Infrastructure a burning issue in Ontario’s remote Ring of Fire – by Mariaan Webb (MiningWeekly.com – February 28, 2014)

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In Ontario’s Far North, the mineral reserve dubbed the Ring of Fire has been hailed as one of the most promising mineral developments in the province in almost a century, with the largest deposit of chromite ever discovered in North America. This discovery has potential for decades, possibly a century, of chromite production, which could revitalise the North American stainless steel industry.

But the bustling region, where more than 20 companies hold claims, is located in the isolated McFaulds Lake area of the James Bay lowlands – more than 500 km from Thunder Bay – and needs infrastructure, most crucially transportation infrastructure, to turn it into Canada’s newest mining camp. It is estimated that the region needs about $2.25-billion in transportation and industrial infrastructure.

Transportation is seen as the number-one issue that could make or break the area’s potential and Maurice (Moe) Lavigne, the VP for exploration and development of TSX-V-listed KWG Resources, stresses that these chromite deposits will not progress to economic enterprises unless there is an efficient and affordable way out of the remote region.

Much of the debate around infrastructure has focused on which way the Ring of Fire should go – road or rail – and who should carry the cost of the infrastructure development and maintenance.

Both rail and road infrastructure will be expensive, as the Ring of Fire is stranded in a swampy area. KWG Resources, through a subsidiary, Canada Chrome Corporation, controls the key transportation route on land, which it acquired through claim staking in 2009. KWG has proposed a rail route connecting to the CN transcontinental rail line at the Exton rail siding to transport ore to consumers, which has set it on a collision course with its erstwhile US-based partner Cliffs Natural Resources, which has proposed an all-weather road south connecting to the same rail line west of Exton. Cliffs’ plan is to transport chromite concentrate by rail to Capreol, in the Sudbury area, where it plans to build a ferrochrome production facility.

The claims on the northern half of the 320 km transportation corridor cover the only ridge of high ground where road and rail is constructible.

The battle over a much-sought after corridor played itself out last year in front of the Ontario Mining and Land Commissioner, which, in the end, denied Cliffs access to KWG Resources’ staked mining claims to construct its proposed road. Although Cliffs is appealing the decision, it has suspended operations in the area, citing, among other reasons, uncertainty about developing the necessary infrastructure to bring its project on line.

“Rail is the best option economically and environmentally. While the initial capital costs are slightly higher, the operating costs and maintenance costs are substantially lower,” Lavigne tells Mining Weekly.

A study by international engineering firm TetraTech, which KWG commissioned, has demonstrated that lower cost per tonne haulage rates for rail will offset the higher capital expenditure (capex) of rail. It estimates the capital costs for a road will be about $1.05- billion and that of a railroad will be around $1.56-billion. If three-million tons a year are shipped, operating costs are estimated at $10.50/t for the railroad and $60.78/t for trucking on the road. If five-million tons a year are shipped, it is estimated that those operating costs per ton will be reduced to $6.33 for rail and $59.28 for trucking.

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