Ring of Fire
Thunder Bay - Gateway to the 'Ring of Fire' and Chromite Development
Thunder Bay is strategically located as a major gateway relative to one of Northern Ontario’s hottest potential mining areas known as the “Ring of Fire”. One of the major projects in this area involves KWG Resources Inc., and their discovery of the “Big Daddy” chromite deposit. Plans are underway to develop a world-class chromium mine in that location. Chromium is the “stainless” part of stainless steel. The project would see Ontario for the first time become a producer of a highly strategic global mineral.
Initial estimates are that the total capital cost associated with the project would be approximately $800 million USD. A major aspect of the development relates to the construction of a roughly 350 kilometre rail line that would link the proposed mine site to the CN Rail line near Nakina. Estimates are that over 500,000 tonnes of product will be shipped from the site annually. The mine could have a life expectancy of 100 years.
Initial forecasts by the company indicate that there would be approximately 1,200 permanent jobs associated with the operation of the mine and railway. A further 4,200 indirect permanent jobs would also be supported by the operations, bringing the total number of permanent jobs to 5,400 workers. Additionally, there would be an estimated 5,200 construction jobs created during the development of the mine, railway and refinery components of the project. The grand total of jobs to be generated by the project could be in excess of 13,200.
Cliffs Natural Resources, the largest iron ore company in North America, has recently acquired 20% of KWG. Cliffs’ involvement with the project will help to facilitate financing, as they have over 160 years of expertise in building mines, establishing processing mills, and laying tracks used to haul iron ore. The estimated value of Cliffs’ current combined operations is in the billions of dollars USD. The company also has railroad building expertise in Canada that spans almost six decades, as it was involved in the development of the Labrador iron range in the early 1950s.
The Cliffs’ operation nearest to Thunder Bay is the Northshore Mining Company, a wholly-owned subsidiary. This operation is situated on the Mesabi Iron Range, with the mined located in Babbitt, Minnesota. The processing facilities for this mine are located in Silver Bay, Minnesota.
Cliffs has chosen KWG to be its strategic partner in developing the chromite mining operation and the rail link to a new smelter. Canada Chrome Corporation was incorporated as a subsidiary of KWG to be the operating company. Cliffs has also recently completed the purchase of Freewest Resources Canada Inc. for approximately $240 million. Freewest is another mining company with three world-class chromite deposits in the “Ring of Fire” area.
As of early 2010, approximately $10 million has been spent on resource definition drilling of the KWG site. Scoping level metallurgical studies that have been completed indicate that high-value chromite concentrates can be produced. Other project activities currently underway include the collection of baseline environmental data, as well as consultation with Aboriginal communities. Railroad engineering and additional mineral data acquisition are also currently being conducted. Consultations are also starting to take place with respect to community based regional land use planning matters.
The key next steps for the project include further data acquisition and analysis, environmental assessment work, and detailed engineering relating to the railroad. Once the chromite resource estimation and mining operation pre-feasibility studies have been completed, the company can proceed with securing the total financing required by the project. The company has suggested that the mine could possibly be in operation by 2015.
Chromite is considered a strategic mineral, especially by the U.S. defense sector. It is used to make missile components, armour plating and jet engines. The majority of the chromite imported into North America comes from Zimbabwe and South Africa, which mines roughly 70% of the world’s supply. Chromite is processed into ferrochrome, used in the production of stainless steel. Approximately 90% of the world’s chromite is used in making stainless steel. China uses half of the world’s chromite. The North American stainless steel industry consumes four-million tonnes annually.
Thunder Bay has already begun working with Canada Chrome on a number of project development related matters. Along with the local business community, the Community Economic Development Commission is looking forward to Thunder Bay becoming the “Gateway” to the “Ring of Fire”.
