Alderon Iron Ore Corp. is pleased that the Government of Newfoundland and Labrador has today confirmed that it will proceed with the construction of a third transmission line from Churchill Falls to Labrador West.
Nalcor has previously confirmed that it would be able to supply power to the Kami Iron Ore Project ("Kami Project") (see January 10, 2013 news release) but the New Transmission Line is necessary to ensure there is enough transmission capacity to deliver the power to the Kami Project. The confirmation regarding the New Transmission Line paves the way for the conclusion of the Power Purchase Agreement which is the remaining condition for a confirmed power supply for the Kami Project.
"Our government has no higher priority than to fuel the growth of opportunities and a region that is growing in industrial activity needs a secure supply of electrical power," said the Honourable Tom Marshall, Premier of Newfoundland and Labrador in a press release issued by the Government today. "Nearly three weeks ago, on the day that I was sworn in as Premier, I said the decision on a new power line for this region was imminent. Today, I am announcing that the decision is made and we will be moving forward with the construction of a third line to supply power from Churchill Falls to western Labrador."
"Today's announcement reflects our government's support for responsible natural resource development in the province, specifically for the mining industry in western Labrador," said the Honourable Derrick Dalley, Minister of Natural Resources in the same press release issued by the Government today. "Construction of the third transmission line will meet power demands for new mining developments, attract investment into the region, and generate spin-off employment and business opportunities for the people of Labrador."
"Access to power is crucial for the Kami Project and we are proud to be a part of the leading iron ore industry in Labrador," said Tayfun Eldem, President and CEO of Alderon. "We are particularly pleased that the Kami Project will contribute to the continued economic prosperity of the region. The announcement of a third transmission line paves the way to execute on our Power Purchase Agreement, which will greatly assist with the ongoing process for the previously announced debt financing for the Kami Project."
"Realization of the Kami Project will demonstrate the ability of the Provincial Government to work cooperatively with industry to bring to fruition a significant economic development project for the people of Newfoundland and Labrador," said Mark Morabito, Executive Chairman of the Board of Alderon. "We are very appreciative that Premier Marshall and Minister Dalley have confirmed the construction of the third transmission line, as the Kami Project will infuse significant and long-term economic benefits to the Province. In addition to approximately $3.9 billion in tax revenues, this mine will add an impressive $25.4 billion to the Province's GDP. With a total direct investment of $11.9 billion, the Kami Project will also create approximately 800 construction and 500 full-time production jobs. This translates to a total of $2.7 billion being paid to Newfoundland and Labrador employees and businesses."
Alderon has collaborated with the Province and Nalcor for more than two years to secure access to power, including paying upfront engineering costs of $4.4 million. The statements from Chairman Mark Morabito regarding the economic benefits of the Kami Project are based on an independent Economic Impact Assessment ("EIA") of the Kami Project that was undertaken by Strategic Concepts, Inc. and Dr. Wade Locke of Memorial University.