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An up-and-coming northwestern Ontario iron ore producer is “98 per cent” sure the processing for a magnetite deposit will be located near Ignace, rather than Atikokan.
Thunder Bay’s Bending Lake Iron Group is evaluating two sites close to the northwestern Ontario town for a concentrator and pellet plant.
The privately-held, First Nation family-owned company wants to develop an open pit mine which will create 700 construction jobs within two years and 300 permanent mine and processing jobs.
President Henry Wetelainen said after examining the costs of permitting, their project timelines and delays at Atikokan to reach an agreement with the Ministry of Natural Resoruces, the company decided to shift its focus to Ignace.
The proposed site for the processing is at the Bending Lake deposit itself, south of Ignace. The back-up site is at Raleigh Falls, 30 kilometres west of town, and closer to the Trans-Canada Highway and a rail connection.
“I think we’ve made a decision that it’s going to be easier with everything at, or north of, Bending Lake,” said Wetelainen. “If we can’t license the tailings (disposal) area we want at Bending, we have the option.”
The company is working on its environmental assessment and expects to have a new project description ready by December to file with the various regulatory agencies towards permitting.
The Bending Lake iron deposit is accessible by road with Highway 622 running through part of it.
The company’s engineers, Krech Ojard, are firming up the costs to build a 26-kilometre short-line railroad from the mine to the Canadian Pacific Railway’s main line.
The initial estimates are $58 million for construction, plus $34 million to purchase equipment, including locomotives and rolling stock.
“A rail line gives us all kinds of flexibility,” said Wetelainen. “We can scale up our production at Bending as we prove up more reserves.”
The company has proven ore reserves of up to 250 million tonnes, worth about 25 years of production life, with the potential to grow as large as 500 million to 700 million tonnes.
Once the environmental work and permitting is out of the way, the company is aiming for commercial production in 2016.
It’s great news for Ignace, an economically depressed community, which has lost many jobs in the forestry industry.
“We have the infrastructure, municipal services and capacity to serve large economic development projects like this,” said Ignace Mayor Lee Kennard, in a Sept. 9 news release. “We’re enthusiastic about the jobs it will bring and we encourage the regulators, consultants and the company to move the permitting process forward as quickly as possible for the benefit of the economy of northwestern Ontario.”
Wetelainen said Atikokan isn’t completely out of the picture though.
The former Steep Rock open pit mine remains his preferred processing location. He likes the road and rail infrastructure there, along with the power and natural gas connections. One of the pits could be used for tailings disposal.
But the cost of developing on the site is too prohibitive, combined with the minefield of environmental and regulatory hurdles that could delay the project.
Whether Atikokan gets the processing also depends upon what equipment is chosen, said Wetelainen.
The company is exploring two technologies to make both iron ore pellets and merchant pig.
One is a rotary hearth furnace made by Japan’s Kobe Steel that makes merchant pig units of 97 per cent iron.
The other is an electric arc furnace. The operating costs are estimated at $179 per tonne with electricity costs translating to 8 cents per kilowatt.
Wetelainen said Atikokan only make sense if they can strike a deal for cheaper power through a public-private partnership using the nearby generating station.
Though the Bending Lake Iron Group’s claim to fame is as a future maker of merchant pig iron, its steel analysts said the market for iron ore pellets looks much more promising.
“We are now in talks with U.S.-based steel companies,” said Wetelainen, who declined to name any due to confidentiality agreements. “They’re the biggest boys in North America and they’re very interested in buying pellets off us. We also have good interest out of Japan, India and China, all in the pellet market.
“We can make a profit selling pellets in North America, but we also believe you can make pig iron over a long period of time and still make good money.”
On the financing front, Wetelainen said there’s been interest from other international steel players, automakers and industrial financiers, all willing to take a stake in the project.
Wetelainen did reveal that Caterpillar Financial is ready to invest $100 million as part of an equipment deal. And an Indian company wants to build a pelletizer that would drop the project price tag from $900 million to $700 million.
Bending Lake is one of three deposits the company is working in northwestern Ontario.
At Otter Bay, 115 kilometres west of Atikokan, near Fort Frances, the company has done mapping and geophysics work on an iron formation in anticipation of identifying drill targets.
To the north, near Sioux Lookout, Wetelainen said there is a 180-million-tonne historcal reserve on the Minnitaki Range, a 15-kilometre-long deposit that’s been well-known to his family of prospectors for generations.