the irony of that is we’d end up basically fuelling their mining projects with the power that they’ve got from us in the Upper Churchill, so it makes really good sense to have the Lower Churchill and to have Muskrat Falls developed.”
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