Pressure from U.S. could hasten development of strategic chromite deposits in Ring of Fire – by Gregory Reynolds

This article appeared in the Winter 2010-11 issue of Mining Life & Exploration News (Canada’s Quarterly Mining Magazine)

The drive to develop the Ring of Fire’s huge storehouse of minerals is no longer just based on economics but has entered the world of international politics. In fact, the safety of the United States of America has become a factor……and the military establishment wields a big stick.

The need for a safe and secure chromite source to keep the U.S. gigantic defence machine in a state of perpetual readiness (as well as fighting two wars at the moment) has been drawn to the world’s attention by WikiLeaks, a web site dedicated to revealing government secrets.

In November, WikiLeaks founder Julien Assange started publishing some of the 250,000 secret diplomatic message sent by and to U.S. diplomats stationed around the world. Concern was expressed about foreign dependence on key commodities.

One of the key players in the Ring of Fire is KWG Resources Inc. and it issued a statement Dec. 6 that said: “The inclusion of chrome sources in Kazakhstan and India, on a U.S. State Department leaked listing of strategic assets, demonstrates the potential global significance of the Ring of Fire chromite discoveries. Until now, North America has had no commercially viable sources of chromite,” explained KWG president Frank Smeenk.

“We have pressed both our Canadian and Ontario governments to heed the strategic significance of these remarkable discoveries, as they represent potential continental self-sufficiency and a Canadian export commodity that is crucial to Canada’s allied trading partners. These leaked intelligence reports have dramatically underscored our message in this regard.”

Chromite is the only ore of chromium, a metal used to induce hardness, toughness and chemical resistance in steel. The alloy produced is known as “stainless steel.” When alloyed with iron and nickel it produces an alloy known as “nichrome” which is resistant to high temperatures and used to make heating units, ovens and other appliances.

Thin coatings of chromium alloys are used as platings on auto parts, appliances and other products and given the name “chrome plated.” So-called “super alloys” use chromium and have strategic military applications.

United States chromium consumption is equivalent to about 14% of all the chromite ore mined each year. In the Western Hemisphere, chromite ore is produced only in Brazil and Cuba; the United States, Mexico and Canada do not produce chromite.

Market reports estimate that four countries—South Africa, Kazakhstan, Finland and Turkey—control nearly 80% of the world’s 24 million tonnes of chromite ore production.

The Ring of Fire is in the isolated James Bay Lowlands of Northern Ontario, 500 km northeast of Thunder Bay and 100 km west of the DeBeers’ Victor Diamond Mine.

Control of three chromite deposit has been achieved by a large U.S. company, Cliffs Natural Resources Inc. of Cleveland, Ohio.

Cliffs as of Nov. 16, 2010 owned 19.3 per cent of KWG’s equity on a fully diluted basis. Cliffs also owns 85 per cent of Spider Resources Inc. KWG and Spider hold 26.5 per cent each of the key deposit, the Big Daddy, and Cliffs got the other 47 per cent by buying Freewest Resources.

KWG has announced that the metallurgical test work on a Big Daddy bulk sample will be conducted by Xstrata Process Support (XPS) at their facilities in Sudbury, under the direction of Arthur Barnes. Initial physical properties tests are expected to be completed in the next number of weeks and the material will be scheduled for further smelting tests at XPS in 2011.

The tests will provide data on the friability of the ore and the amount of electrical energy consumed in its smelting. These data will enable consumers of the raw material to determine its potential value relative to similar materials from sources of supply located elsewhere.

Cliffs is the largest producer of iron ore pellets in North America, a major supplier of direct-shipping lump and fine iron ore out of Australia and a significant producer of high and low volatile metallurgical coal.

Early in 2010, Cliffs purchased two large chromite deposits and the controlling interest in a third deposit in the Ring. Cliffs subsequently announced “its intent to develop the mining operation in the Ring and a ferrochrome processing operation at a site to be determined in Ontario. Pre-feasibility studies are underway, with projected start-up in 2015.”

On Dec. 1, Cliffs announced Dave Anthony will join the organization as vice president, senior project director, of Cliffs’ Canadian chromite operations, effective January 2011.

In this position, Anthony will lead the technical development of Cliffs’ chromite deposits in Northern Ontario, overseeing project scope, execution plans, schedules and budgets to successfully design, procure, construct and begin production. He will report to William Boor, senior vice president, president – Ferroalloys.

Cliffs has said it is prepared to spend up to $2 billion to build a railway, possibly a highway, a mine and a processing plant in order to get the chromite to its U.S. plants.

The Ontario Ministry of Northern Development, Mines and Forestry says 21 exploration are under way in the Ring and finds of nickel, copper, gold, diamonds, platinum and palladium have been announced.

The problem is that the junior mining companies that have made discoveries lack the financial ability to mine ore in an area without roads, rail lines or hydro power. Cliff has the money or can borrow it.

It is being said in mining circle that Cliffs is seeking financial assistance from the Ontario and federal government to undertake the project.

Cliffs also has said it wants to be in production by 2015, a date many in mining think is impossible unless the two senior levels of government not only contribute but cut through their red tape that entangles any project involving resource development.

To date, the Ontario government of Dalton McGuinty has been a cheerleader for those wanting a quick development of the Ring.

It inserted approving comments in its 2010 Speech from the Throne, 2010 budget and numerous speeches by provincial cabinet ministers, including the premier.

Anthony has more than 30 years of engineering and environmental experience in the mining industry. Most recently, he worked with Barrick Gold Corp. as chief operating officer, responsible for African Barrick Gold (ABG) Mines & Capital Projects.

He also has held general management positions with Barrick’s gold and copper operations in Tanzania, directing the design, commissioning and operating of greenfield projects. Anthony also completed designs for mining companies across the globe while a senior metallurgist for SNC-Lavalin Engineers & Constructors Ltd., a leading Toronto-based engineering and construction group.

In addition, Anthony held engineering and environmental roles with major Canadian-based mining operators for more than 20 years.

“As Cliffs establishes its presence in the ferroalloys industry, Dave’s ability to bring large, complex mining projects to fruition, and his experience in Canada, will be instrumental to future success,” Boor commented.

“A demonstrated leader, Dave brings a wealth of knowledge and global mining experience that will be crucial for the development of this greenfield project.”