The Premier of the province of Newfoundland in Canada, has said that he is confident that an agreement can be reached, as early as February 2000, with the neighbouring province of Quebec to develop the C$6.5B Lower Churchill hydro project in Labrador. The project involves the expansion of the existing Upper Churchill hydro power project, partial diversion of a river to the

existing reservoir, the addition of new turbines and the construction of a new dam. The Innu, an aboriginal group, who claim they were never compensated for the flooding of their ancestral lands by the Upper Churchill project which was built in the early 1970s, oppose the project. Aboriginal groups have long maintained that they would only agree to further development at Churchill Falls if the Governments signed a treaty that gives them rights to their ancestral lands.

Churchill Falls project officials estimate that much of the 2200MW that would be generated by the project could be sold in the northeastern US power market by Hydro-Quebec. About 1000MW is to be sold in Labrador to power a proposed smelter for Inco Ltd’s nickel project at Voisey’s Bay in Labrador.

However, in January 2000 Inco indefinitely postponed the construction of the smelter due to poor market conditions and licensing problems.