SOMBA K'E/YELLOWKNIFE - The president of Avalon Rare Metals Inc. has complained to the GNWT about the lack of cheap power from the existing Taltson River hydroelectric facility for a possible processing facility in the South Slave.

Don Bubar, CEO and president of Avalon Rare Metals, says the GNWT needs to step up its game when it comes to providing companies like Avalon with cheap power. - Guy Quenneville/NNSL photo

The company is mulling over the idea of building a processing plant at Pine Point for ore from its Nechalacho rare earth metals deposit at Thor Lake, about 100 km southeast of Yellowknife.

In a Jan. 12 letter to Premier Floyd Roland, Avalon president and CEO Don Bubar wrote the company is concerned about the NWT's "apparent hesitation" to offer hydroelectric power to new large industrial consumers at prices that are competitive with Saskatchewan. He also disagreed with the designation of diamond mines as priority customers for Taltson power.

"We are confused about how policy on power generation and sales is developed and how priorities are established," he wrote, adding Taltson power would reduce some of the cost disadvantage inherent in operating in the North.

Bubar argued the government's hesitation discourages new manufacturing or processing businesses from being established in the North.

"Energy is the largest component of our anticipated plant operating costs and therefore competitive pricing is critical to the economics of the hydrometallurgical plant and likely for any other rare metals value-added business opportunities in the NWT," he added.

When contacted by News/North, Bubar said the current rates for Taltson power are about double what his company would pay in Saskatchewan."It's one of the major contributors to operating costs," he said, although he said there are other significant expenses to operating in the North, such as transportation and shipping materials north. "The decision is not just based on power."

Bubar explained his letter was designed to remind NWT decision-makers about the project. "Our point was to stick our heads up and say, 'Don't forget about us.'"

In his letter, Bubar noted Avalon has committed to research use of the Pine Point location at the request of Fort Resolution's Deninu Ku'e First Nation and K'atlodeeche First Nation on the Hay River Reserve.

The location was suggested because of low-cost power from Taltson, existing roads and tailings disposal facilities, plus job and business opportunities for aboriginal people.

"Avalon will continue to evaluate other potential locations both inside and outside the NWT," Bubar wrote.

There are about six megawatts of interruptible power available to the former Pine Point site from the Taltson Dam.

"Coincidentally, this roughly matches our estimated power requirements for the proposed hydrometallurgical facility," Bubar noted.

However, he pointed out Avalon has been told by the GNWT and the Northwest Territories Power Corporation that diamond mines would be the priority customers for any excess power generated at the current Taltson facility.

Bob McLeod, the minister of Industry, Tourism and Investment, said there are legislative and regulatory barriers to providing electricity to the Avalon processing plant at the price the company is seeking.

"They're asking for a rate similar to what Saskatchewan is offering," he said. "The pricing is something we would have to deal with."

McLeod said it would require changes to legislation and regulations to give government more flexibility to set rates.

"I think the members of the legislative assembly would want us to be creative in making it happen," he said.

As for Bubar's charge that diamond mines are a priority for the government, McLeod said, "I don't think you can compare the two projects."

The minister said, for one thing, power to the diamond mines is not regulated, while power to the proposed processing plant would be regulated.

McLeod said he would like to see Avalon build its processing plant at Pine Point.

"For sure, that's my whole reason for being," he said. "We'd love to have a value-added facility, but we have to have the benefits outweigh the cost."

The minister said the government views the Avalon processing plant as an exciting opportunity for the NWT.

McLeod said the GNWT and the federal government are planning to hold a workshop sometime in March to discuss the value-added opportunities the project and similar initiatives could create.

The minister noted the premier has responded to Avalon's letter by outlining some of the barriers that have to be worked out.