Get the price of power down [Ring of Fire smelter] – Thunder Bay Chronicle-Journal Editorial (February 8, 2011)

The Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario. This editorial was published on February 8, 2011.

For an extensive list of articles on this mineral discovery, please go to: Ontario’s Ring of Fire Mineral Discovery

THE MESSAGE could not be clearer, the opportunity greater nor the time shorter for the Thunder Bay area. Cliffs Natural Resources, the major player in the giant Ring of Fire chromite deposit far north of here, has all but told the provincial government that it will build an electric arc furnace to process an estimated 70 million tonnes of ore in Northern Ontario if it can afford the electricity.

“At current provincial power rates, there isn’t a location in Ontario that is economically viable for Cliffs to build the ferrochrome production facility,” the company’s ferroalloys president Bill Boor said last week.

The ferrochrome furnaces would need 300 megawatts of power and “only a few” places in Northern Ontario meet these requirements, however, Sudbury is representative of a “technically feasible site,” he added. That is, it has the power supply, mining history and allied business.

“Representative of a feasible site” is pretty open-ended, and encouraging for alternate sites.

Cliffs still wants to meet with other municipalities, including Thunder Bay, Greenstone and Timmins to continue discussions for a potential site for the plant. Thunder Bay and Greenstone have as good a chance as the “base case” location in Sudbury.

Thunder Bay is a fully-serviced seaway port with a modern power plant capable of producing 306 MW of electricity — more than is required by the smelter.

Power output has been 75 to 80 per cent lower in recent years because of forest mill closures. Which suggests that together with existing hydro-electric plants and the Ontario plant in Atikokan, there will be power to spare — if the province’s new long-term energy plan, still open for comment, takes account of the many new mining developments being explored across the North. Thunder Bay city council was preparing to endorse a request for additional capacity at its meeting Monday night.

Greenstone, meanwhile, encompasses Nakina which would be the southern terminus of a new all-weather road planned to truck the ore from the mine site to the CN Rail line. Where it goes from there is the question — besides a power price competitive with either Manitoba or Quebec. If only CN hadn’t ripped up its Kinghorn line.

The Kinghorn ran from Longlac, just east of Nakina, to Thunder Bay — less than half the distance to Sudbury. But despite repeated urging — including the threat of court action — from the Municipality of Greenstone and others to keep the rails in place pending development of a big iron ore deposit near Geraldton, CN tore them up last year.

In 2008 Greenstone Mayor Michael Power blasted the provincial and federal governments for not funding Greenstone’s plan to temporarily purchase the line from CN before transferring it to a short-line operator.

Earlier, the province did give Greenstone $50,000 to market the Kinghorn line to potential new buyers. A short-line operator from western Canada expressed interest in the line but failed to come to an agreement with CN.

One can only speculate at how easy it would have been for CN to keep the line for itself had it known the much greater potential in the Ring of Fire. But could not the province have helped to complete the transfer to the short-line operator in the interest of 350 jobs over 40 years that Power estimated would result from the iron ore mine alone — jobs lost to the forest industry decline itself due in part to too-high power costs?

Now the province has another chance to maintain and boost the economy of Northern Ontario, by creating a power price structure that reflects the real, lower cost of electricity production here in the North, not the price that folds in the higher cost of power in and for southern Ontario.

Cliffs is saying it wants to confine its Ring operations in Northern Ontario. A better power price will achieve that while Thunder Bay and Greenstone pitch to keep the processing closer to the mine than Sudbury or Timmins. It’s a race and, all things considered, it’s Northwestern Ontario’s to win.

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