Power costs must be addressed for Northern Ontario industries – by Brian MacLeod

Brian MacLeod is the managing editor for the Sudbury Star, the City of Greater Sudbury’s daily newspaper. This column was published on February 10, 2011. bmacleod@thesudburystar.com

Duguid’s response to what could be an enormous long-term economic
boost for Northern Ontario is lukewarm by comparison.
(Brian MacLeod – Feb/18/2011)

The Ontario government had better not fiddle when it comes to dealing with Cliffs Natural Resources’ attempts to develop the Ring of Fire chromite deposit in Northern Ontario.

An opportunity lost now would resonate for decades.

The 5,100-square-kilometre tract of land, centred about 500 kilometres north of Thunder Bay, is thought to contain one of the world’s largest deposits of chromite — a key ingredient in the production of stainless steel.

The economic potential is staggering, but there are major roadblocks that could diminish those benefits. As many as 500 people could be employed at the mine, up to 300 people in transportation and up to 500 jobs could be created at a chromite processing plant.

And each dollar of capital investment could generate $15 to $25 of economic activity. On top of that, development of a transportation infrastructure could result in more intensive exploration of Northern Ontario.

That the company has identified land near Capreol as a base case for the processing plant means only that it’s a scenario by which other areas will be measured. Any mining company seeking provincial approvals to operate must — for political purposes — advance the idea of processing in the province. Sudbury has an experienced workforce and a well-developed infrastructure, yes, but so does Rouyn-Noranda, just over the Quebec border. Thunder Bay is also in the running for the plant, as are locations in Manitoba. (There is no law that says the material must be processed in Ontario.)

A crucial consideration is the cost of electricity.

Xstrata closed its Kidd Creek processing plant in Timmins last year in favour of processing material in Quebec, in part, because power rates in Ontario are much higher than in Quebec and Manitoba. Since a chromite processing plant would require huge amounts of power, electricity costs could well be the deciding factor for the plant’s location. The company has said as much.

Discussions between Cliffs and the province are underway on these and other issues, including whether public funds will be spent on building the transportation infrastructure.

But Ontario Energy Minister Brad Duguid’s response was flippant and that’s disturbing. Duguid says he’s already changed the province’s energy policy to address power costs — a major initiative being cost reductions for using power during off-peak hours. Such a policy suits the forestry industry, but smelters run continuously –they are not strictly off-peak users — so the benefits of that program for Cliffs are limited.

Duguid’s attitude contrasts with government efforts to rush to the aid of General Motors, which risked thousands of jobs in southern Ontario when the company went bankrupt. Ottawa and the province spent billions of dollars bailing out GM, even purchasing part of the company.

For the rest of this column, please go to the Sudbury Star website: http://www.thesudburystar.com/ArticleDisplay.aspx?e=2985185