Here's how a new Churchill Falls deal might power a surge in Labrador West mining

Top officials with N.L. Hydro believe a proposed new deal for energy sales to Hydro-Quebec, and the development of additional hydroelectric capacity on the Churchill River, will power a fresh surge in mining activity in Labrador, generate significant jobs and revenue for the province, and help meet the growing global demand for so-called "green" steel.

That's in addition to the billions of dollars in investment and thousands of new construction jobs over the next decade as energy production on the river expands by nearly 4,000 megawatts.

Such a scenario was part of the sales pitch used by N.L. Hydro CEO and president Jennifer Williams and vice-president Walter Parsons in the House of Assembly last week, during a special session on the Churchill Falls memorandum of understanding.

Both Hydro executives told MHAs that iron ore companies are showing great interest in either expanding their existing operations, or developing new mines, in Labrador West.

Proof of this, they said, is an ongoing study reviewing options for transmitting more electricity from Churchill Falls to Labrador West. It's being financed by mining companies, has reached an advanced stage in terms of front-end engineering and design, and proposes the construction of a new transmission line at a cost of more than $1 billion to "supply their decarbonization needs," said Parsons.

The current twin line between Churchill Falls and western Labrador runs about 240 kilometres.

The transmission study is expected to be completed this year, and Parsons is confident the mining companies will proceed with the project.

"All signs are certainly pointing in that direction. So we would expect that should they take that decision in the coming year, inside of 2025, then we would begin that process of actually constructing the line," he said.

But these plans can only become a reality, said Parsons, if the current availability of non-emitting, renewable hydro power is greatly expanded.

"Without having access to additional generation, there's no business case to build that line," he said.

That's why the MOU with Hydro-Quebec was carefully negotiated to ensure that new blocks of power from the existing Churchill Falls station become available on a staggered basis to N.L. Hydro over the next decade, said Williams. 

"That's very much was part of how we approached this MOU," said Williams.

Currently, 525 of the 5,400-plus megawatt capacity at the Churchill Falls power station is allocated to N.L. Hydro to energize the power grid in Labrador, and roughly 312 megawatts of that is sold to mining companies, specifically the Iron Ore Company of Canada in Labrador City and Tacora Resources in Wabush, via two transmission lines from Churchill Falls.

The remainder of that power is sold to Hydro-Quebec at just 0.2 cents per kilowatt hour under a lopsided agreement that's been in place since 1969, and is not set to expire until 2041.