China willing to pay for rail into Ring of Fire – KWG – by Alan S. Hale (Timmins Daily Press – June 1, 2016)

TIMMINS – KWG Resources expects it will have a deal with the state-owned Bank of China to fund the entire cost of their proposed railway corridor to the Ring of Fire by the end of this year.

The company’s vice-president of development, Moe Lavigne, told The Daily Press negotiations are well underway that could see the project – which some estimates say could cost $1.5 billion – entirely paid for by the Chinese in exchange for a secure source of chromite to support their country’s stainless steel industry.

“China understands the totality of this project and is interested in getting guaranteed delivery of chromium for the next few decades, and they’re willing to put up some money to make that happen. And in this case, the Bank of China appears to be willing to finance the building of the railroad,” said Lavigne.

Ever since KWG began contemplating the construction of a railway corridor to access its significant holdings in the Ring of Fire chromite deposit north of Timmins, it has been working closely with the Chinese to make it happen. The company initially signed a deal with the China Railway First Survey and Design Institute to have a feasibility study done for a railway corridor.

The Chinese firm has plenty of experience in building railways over difficult terrain because of the massive expansion of the train system in China over the past couple decades, said Lavigne. But now that relationship has progressed to a point where the Chinese government is offering to pay for the project if it means they will have a new secure source of chromite going forward.

Put together, KWG and rival company Noront Resources own the vast majority of the stakes in the Ring of Fire. But Lavigne argued that KWG’s established relationship with the Chinese represents a distinct advantage over Noront.

Up until now “none of the companies involved in developing the Ring of Fire had any sales contracts with potential buyers. And without a sale contract, you can’t go to the bank to raise money for a mine,” said Lavigne. “In this case, 60% of the chromium market is controlled by the Chinese. They produce the stainless steel we see every day here. Without them as a customer, there’s no chance you could put the Ring of Fire into production.”

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