HOW MUCH BALONEY IS IN THE RING OF FIRE SANDWICH? – by Frank Smeenk (June 18, 2020)

In a recent Sudbury Star article titled Stalled Ring of Fire worth
more than $117 billion, Carleton University Geology Professor
Dr. James Mungall asked “How much is the Ring of Fire really worth?”

Frank Smeenk is the President and Chief Executive Officer of KWG Resources Inc.

Stainless steel is approximately 18% chrome and 8% nickel with iron constituting most of the remaining 74%. A decade ago, the private Chinese enterprise Tsingshan Group, started to establish facilities in Indonesia to produce large quantities of nickel pig iron to make stainless steel there by adding ferrochrome melt made with coal-generated electricity.

In the first half of 2017 Indonesia produced no stainless steel. Now, Tsingshan produces up to 3 million tons per year there. This will increase to 4 million tons next year. That is about 8% of global production, from zero less than 30 months ago!

With that, Chinese companies currently generate more than 50% of global stainless-steel production. They intend to increase that as the world’s consumption of non-corroding steels continues to grow. This is a big boys’ game that Canada has just been suited-up for!

When chrome-containing chromite was discovered in an area of northern Ontario known as the Ring of Fire, China’s state-owned steelmaker, Baosteel, made a strategic investment in Noront Resources. It’s a Canadian exploration company with significant mining claims in the Ring of Fire.

To thinking geologists, the discovery of chrome in the Ring of Fire has the potential to be truly enormous. The chrome found there thus far is apparently more concentrated in larger contiguous volumes than anywhere else on earth. This was, presumably, a powerful motive for Baosteel’s investment and its interest in Noront’s future production.

It is hard to visualize how very large the discovery might prove to be. The mineralization is in a number of layers sandwiched into rock that precipitated from magmas deep in the earth’s crust feeding a volcanic mountain chain some 2.7 billion years ago. The sandwich itself is 15 kilometers long and 500 meters thick.

The forces of mountain building pushed it up into a vertical position and was then engulfed by granite magmas bubbling up in the crust. The mountain chain was eventually ground down to its current level over the next two billion years, and then the area was invaded by a shallow sea which covered it in limestone that served to protect it from being completely ground away by continental glaciers that have occupied North America for most of the last 2.5 million years. It is fortuitous that it was not eroded away and that portion which remains could be as deep as it is long. However, mining can’t presently be done much below 3 to 4 kilometers.

But then, 3.5 kilometers is equivalent to the height of about fifteen of downtown Toronto’s landmark Commerce Court West towers stacked on top of each other. (Each such tower measuring 784’H x 110’W x 220’D) And 500 meters thick is the same as 15 of those stacks standing shoulder to shoulder from Bay Street east to Church Street.

And 15 kilometers long is the equivalent of almost 224 of those 15-wide-and-15-tall stacks of towers butting up to each other from the corner of King and Bay in a straight-line north to Finch Avenue. Were the towers all solid rock like the intrusion, the total mass would exceed 70 billion tonnes.

The ‘meat’ in this rock sandwich is chromite, the mineral that contains chromium oxide. In some places it’s quite thick, more than 100 meters. Drilling done thus far has discovered it in parts of the top two or three ‘towers’ in a number of adjoining stacks along the middle two-thirds of the intrusion sandwich’s length. In each of these discovery locations, how far down the chromite occurrence extends remains to be determined. But the professional opinion has been published, as allowed by the rules, that it could go deep!

Very strict rules govern the interpretation of what might be in the rock surrounding the drill-holes that have thus far been completed. Those rules permit publishing the opinion that the parts of those ‘stacks of towers’ found so far at the north end, collectively host over 180 million tonnes of measured and indicated resources containing more than 31% chrome oxide (Black Thor 137.7mT at 31.5%, Black Label 5.4mT at 25.3%, Black Creek 8.645mT at 37.41%, Big Daddy 29.1mT at 31.7%) and that more than 32 million adjacent tonnes can be described as inferred resources having just under 30% chrome oxide. (Black Thor 26.8mT at 29.3%, Black Label 0.9mT at 22.8%, Black Creek 1.61mT at 37.78%, Big Daddy 3.4mT at 28.1%)

At the south end, over 20 million tonnes can be described as measured and indicated resources having just under 36% chrome oxide (Black Bird 20.46mT at 35.76%) with an adjacent 23 million tonnes of inferred resources having 33% chrome oxide. (Black Bird 23.48mT at 33.14%)

Nearby, another almost 86 million tonnes can be described as inferred resources having 34.5% chrome oxide . (Black Horse 85.9mT at 34.5%) Those resources are held by several different Canadian mineral exploration companies including Noront Resources, Probe Metals, Bold Ventures and KWG Resources.

The +340 million tonnes that have thus far been identified to host chrome oxide is less than one-half of 1% of the total possible mass of the intrusion that could perhaps be made accessible to mining. If just the chrome-oxide ‘seen’ thus far in that small fraction, could be extracted and reduced to a usable alloy, the alloy would contain some 174 billion pounds of chrome metal.

By comparison, the entire world presently consumes only about 9 billion pounds of new chrome metal production annually. The current price of chrome (in ferrochrome) is an anomalously low US$0.90 (CA$1.18) per pound; a year ago it was US$1.45 (CA$1.90); in 2007 it spiked to almost US$3.00 (CA$3.95).

In a recent Sudbury Star article titled Stalled Ring of Fire worth more than $117 billion, Carleton University Geology Professor Dr. James Mungall asked “How much is the Ring of Fire really worth?” While his courageous exercise of academic independence has moved debate of the issue compellingly, Dr. Mungall did not include in his calculations presently inferred resources, or any additional resources that might be inferred from reasonable geological and geophysical extrapolations.

It could be that the baloney we’ve ‘seen’ in the sandwich thus far is all that there is, but common sense of the physical world dictates that to be unlikely.

The true value of the Ring of Fire is responsibly measured by the nation endowed with it, by understanding its strategic uniqueness as China has done with Rare Earth Elements and as Japan did with oil in the Pacific in WW II. Economically, the right numbers with which to make decisions that affect history are achieved by extrapolating the geophysical and geological probability of additional resources and then multiplying the economic activity by relevant ripple-effect multipliers.

That independent academic exercise would yield a target number with which to arm Ontario/Canada in their strategic decision making, as well as a calculation of the resulting meaningful increment in the GDP of the participants in that strategy.

All of this is not lost on our American friends and neighbours who are trying to level the playing field in trade with China because the United States, like China, has no chrome. China believes future demand for chrome will substantially exceed supply. Tsingshan has begun investing US$14 billion in Zimbabwe to secure new supply there. It is thus very high on the list of strategic metals crucial to USA national security, now being addressed by the USA-Canada Critical Minerals Task Force.

As well, from new research into the discovery’s environmental and economic aspects, scientists in the Canadian government’s Natural Resources ministry have confirmed that chromite from the Ring of Fire can be refined with North America’s very low-cost natural gas (using a new process developed in Canada) rather than the very costly electricity that all other producers must use for the traditional processing method. The new Canadian process would use substantially less energy.

So, with this tremendous endowment of newly-discovered chrome located in the Ring of Fire in northern Ontario, combined with North America’s wealth of natural gas, the democratic west can establish an inexpensive, local and more environmentally friendly source of one of the key ingredients of stainless steel. We can thereby underpin the establishment of a North American stainless steelmaking industry.

Sault Ste. Marie has been recommended as an ideal site. Canadian production can be more than cost competitive and will be strategically independent. With its new technology, using natural gas instead of coal and using much less energy to process at much lower temperatures, this situation has the potential for Canada to become a world leader in stainless steelmaking.

This is strategically very important. As China has concluded, stainless steel will continue to be substituted for corroding steels in many applications (including non-corroding rebar in roads, bridges and other infrastructure to eliminate reinforced-concrete failure – a huge cost in infrastructure maintenance and replacement).

While it may be quintessentially Canadian to not applaud the discovery of a potentially huge and undeniably strategic source of chromite, dismissing it as editorialized in the Globe and Mail’s A Road to Nowhere is hardly fair.

In fact, that assessment is diametrically opposed to the reality of the potential that lies at the end of that road – the source of a world-class, world-leading, stainless-steel industry that will prove to be much more environmentally friendly than current sources, and will provide strategic independence for Canada and the United States, in a key building material for future generations, which has now become a national security issue focus. And rightly so!

KWG Resources Inc.

KWG Resources Inc, a Canadian mineral exploration company which co-discovered the chromite deposits in Northern Ontario’s James Bay Lowlands area known as the Ring of Fire. The Company has since developed and patented a solid-state direct reduction refining method which utilizes natural gas to produce ferrochrome at lower temperatures and significantly lower energy consumption than electric-arc smelting with less ecological hazard.

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