Jennifer Obleman
Northern News Services
Published Monday, September 17, 2007

SOUTH SLAVE - Deze Energy Corporation's plan to expand the Taltson hydro station and supply power to area mines is still years away, but talks with the diamond mines are starting to get serious.

"We've been working our way to more formal discussions," said Dan Grabke, managing director of Deze Energy Corporation, a partnership between the Northwest Territories Power Corporation, North Slave Metis Alliance, and Akaitcho Regional Investment Corporation.

Applications for regulatory approval were filed in May for the project to triple the capacity of the existing Taltson hydro electricity station, located on the Taltson River north of Fort Smith, and build 600 kilometres of transmission lines to the diamond mines.

Total project costs are estimated to top $300 million, which will be financed through the banks and paid off within the life of the diamond mines, expected to be about 20 years.

Deze is starting to negotiate with Ekati, Diavik, and De Beers about the price of purchasing hydro, though hard and fast conclusions will have to wait until regulatory approvals are granted and cost estimates are finalized, said Grabke.

"We're quite confident we can save them money and still have a profitable business. Hydro power is very expensive; to first build it ... but after that there's very little cost to it. And nobody really figures the price of oil is going to go down," he said.

Diavik is interested in hydro energy if it means stable, efficient, cheaper power, said Tom Hoefer, manager of communications and external relations.

"If the government can help introduce cheaper power into the Slave geological province, where we diamond miners operate, it could do much for sustaining diamond mining for much longer than we expect now," he said.

The question is, would hydro power prove to be less expensive than diesel?

Every year, Diavik hauls about 90 million litres of diesel, roughly half of which is used for power generation, up the Tibbitt-Contwoyto ice road, which is open for about two months. A short ice road season means flying in fuel at a steep cost.

But Diavik has already invested a substantial amount of money into diesel generators and storage tanks.

Reliability of the power source is also a concern, Hoefer said.

"Running a power line 600 kilometres into the barrenlands is something new and untested in the North. We don't know its reliability ... we would need to maintain backup diesel power to ensure the safety of our workers and mine site when that power fails," he said.

De Beers is also considering Taltson River as a possible power source, said Cathie Bolstad, manager of public and corporate affairs for De Beers Canada's NWT projects.

"We have provided our power requirements ... The availability of hydro power at a price that is economical is certainly something we are interested in," she said.

The Taltson hydro electricity station was built in the mid-'60s to service the Pine Point Mine, which closed in 1986. The station now supplies power to Hay River, Fort Smith, Fort Resolution and Fort Fitzgerald.

The expansion project will begin in 2009 if regulatory approval is granted, and will take about three years and 400 workers to complete. Deze will hold community consultations in the South Slave region next month.