Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.
Cliffs commits
While Cliffs Natural Resources made a declarative statement that Sudbury was its choice to host a $1.8-billion ferrochrome processor, the Ontario government was vague on what the province is prepared to invest in.
Power and processing were the two unanswered questions that came out of simultaneous May 2 press conferences staged by Cliffs and the Ontario government on the announcement of the smelter in the Nickel City.
Cliffs is advancing its Black Thor chromite deposit in the James Bay lowlands toward feasibility and a production target startup of 2015. Once the mine’s permits are obtained and an environmental assessment is finished, groundbreaking for the Sudbury furnace could begin within a year and a half.
Since entering the Ring of Fire chromite play, Cliffs has maintained that power rates in Ontario were too high to site a refinery in the province when compared with neighbouring provincial and U.S. jurisdictions.
But in its high-level talks with the McGuinty government, those concerns appear to be alleviated for the Ohio miner.
Bill Boor, Cliffs senior vice-president, who is overseeing the region-wide $3.3- billion mine and processing project, said discussions with Ontario have advanced to where the company was “comfortable” in making the site location of the furnaces finally public.
In his Sudbury press conference, Northern Development and Mines Minister Rick Bartolucci acknowledged that talks between Ontario and Cliffs continue, and that a deal will be struck in the coming months.
“Once the agreement is in place, we’ll make the parameters of the agreement public.”
Whether Cliffs will receive direct government subsidies, energy rebates or have its own exclusive supply of power generation remains to be seen.
“What we need is access to a robust grid,” said Boor, “which Sudbury gives us. It’s not just rate, it’s rate and secure supply.”
According to Cliffs’ production description, the miner wants to export approximately one million tonnes of concentrate to refineries outside Canada.
To do that, Cliffs anticipates applying to the Ontario government for a domestic processing exemption.
“That’s what we’re expecting and we’ll have to go through that process and they’ll have a decision to make,” said Boor.
He called exporting the concentrate to markets like China a “critical part” of the project’s overall economics to justify the company’s investment.
Historically, as a North American iron ore and coal producer, Boor said Cliffs is making a “big entry” into the global ferrochrome market, and to build a larger production facility in Sudbury “is something we can’t envision as an early step.”
If the ferrochrome market proves ready to accept more supply, Boor didn’t rule out expanding the Ontario project.
“We’re bringing as much of the manufacturing (to Ontario) as we can as a first step.”
Bartolucci didn’t reveal if the exemption will be granted, but added that too remains a topic of discussion with Cliffs.
Though many Northern leaders were disappointed in Ontario’s reluctance to match Cliffs’ investment with a major funding commitment on its own, Boor said that news is coming.
Cliffs has an agreement in principle to work with Infrastructure Ontario to jointly develop an all-weather road to access its chromite deposit.
“Through that (process) we’re going to figure out contributions, but they are going to significantly invest in that road.”
Boor emphasizes the transportation corridor shouldn’t be treated as an ore haul road for Cliffs, but as provincial infrastructure that will open up the Far North.
For now, a Ring of Fire railroad isn’t in the cards. Boor ruled it out as a “function of cost trade-offs.”
With only one deposit under development, and with the terrain of the James Bay lowlands difficult just to build a road on, a railroad doesn’t make sense until other mines come onstream.
“For a project of our scale, there is no way we can see, as a first step, getting to a rail project. If you get a road in place and start developing other mining opportunities in the Ring of Fire and it develops (on a) regional scale, we’re hopeful that someday there’ll be a railroad.”
Boor confirmed that the Canadian National Railway (CN) has been a “project partner” since the project’s early stages. Current discussions with CN are focused on the existing rail infrastructure, but they are investigating “various options with them.”
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