Two major mining companies in the Yukon have signed a memorandum of understanding with an LNG company to build a supply facility in Fort Nelson, B.C. if their projects go forward.
The deal between the Casino Mining Corp., Selwyn Chihong Mining Ltd. and Ferus Natural Gas Fuels Inc. was announced Wednesday.
“In order for us to move forward on an LNG project, we need to meet a certain threshold in terms of contracts and demand,” Ferus spokeswoman Blaire Lancaster said in a phone interview yesterday.
“Our project approval is dependent on the mining projects going ahead, so this is an early stage announcement.”
Lancaster said Ferus is planning to build the facility at an estimated $200 million purely to supply the two proposed mines.
But the company also expects once the supply chain has been established, others interested in saving money and reducing greenhouse gas emissions by displacing diesel generation will consider switching to liquefied natural gas, she explained.
Lancaster said an early announcement like this does get parties thinking.
“We are anticipating more potential demand coming out of this announcement this morning,” she said.
The Casino project proposes what would be the largest mine in the Yukon’s history, with a daily production 10 times greater than the Faro mine that served as a cornerstone of the territory’s economy for many years.
The Selwyn project involves a world class lead-zinc deposit at Howard’s Pass 165 kilometres east of Ross River, along the Yukon-N.W.T. border.
The Casino Mining Corp. is currently preparing its application for the first-ever full panel review in the 11-year-history of the Yukon Environmental and Socio-economic Assessment Board. The company has indicated it has set a target of Dec. 31, 2017 to have the application ready for submission.
After a lengthy review by the assessment board’s executive committee, the committee decided earlier this year to bump the review up to a panel.
The Selwyn project is in the advanced stages of exploration, though the company reduced activity this year in light of the weak commodity markets.
Lancaster explained the Fort Nelson facility will be a two-phase development, the first expected to come on line in 2020 and the second in 2022. The liquefied natural gas will fuel the power generation plants and mining operations.
Ferus expects for each of the two phases, it will be shipping in the neighbourhood of 15 to 20 truck loads a day, she said.
Lancaster said the Fort Nelson facility is still viable and can proceed if just one of the mining projects goes forward.
Fort Nelson was chosen as the location because of its proximity to a supply of natural gas and the Yukon, she said.
Wednesday’s news release indicates the Casino mine would eliminate 140,000 tonnes of CO2 emissions annually by burning natural gas instead of diesel over the 22-year mine life.
The Selwyn mine would eliminate 115,000 tonnes a year over its 11-year mine life.
“In signing this MOU and adopting LNG as part of the energy portfolio for their projects, Casino and Selwyn Chihong are demonstrating progressive thinking and remarkable leadership,” Ferus president Dick Brown said in yesterday’s release.
“Not only does this fuel choice make their projects cleaner and more competitive, demonstrating their commitment to building modern, environmentally responsible mines, it may also benefit neighboring mines, industries and communities currently powered by diesel by making the LNG more broadly available.”