Peat Fuel Power in the Ring of Fire? – by Ian Ross

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. This article was published in the October, 2010 issue.

For an extensive list of articles on this mineral discovery, please go to: Ontario’s Ring of Fire Mineral Discovery

Peat fuel producer Peat Resources Limited eyeballs powering Far North mines.

A Toronto-based peat fuel pellet producer thinks he can provide a green source of power to mining companies currently operating off the grid in the Ring of Fire.

Peter Telford, president and CEO of Peat Resources, was making the rounds at last spring’s Prospectors and Developers Association of Canada’s annual convention, talking to companies like KWG KWG Resources and Cliffs Natural Resources of his ability to supply them with fuel for their future mine operations.

“If the Ring of Fire project proceeds and Cliffs wants to start processing chromite into ferrochrome for use in stainless steel, there will be a real power demand that (Ontario Power Generation stations in) Thunder Bay and Atikokan can’t supply.”

Peat Resources has an indicated and measured resource at its Upsala property in northwestern Ontario of 22.5 million tonnes of fuel-grade peat. The company has a small pilot plant there, where it has been optimizing its wet harvesting method and pelletizing technology.

Peat is a biomass that has been used for power generation in Europe. But it has been an uphill climb for the Toronto company to convince the Ontario government that the swampy material can be used as an environmentally friendly alternative fuel to burning coal.

With the Ontario government still not having made an official decision on whether peat can be included in the biomass mix at OPG generating stationsk, Telford is turning his attention to the chromite and base metal miners exploring in the James Bay lowlands.

Telford suspects a ferrochrome processing facility could require 400 megawatts of power.

OPG’s Thunder Bay and Atikokan plants produce a combined 517 megawatts, but are scheduled to be off-coal by 2014. Plans are underway to convert Atikokan into a biomass-burning station using wood pellets.

“The mine development and ore processing need reasonably priced power and power generated at Thunder Bay and Atikokan from wood pellets is not going to be reasonably priced power,” said Telford.

So far, the conversations with miners have been very preliminary.

Telford said until companies like Cliffs consolidate their holdings at McFauld’s Lake and prove up their resources, it is too early to talk about their specific power needs.

“By fall, they’ll be ready to start thinking about their infrastructure and energy needs.”

It hasn’t stopped Telford from doing his own groundwork.

If an ore haul railway is built between McFauld’s Lake and Nakina in northwestern Ontario, Telford said there is an abundance of peat bogs along the route and he has already investigated and selected some sites.

One scenario Telford envisions is establishing a peat pelletizing plant at Nakina, at the southern end of the railroad, and transport pellets to a power generation facility at a mine site. It would serve as a backhaul freight for southbound ore trains that otherwise would head back north empty.

He doesn’t suspect it would be onerous to get government regulatory approval if there is a demonstrated business demand and a viable market for the product.

“That was one of the knocks against us four years ago when we were trying to get the approvals on the Upsala site. If we have Cliffs saying ‘we want the power and we’ll take peat,’ then we can go back to regulatory people and it answers a concern.

“It won’t be the environmental issues that are going to drive it, it’ll be economic issues.”

Telford said Noront Resources’. CEO Wes Hanson is familiar with his operation. Hanson conducted an engineering review of Telford’s peat project while working for SNC-Lavalin years before.

While acceptance of peat fuel is slow in Ontario, Telford is having more luck on the East Coast where he’s aiming to bring his Newfoundland peat property into production in 2012. A Cornerbrook paper mill took a truckload of pellets last year and found it worked fine as a fuel. The company has been talking with Nova Scotia Power.

There is also interest in the United Kingdom and Europe where there is a big demand developing from utility companies wanting to look at burning peat fuel blended with coal.