[MiningWatch Canada Ring of Fire report] Power requirements a concern – by Carol Mulligan

Carol Mulligan is a reporter for the Sudbury Star, the City of Greater Sudbury’s daily newspaper.

For the MiningWatch Canada report written by Joan Kuyek, please click here: Economic Analysis of the Ring of Fire Chromite Mining Play

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

The author of an economic analysis on the Ring of Fire chromite deposits urges Ontarians to ask a couple of basic questions about the benefits of developing the resource.

What will it cost taxpayers of the province of Ontario for every job that is created? And, is the cost worth it?

Joan Kuyek wrote the report for MiningWatch Canada, a national non-profit organization that examines mining and its effects on communities. Formerly of Sudbury and now living in Ottawa, Kuyek was commissioned by MiningWatch to conduct a preliminary review of the economics of mining the rich chromite deposits in Northern Ontario.

In the opening paragraph of her 20-page report, Kuyek said there is no experience in chromite mining or ferrochrome production in Canada.

She also admits she knew little about either subject when she began working on the report, released last month.

The retired executive director of MiningWatch leaves it for readers to draw their own conclusions about whether massive investments of public money will be worth the jobs that will be created by several companies who have the rights to mine there.

” The real question is the price per job,” said Kuyek.

Companies such as Cliffs Natural Resources, who own huge portions of the Ring of Fire, are indicating they will need public funding to build roads and infrastructure to get to the chromite ore — and subsidies for the massive amounts of electricity required to process it.

Chromite is used in the production of stainless steel, and Canada has little to no experience in it, says Kuyek in her report. Xstrata, however, is the world’s largest chromite producer, with most of its operations in South Africa.

Before chromite can be used in steel making, it has to be converted to ferrochromium. Hopes were high in Sudbury last week when Cliffs Natural Resources announced that Sudbury is one of the locations it is considering for a smelter to process chromite from the Ring of Fire. Cliffs is considering a brownfield site near Capreol for such a facility.

If the plant is located here, Sudbury does stand to gain hundreds of good-paying jobs in ferrochrome production. But Kuyek said it will take massive government investment to bring those jobs to fruition.

Kuyek also points out that Ontarians won’t benefit from mining royalties from developing the ore deposits there. “In Ontario,” writes Kuyek, “Ring of Fire mines will qualify as ‘Northern Ontario remote mines’ and will enjoy a 10-year tax holiday from paying” the mining tax.

First Nations will also have to be “careful” that any royalty sharing agreement they arrange with the province is based “not on a percentage of the mining tax, but on a share of gross revenues.”

Because of the high cost of mine development, companies would not show a profit “for income or mining tax purposes for a number of years, and will pay little or no mining and income tax during the life of the mines.”

But the largest concern for Ring of Fire companies and Kuyek is the power needs of a ferrochrome production plant.

The now idle Kidd Metallurgical Site operated by Xstrata Copper in Timmins used the same amount of power as 250,000 homes, said Kuyek. “This is more,” she said of a ferrochrome facility.

Giving a break to a producer such as Cliffs will, no doubt, boost residential hydro rates, she said.

Kuyek said she was “appalled” when she began investigating the economics of chromite development in Ontario, but she leaves it for readers to draw their own conclusions.

For the rest of this article, please go to the Sudbury Star website: http://www.thesudburystar.com/ArticleDisplay.aspx?e=2977067