Construction began Tuesday on Vale Inco's $2.2 billion commercial hydromet plant to process nickel concentrate 120 kilometers west of St John's Newfoundland.

Vale Inco Corporate Affairs Manager Bob Carter told CBC News that the facility is proceeding under gloomy economic conditions. Anybody involved in this business is looking very closely at what is going on. Our industry has been affected by changes that are occurring globally.

The four-year construction project is expected to require 1,600 workers by the time it is forecast to be completed by December 31, 2011. The plant will generate 450 permanent jobs.

Vale Inco expects to award 45 major construction contracts to build the plant. However, anyone wishing to be employed at the construction site must be a member of one of the many unions represented by Newfoundland and Labrador's resource development trades council.

Vale has an agreement with the council that includes a no strike/no lockout clause.

When the decision was made to build the hydromet plant, Newfoundland/Labrador Minister of Natural Resources Kathy Dunderdale called the plant the processing technology of the future with the greatest economic and employment impact for the province, so we felt this is the best possible outcome for the people of the entire Placentia Bay region, and indeed the province.