A new study of transportation options for the Ring of Fire has determined that building a railway would be cheaper option over the long term than shipping ore on an all-weather road.
KWG Resources, a mining company that has long promoted the railway option for the region, commissioned the study. According to the study, the cost of building a rail line over the 330 kilometers between the Ring of Fire and Nakina is nearly $1.5 billion, while the cost of building a highway comes to just over $1 billion.
However the operating costs of a railway line were significantly lower than those of highway shipping, due to the high cost of equipment, maintenance and labour associated with shipping ore by road.
The study estimated that the extra cost of building a railway line would be covered by the savings in operating costs in six years, at the base case for mining production.
“This analysis brings out the features that the rail option is more robust, low maintenance, cost-reflective and demand-responsive to operational and market conditions than the road option,” the study stated.
It also noted that the cost of the rail option goes down compared to the road as more ore is mined in the region.
“The lower medium and long term cost for rail provides an opportunity to develop a more stable and consistent transportation corridor in the region, which can respond well to development,” it reads.
The study also noted that due to a scarcity of gravel in the region, building both a railway and a road may not be possible. Whichever option gets built first may limit the cost-effectiveness of the second option, the report stated.
Cliffs Resources has proposed building an all-weather road from the Ring of Fire to Nakina. A spokesman for Ontario’s Ministry of Northern Development and Mines (MNDM) told Wawatay that the province is considering funding a portion of the road and recouping the money through tolls or fee for use plans. The MNDM spokesperson also said the road would be for industrial users only, and not connect to local communities.
Cliffs VP Richard Fink acknowledged that a railway would be the preferred option, but as he told Canadian Mining Journal, the initial costs of building it are prohibitive.
“Everybody would love a railway,” he said on Feb. 1, 2012. “The concept is wonderful, but we don’t see anybody who would finance it.”
The new Ontario cabinet has also announced it will hold a cabinet meeting in Sault Ste. Marie on Mar. 1 focused on addressing northern Ontario’s “complex transportation needs, including vital access to the Ring of Fire.”