Consideration for rail corridor to Ring of Fire
Canadian exploration company KWG resources Inc. is launching a feasibility study for a possible railway corridor to the Ring of Fire mining development.
It is possible the wheels might finally be rolling for the Ring of Fire project, at least from the point of view of KWG resources Inc., one of the key stakeholders in that mining venture.
KWG, a Canadian mining exploration company, has worked out a deal with China Railway First Survey and Design Institute (FSDI) for a feasibility study on a railway corridor into the project.
The Ring Of Fire refers to a large mining development located about 600 kilometres northwest of Timmins, in the remote McFaulds Lake area. The prospect is identified mainly as a chromite project, valued in the tens of billions of dollars. There are huge deposits of other metals there too, but so far none of the significant mining companies involved has moved forward with any sort of a mining operation. KWG and Noront Resources are the main players in the project.
Bruce Hodgman, a vice president and communications director for KWG, told The Daily Press this past week that the plans for the rail corridor would involve a link from the Ring of Fire south to the amalgamated community of Greenstone, Ontario (Geraldton, Longlac, Beardmore). The distance would be roughly 350 kilometres over land that was staked out by KWG.
“We’re the company that actually staked those claims, the high ground that leads into the Ring of Fire if you will; that sand ridge that leads right from Greenstone up to the project itself,” Hodgman explained.
“So it is the only feasible corridor because it has high ground and of course we have so much swamp up there it doesn’t make any sense to go anywhere else.”
He said KWG spent between $15- and $20-million on pre-engineering, surveying and soil-testing work on that corridor to make sure it could support a railroad. With that, the company presented the information to China Rail, which in the past 60 years has created nearly 48,000 kilometres of rail through some of the world’s most difficult terrain.
“They’ve had a look at that data and have decided they want to move forward and by moving forward it means they want to do a feasibility study on the rail corridor,” said Hodgson.
He said KWG president Frank Smeenk would be travelling to China in January to discuss issues of financing the study and what sort of return on investment will be expected by the Chinese. Hodgman said there is no firm estimate on the cost of the study at this point in time.
“If you’re talking strictly ballpark, I would put it in the ballpark of $10-million,” said Hodgman. He said the expectation is that China Rail will finance the study.
Hodgman said by financing the feasibility study, the Chinese “will be looking for payment in either A) ferrochrome, or B) stainless steel ingots or billets, or possibly some combination of those products.”
If an agreement is reached on the study, Hodgman said he is hoping the study itself would take less than a year.
“Because we’ve already generated all that engineering data, because we spent $15-million to $20-million on drilling bore holes along that corridor and analyzing the material, I’m optimistic it would take something more in the range of give or take six months.”
Following that, there would be an environmental assessment and a permitting process, which would easily take longer than a year. The hope is that in a couple of years time, a new rail link will be created over the muskeg, allowing materials to be shipped in for the creation of the mines.
It would also allow the mining companies to begin shipping out chromite, an essential mineral for the creation of stainless steel.
“We have the ability in Canada to use cheap natural gas to make ferrochrome, to use cheap Quebec or Manitoba electricity to make stainless steel, by incorporating Canadian iron ore and Canadian nickel and Canadian ferrochrome that we now have access to,” he said.
Hodgman added that the current plan is to create a plant in Greenstone, for primary processing of the chromite.
“That’s our plan. We are in discussions with Greenstone to actually place a facility right there where our railhead meets with the east-west gas pipeline,” he said.
He said KWG has developed a process, with patents pending, that will allow the company to use natural gas to covert chromite into ferrochrome, instead of using extremely expensive electricity.
“Because we can do that we can now process this material in Ontario,” he said.
Although some critics might suggest that KWG is selling out Canadian resources to the Chinese, Hodgman said that is not the case.
“I would say if in fact yes we were just shipping our raw resources, unprocessed to China, then I would agree with that statement,” said Hodgman. “What we’re talking about is processing in Canada, creating jobs in Canada, generating tax revenue in Canada.”
Hodgman said instead of sending raw products out to other countries, finished products such as stainless steel could be produced here in Canada.
“We can re-invent stainless steel, something that has disappeared from Canada for decades,” he said.
“This is good for all Northern communities. I believe they will all benefit from this,” Hodgman added. Timmins Mayor Steve Black agrees.
“I believe getting the Ring of Fire into production anywhere will be a tremendous impact to all of Northern Ontario. With that being said, obviously the closer to Timmins a processing facility is the more direct benefit there is,” said Black.
“However Greenstone, for KWG, makes sense from an existing infrastructure standpoint when it comes to rail access and proximity to the site and this location has potential to benefit the Northeast significantly,” said the mayor.
Christy Marinig, the CEO of the Timmins Economic Development Corporation, said any new mining development that takes place in Greenstone is still close enough for the mining supply sector in Timmins to be able to bid on contracts there.
Black said he believes the rail project will still take lots of time and approvals before it becomes reality.
“Ultimately it would be great for the province to make a decision of what infrastructure set up would open up access to the mining area and have the most beneficial impact to First Nations communities in the north and then partner with the companies to see actual progress,” the mayor continued.
Hodgman agreed that the role of First Nations would be significant and a likely scenario would see First Nations actually managing and overseeing the rail corridor.
He said this would result in social benefits and economic benefits flowing through to First Nations communities.
“This is benefit for all of Ontario. This is not just for KWG,” he said. Hodgman said the new rail corridor would not be only for KWG, but would also be used by Noront and any other mining company with a stake in the Ring of Fire.
Hodgman is clearly optimistic about the negotiations with the Chinese in January.
“The Chinese are coming. You know, they want these raw materials and if it takes them building the railway and getting paid back in ferrochrome, then I think it is a win-win situation for Ontario and for the Chinese,” he said.
“I think it is important that we say this is good for the benefit of everybody. It’s not just the KWG story. This is something that is good for the First Nations, for Northern Ontario, for all the mining companies. This is good for everybody.”