The Sudbury Star is the City of Greater Sudbury’s daily newspaper.
A $3.3-billion plan to build North America’s first major chromite mine deep in the Canadian wi lderness promises to usher in an era of prosperity for the region’s aboriginals and generate millions of tax dollars over its lifetime.
Tucked deep into Northern Ontario, the Ring of Fire contains rich mineral deposits that could transform the region, much as the oilsands have transformed Alberta. Much like the oilsands, it has raised deep environmental and social concerns.
But the Ring of Fire stands apart from other resource mega-developments around the world in one important respect. Rather than oil, gold or iron ore, its main attraction is a relatively minor ore — chromite — which is refined into ferrochrome to make stainless steel.
The region contains North America’s only known large-scale chromite deposit. If Cleveland-based Cliffs Natural Resources Inc. develops the Black Thor project, it will likely revolutionize the stainless steel industry on the continent, which now relies on imports from South Africa and Kazakhstan. It would make Canada the world’s four thlargest chromite producer.
Black Thor is the first of many projects that could keep the Ring of Fire bustling with drills, crushers and dump trucks well into the next century — until the deposits run dry.
“We’ve got a whole bunch of projects and you could have an enormous boom that ends in an enormous bust,” said Bob Gibson, an expert on environmental policy at the University of Waterloo in Waterloo, Ont.
Rapid urbanization in China, India and other developing nations has driven up demand for base metals such as copper, nickel, iron ore and chromite, used to build every-t hing from skyscrapers to household appliances.
At the same time, centuries of exploitation have made it harder to find viable projects in politically stable regions, forcing miners to develop evermore remote resources.
The Ring of Fire is a case in point. Named whimsically for a Johnny Cash song, the crescent-shaped arc of deposits about 1,500 km northwest of Toronto is rich in chromite, nickel, copper and platinum group metals.
RHODE ISLAND SIZED
Turning that 4,000 square kilometre swath of boreal forest — about the size of Rhode Island — into Canada’s newest mining district will be no easy task. There are no roads, rail lines or reliable sources of power.
In fact, the price of the Cliffs project has already ballooned to $3.3 billion from an earlier estimate closer to $1 billion. Costs include a smelter hundreds of miles south in Sudbury, and some $600 million for an all-season road.
With first production at least three years away, after a prolonged environmental and political permitting process, that price could rise, raising concern whether the chromite project alone is enough to merit the capital investment.
“The costs have nearly tripled from their original estimate,” said JP Morgan mining analyst Michael Gambardella. “There must be some additional volumes, whether it’s in chromite, ferrochrome or other minerals that are up there, to offset the additional capital costs.”
Refined ferrochrome prices have risen 9% so far this year to $1.20 a pound. Prices for the alloy have been volatile since early last year as economic worries in Europe weighed against concerns over production shortfalls in South Africa.
Cliffs sees Black Thor as an opportunity to command about 10% of the global chromite market, while building on its existing relationships with steelmakers.
The massive, open-pit mine is expected to pump at least 600,000 tons of ferrochrome into North American and European steel markets each year, and some one million tons of chromite concentrate into Asia.
“There’s still a lot of demand growth for stainless steel — and therefore ferrochrome — in the world because you still have a lot of development left in places like China,” Ga mbardella said.
Along with Cliffs, juniors such as KWG Resources Inc. , Noront Resources Ltd. and Probe Mines Ltd. are all exploring chromite projects in the Ring of Fire.
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