Voisey's Bay Nickel Co. confirms it is having significant problems with a processing technology it is currently testing at a plant in southern Newfoundland, raising concerns about where ore from the Labrador mine will be processed.

Voisey's Bay Nickel opened a hydromet test plant in Argentia in 2005.
(CBC)

VBNC opened a hydromet test facility in October 2005, but recently approached the Newfoundland and Labrador government about problems it has encountered at the Argentia site.

A final decision is not expected for another six months, but the company acknowledges there have been problems.

"The only thing I can say is that we are running into technical challenges with hydromet," said public affairs director Bob Carter.

The Voisey's Bay development agreement requires the company to process ore from the nickel mine within Newfoundland and Labrador, either through a hydrometallurgical process or through a more traditional smelter.

Hydromet is considered a cleaner and less expensive choice, although Voisey's Bay Nickel said it has not been proven on the type of ore found at the northern Labrador mine.

The Voisey's Bay nickel mine is located in northern Labrador.
(CBC)

A newsletter circulated by the company described "significant technical uncertainties" with the technology.

Premier Danny Williams has confirmed that the company has approached government about the possibility of not proceeding with a full-scale hydromet facility. However, Williams offered little comment on what he has been told.

"There's now indications from the company that they might be looking at another alternative," he said.

"They're presently considering that. They've raised the issue with government and that's really where it stands at this point."

Williams and other officials in his government have been at odds with Voisey's Bay Nickel in the past.

Under its former owner, Inco, managers in 2006 dropped their preferred site from the Placentia-Argentia area to Long Harbour, another community in Placentia Bay.

Williams argued at that time that Inco could have been looking for a way to escape from commitments in the development agreement to build a new processing facility in Newfoundland and Labrador.

Companhia Vale do Rio Doce, which bought Inco last year, filed an application in October to expedite development of the mine, considered one of the world's largest finds of nickel and copper.

The mine at Voisey's Bay went into production in 2005. Ore is currently being shipped to CVRD facilities in Sudbury and Thompson, Man.

About 160 people are currently working at the Argentia test site.