COMMENT: Cliffs threatens pull out of Ring of Fire – by Marilyn Scales (Canadian Mining Journal – October 22, 2013)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

I can hear it now: “I told you so” from nationalists who believe nothing good ever comes from letting a foreign corporation take over a Canadian miner or junior. After all, it seems as soon as Vale bought Inco, a year long strike began bristling with the animosity Inco had tried so hard to defuse in recent years between itself and the unions.

The nationalist chorus is likely to increase in volume as Cliffs Natural Resources of Cleveland, OH, says it is thinking of pulling out of the Big Daddy chromium-PGM-nickel project in Ontario’s Ring of Fire. Cliffs gained a 70% interest in the project in 2010 when it swallowed Freewest. The remaining 30% is owned by KWG Resources of Toronto.

Since the Ring of Fire in the James Bay region has no infrastructure, developing any mine there will be a massively expensive undertaking. Not the least of the costs will be a means of transportation for concentrates headed to deep water ports. Here, opinions differ – should a railroad or an all-weather road be built?

Now things get interesting. KWG has staked a swath of ground that covers the most likely route for laying tracks through swampy wetland.  The staking was done through a subsidiary of KWG and with the approval of Cliffs. The original thought was to build a railway, but Cliffs has now decided it wants a road, and KWG has refused to give an easement through the property to Cliffs. Cliffs applied to the Ontario Mining and Lands Commissioner, who ruled that under Ontario’s Mining Act, a mining claim such as KWG’s has prior right-of-surface use for all aspects for all aspects of exploration and development. That was not what Cliffs wanted to hear, and it is appealing the decision.

Cliffs remains doggedly in favour of road option. The company’s latest pronouncement is that it may consider mothballing the Big Daddy project unless the Ontario government wades in and settles the matter in its favour.

The company has already suspended work at another project, the Black Thor chromite property that it also acquired through Freewest. Cliffs blamed environmental delays, problems with land tenure and surface rights, and foot-dragging by the province for its decision.

Cliffs latest musings in the daily press could be considered a threat, given that the company has already shuttered one exploration camp that could have laid the foundation for a $3.3-billion mine development.

Cliffs has a point that uncertain signals from the province, and lengthy negotiations with First Nations in the Ring of Fire can slow advancement on any mining project there.

But a squabble with KWG over a transportation corridor – remembering the two are partners on the Big Daddy project – is a terrible reason to walk away from a breakthrough chromite discovery. Even less becoming to its corporate image, is Cliffs’ veiled threat to shut down a second potential mine project in Ontario.

Cliffs is active at two other major Canadian projects. First is the Bloom Lake iron ore development 400 km north of Sept-Iles, QC. Work there has slowed due to softening of global demand for steel. The second is the Decar nickel-iron advanced exploration project (with First Point Minerals, 40%) 80 km north of Fort St. James, BC. The American iron ore giant is also involved in several other earlier stage exploration properties in Canada.

One Response to COMMENT: Cliffs threatens pull out of Ring of Fire – by Marilyn Scales (Canadian Mining Journal – October 22, 2013)

  1. Doug October 23, 2013 at 10:19 am #

    “….unless the Ontario government wades in and settles the matter in its favour.”

    And how exactly would the Ontario government do that. The matter has already been decided in KWG’s favour. If the Ontario government would overturn that decision, it would make Ontario look like a banana republic and make Cliffs look like some kind of colonial overlords. The only other way is for Ontario to take over KWG or negotiate with KWG (which incidentally Cliffs should have done a long time ago).