OREANDA-NEWS. June 9, 2011. The world's second-largest mining company is proposing to build a USD 3-billion solution potash mine near Kronau, about 30 kilometres southeast of Regina.

The Brazilian mining giant has been quietly developing its plans, along with Germany's K+S, Europe's largest potash miner, which plans to build its Legacy project in the Bethune area, and Western Potash, based in Vancouver, which is working on a project in the Milestone area. They hope to join the granddaddy of them all, Mosaic Potash Belle Plaine, which has been producing muriate of potash in the Regina area since the 1960s.

RAISING PROFILE IN PROVINCE

Until now, Vale has maintained a fairly low profile in Saskatchewan, but that's beginning to change.

"Vale is right now the second-largest miner in the world," said Cory McPhee, vice-president of corporate affairs for Vale, which maintains its base metals corporate office in Toronto. "Our vision is to be the biggest and the best.

"(Becoming) the biggest will happen as a result of executing on our project (plans). (Becoming) the best is all about doing things properly, not just properly, but in a leading fashion in the world. Essentially, we want to be the mining partner of choice wherever we are."

McPhee knows the company has some work to do after a protracted strike at its nickel mine and mill in Sudbury, Ont., tarnished its reputation following its USD 17-billion takeover of Inco in 2006.

"It was disappointing for all concerned," said McPhee, who worked 21 years with Inco before joining Vale. "Nobody wins in a strike, not the company, not the employees, not the community where we operate. At the same time, I would say we're better positioned now as a result of that strike for the long-term stability of our operations."

McPhee said Vale is investing USD 3.4 billion in a new plant and equipment, reducing its environmental emissions and opening a new mine in Ontario.

And Vale is looking forward to coming to Saskatchewan with a clean slate and a proposal to build a greenfield, or new, solution potash mine.

"Saskatchewan is new ground for us," he said.

Potash isn't new to Vale, which operates an underground potash mining operation in Brazil.

"This is very similar to solution mining projects (in Saskatchewan)," said Will Longworth, project manager with Vale Potash Canada Ltd. "It's the same type of mining method."

START BUILDING MINE IN 2013

At Kronau, Vale is proposing a 2.9-milliontonne-per-year mine, which would likely cost in the neighbourhood of USD 3 billion. "We'll start with 2.9 million tonnes, but there's potential to expand if the market warrants it," Longworth said.

The number of full-time jobs could range from 300 to 500, depending on production capacity, plus 1,500 construction jobs.

"The start of construction could be sometime in 2013, maybe in the third quarter. Completion would be late 2016," Longworth said.

There's a long way to go to reach the construction phase. Pre-feasibility work is underway, followed by a commercial feasibility study, which could take about a year.

"One of the main drivers of the schedule is the environmental impact study," Longworth said. "That's what's driving the company's ability to commit to approve the project."

However, McPhee stressed Vale will do whatever it takes to reassure the provincial government and Saskatchewan residents the company is a good corporate citizen and is here for the long term. It's held open houses in the Kronau area and is writing a cheque to support the local community rink. It has established project offices in the HSBC building in downtown Regina.

"Vale is a long-term operator," Longworth said. "We build projects for the long term. We're not here to build something, then sell it. We're building a processing facility that will last decades."