New FedNav Icebreaking Bulker

GROUNDBREAKING ICEBREAKER The Gazette, Montreal, March 25, 2005,

A new 31,500-tonne icebreaking bulk carrier, the most powerful of its kind in the world, will play a key role in moving 360,000 tonnes of nickel concentrates a year from Inco Ltd.'s new $3-billion Voisey's Bay mine in northern Labrador to its smelters in Sudbury, Ont., and Thompson, Man.

Fednav Ltd. of Montreal, the biggest Canadian international dry bulk carrier, has a contract to haul the nickel concentrates in its new ice-breaking bulk carrier the first 2,050 kilometres (1,100 nautical miles) from Edward's Cove, the mine's port, through Belle Isle Strait and up the St. Lawrence River to Quebec City.In Quebec City, the concentrates (in granular form like sand) will be transferred to covered hopper railcars for the second stage to Inco's Sudbury smelter (1,170 km) and to its Thompson smelter in Northern Manitoba via Winnipeg (3,625 km) on CP Rail, CNR and other lines.

Fednav's part will be the most dramatic as the new vessel will make 12 to 14 trips a year down the Labrador coast and up the St. Lawrence, contending with some of the world's most rugged ice conditions, including icebergs, from November through July. Fednav takes delivery of the ice-breaking carrier from Japan's Universal Shipbuilding Corp. in April 2006 and it will enter Voisey's Bay service three months later. It will have a double hull, an icebreaking bow of Fednav's own proven design, a V-shaped stern with ice knife to protect the rudder, and a state-of-the-art satellite-based navigation system developed by Fednav subsidiary Enfotec.

It will operate safely in the most extreme conditions, said John Weale, the company's vice-president of risk management. The carrier will be capable of a speed of three knots in level first-year ice 1½ metres thick. A bow wash system will help to reduce friction as the vessel rides up over the ice and crushes it with its own weight. It will have one 50-tonne deck crane and two 30-tonners and carry containers on deck. Open water speed will be 13.5 knots and the vessel will qualify for operation anywhere in the world as a bulk carrier.

The 50-kilometre access route to Edward's Cove through a maze of islands is ice free for five months from July to November, when new ice starts to form, thickens and extends seaward. But ice originating from farther north is moved southward by the Labrador current across the access route and a shear zone is formed at the interface creating huge ridges. These will pose the biggest challenge.

Registered in Canada with a Canadian crew, the new vessel will be larger, have twice the power and greater icebreaking capacity than the 28,400-tonne MV Arctic, the pioneer icebreaking bulker built at Port Weller, Ont., in 1978. The Arctic has hauled lead, zinc and nickel concentrates from Canada's northernmost mines for many years. Owned by Fednav and fitted with a more efficient bow some years ago, the Arctic hauled lead and zinc concentrates from Cornwallis Island and Baffin Island until the mines were shut because of low metal prices. It now hauls nickel concentrates from the Raglan mine in northern Quebec via Deception Bay to Falconbridge Ltd.'s Sudbury smelter.

The new icebeaking vessel is being built in Japan because Universal Shipbuilding has the design capability and construction technology needed for large icebreaking bulk carriers, Weale said. It wasn't an issue of price, he adds. The vessel could not be built at Port Weller, since its 26.6-metre beam (the Arctic's is 22.9-metre) means it could not transit the St. Lawrence Seaway.

Fednav will not reveal the new bulker's cost, but shipbuilding sources estimate it could be well over $50 million. By 2011 to 2013, Fednav will be changing course because of Inco's longer-term commitment to process the Voisey's Bay concentrates at Argentia, the old US. naval base near St. John's.Inco is building a demonstration refinery at Argentia to test its new hy-drometallurgical or chemical-based process to produce finished nickel. The system uses less electric power and pollutes less than existing smelting and refining plants.

The demonstration plant starts up in November, along with the startup of the Voisey's Bay open-pit mine and concentrator about six months ahead of schedule. Voisey's Bay and the Goro project in New Caledonia in the Pacific will raise Inco's total nickel capacity by 50 per cent with a total investment of about $5 billion.

If the new "hydromet" process works, Inco will build a full commercial-scale plant by 2011 to 2013 at Argentia. If it proves uneconomic, Inco will build a conventional plant there. In either case, Fednav's new bulk carrier will be switched from the St. Lawrence to haul the Voisey's Bay concentrates via the east coast of Newfoundland to Argentia (1,600 kilometres).

Nickel is king just now with China's rapid expansion, fetching more than $6 U.S. a pound against a recent low of $2. Inco will not reveal the cost per pound of moving the Voisey's Bay concentrates thousands of kilometres to Sudbury and Thompson, but insists its journey is necessary. In 2004, Inco's average cash cost of producing nickel was $2.32 U.S. a pound, rising to about $2.80 this year and then dipping to $1.95 in 2006 when Voisey's Bay comes on stream.

Inco, the world's second-biggest nickel producer after Russia's Norilsk, produced 522 million pounds last year, declining to about 490 million pounds this year with heavy maintenance in Canada and power problems in Indonesia. The ores also yield copper, cobalt and platinum."The economics will work well for Canada and for Inco, improving our overall cost performance and reducing our smelters' reliance on external sources of feed," Inco spokesperson Steve Mitchell said.

The 60-year-old Fednav, a family-owned company headed by chief executive Ladi Pathy, operates a fleet of 21 owned vessels and 50 to 60 time-chartered ships. One of every two large deep-sea vessels transitting the St. Lawrence Seaway is operated by Fednav. Every year, its fleet makes nearly 600 voyages and hauls 15 to 20 million tonnes of commodities, mainly grain and steel.