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 Post subject: Ring Of Fire (Access)
PostPosted: May 27th, 2013, 10:55 pm 
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Well if you've been following this hot topic as of late you'll notice that good old Sudbury is getting a $1.8B Chromite smelter
http://www.cbc.ca/news/canada/sudbury/story/2012/05/09/tby-cliffs-announcement.html

Well I suppose they have to access the sites somehow and transport that raw material. Road or rail, that's a long stretch through muskeg. 340km of new road or rail :o . I don't hear any talk of making it a winter road either, not that a winter road would be economically ideal for such an operation.

Besides the issues of the actual mining at the Ring of Fire, this road/rail would cross numerous rivers and raise new issues with wilderness access. Throw in some associated runoff issues and you may be looking at some heavy metal/pollutant loading in the areas waters (particularly with the road). Don't forget about the Caribou and their sensitivity to humans and roads in particular. IMO rail is a better option as it would impose greater restrictions on public access and have a smaller footprint, but hey everything is debatable.

ROAD
http://www.sudburyminingsolutions.com/cliffs-vp-makes-case-for-ring-of-fire-road.html

Quote:
A senior executive with Cliffs Natural Resources offered a detailed explanation of the company’s position in favour of road access to the Ring of Fire at a standing room only session on the final day of the PDAC in March.

“We looked at a lot of different options,” said Ken Pavlich, vice-president of operations for the company’s global ferroalloys business. “After eliminating the obvious non-starters like trying to get to James Bay or Hudson Bay, we decided that the only viable options for our project began at the concentrator and ended at the CN Rail line.

“From that, we looked at three different rail zones and two different road zones and, within each, we looked at multiple routes trying to figure out what would work.

“This was not a two-week or a two-month project,” said Pavlich. “It was more like a two-year project. We put a lot of time and a lot of effort into it because this is going to be the most difficult part of the project in terms of construction.”

Environmental assessment

Cliffs initiated an environmental assessment for the development of its Black Thor chromite deposit in 2011 and is in the latter stages of a feasibility study. The property, Pavlich told his audience, “is in the middle of nowhere – 285 kilometres from Nakina and the CN Rail line, 290 kilometres south of the closest point on Hudson Bay, 270 kilometres west of the closest point on James Bay, 300 kilometres north east of Pickle Lake, 540 kilometres north east of Thunder Bay and 1,135 kilometres northwest of Toronto.”

The company plans to mine 3.7 million tonnes of ore per year at a life of mine strip ratio of 10:1. A concentrator at the site will take the 3.7-million tonnes of material and convert it to 2.3 million tonnes of chromite concentrate. Approximately half of the concentrate would be shipped to a proposed $1.8 billion ferrochrome processing facility in Sudbury, with the remainder destined for export markets.

The low-lying, waterlogged terrain through which a road or rail line will have to be constructed poses major engineering challenges.

The eskers in the area really dictate where the route will go, said Pavlich. “It’s not rocket science. You need to stay as high and dry as you can.”

Cliffs looked at several potential routes for a rail line.

“One is the same route that KWG Resources has been talking about. It’s about 330 to 340 kilometres,” said Pavlich. “We also looked at another route that would connect with the Fernlie siding on the CN Rail line. It’s about 348 kilometres, and we looked at a route that would take us down to the Pickle Lake area to the Savant Lake siding. That one is about 500 kilometres.”

The 340-kilometre north-south route along the eskers staked by KWG Resources was one of several possibilities Cliffs looked at for a road to the Ring of Fire. This route, which would link up to an existing road and only require 265-kilometres of new construction, would terminate at the Cavell siding, 25 to 30 kilometres west of Nakina.

“The east-west route makes sense if you don’t have huge volumes of material, but it’s a much longer route requiring 282 kilometres of new construction and a total distance of 526 kilometres to get down to Savant Lake – 280 kilometres away from where we’d be if we ended up at Cavell,” said Pavlich.

The volume of material to be shipped was one of the factors weighing in favour of a road.

“I know 2.3 million tonnes sounds like a lot,” said Pavlich, “but 20, 30 or 40 million tonnes a year is what you need for a viable railroad based on the work we’ve done and what we’ve seen around the world.”

Cost was another factor.

“When you look at the weighted average cost of capital to a company like Cliffs and you look at the interest on the incremental capital cost for a rail line, it turns out that the interest alone would exceed the cost of truck haulage and road maintenance on an annual basis. What that means,” Pavlich contended, “is the incremental investment for us never pays back on a rail, so a road is the way to go.”

Safety

Pavlich also raised the issue of safety.

“We’re going to be building across a very difficult area and we’re going to have differential compaction and settling characteristics which favour a more forgiving road option.

“Differential settling on a road results in a bump or a swale. You send a grader out with some crushed stone and you repair it.”

Road maintenance as a result of settling can be performed without disrupting truck traffic, said Pavlich.

“Differential settling on a rail line is a derailment, which is from a safety standpoint, an environmental standpoint and an operational standpoint, a somewhat catastrophic event and it’s one we prefer not to have to be involved in.”

The east-west route via Pickle Lake to the CN Rail line 280 kilometres west of the Cavell siding was rejected both because of the increased distance and the fact that much of the route – from Pickle Lake onwards – is a paved highway that Cliffs would have to share with existing vehicular traffic.

“It wouldn’t allow us to operate over the road tractors hauling two trailers with 35 tonnes of material in each trailer,” unlike the north-south route, which could be designated as a private road.

The north-south route, he added, would also allow for the use of non-tax fuel.

The Cliffs vice-president didn’t offer a cost estimate for the road or share any thoughts on who would actually pay for it, but a study commissioned by KWG Resources estimated a cost of $1 billion for a road, and $1.5 billion for rail.

Power, another infrastructure challenge, would be supplied locally at the mine site using compressed natural gas, said Pavlich.

Grid power

Proposals for grid power don’t support Cliffs’ project timing, “and some of them don’t even lower our cost of power,” he noted. “And even if we did have a grid, we would still build full backup capabilities because of the remote nature of the operation. It’s just too far away to assume that the line will always be up and running.”

Cliffs also considered wind and solar, but rejected them “because the sun doesn’t shine as much as you’d like and the wind doesn’t blow as much as you’d like.” Furthermore, without the Ontario grid, there’s no feed-in tariff, Pavlich noted.

“We do think, however, that there’s a great opportunity for low-head hydro developments through First Nation joint ventures once the grid is in place.”

The chromium deposits in the Ring of Fire are bound to be developed at some point, but there is still considerable uncertainty about when and by whom, given Cliffs’ recent financial troubles, timeline extensions and musings about taking on a partner.

Meanwhile, an application by Cliffs for an easement over the claims KWG Resources has staked along the north-south route is still to be ruled on by the Ontario Mining and Lands Commissioner, and lobbying for a rail line continues apace.

http://www.cliffsnaturalresources.com



RAIL
http://www.sudburyminingsolutions.com/kwg-ceo-says-rail-access-is-the-way-to-go.html

Quote:
Frank Smeenk, president and CEO of junior miner KWG Resources, can’t think of one good reason to build a road to the Ring of Fire, a remote mineral-rich region in Ontario’s James Bay Lowlands.

“It never occurred to me that anyone would ever contemplate shipping hundreds of millions of tonnes of (chromite ore) over a period of decades if not centuries any way other than by railroad,” he declared in an interview with Sudbury Mining Solutions Journal.

KWG owns 30 per cent of the Big Daddy chromite deposit, and through subsidiary Canada Chrome Corporation, rights to a string of mining claims along an esker stretching some 330 kilometres through wetland terrain from the CN Rail line to the Ring of Fire. Cliffs Natural Resources, which owns 70 per cent of Big Daddy is currently undergoing an environmental assessment and feasibility study to develop its adjacent 100 per cent-owned Black Thor chromite deposit, potentially leaving KWG and its shareholders out in the cold.

KWG’s staking of the route along what it calls “a unique linear sand ridge that stands proud of the vast wetlands” was one way to preserve some leverage over Cliffs and generate returns for its shareholders.

The road versus rail debate is far from settled.

Easement

Cliffs, which is adamant about a road being the only viable means of access, is waiting for the Ontario Mining and Lands Commissioner to rule on its application for an easement over KWG’s claims. Meanwhile, KWG has teamed up with unions representing employees of the provincially-owned Ontario Northland Railway – currently on the chopping block – to lobby for a James Bay and Lowlands Port Authority, which would finance and develop a rail line to the Ring of Fire.

Smeenk claims the rail option is more environmentally acceptable, less expensive in the long run and safer.

“My conclusion early on – and it’s been reinforced subsequently – is that a road is never going to get buy-in from the environmental lobby, which is very well equipped both scientifically and financially,” he said. “A railroad, (by contrast), is a small narrow footprint on the land.

“I was flummoxed when Cliffs and Noront came forward with a road option, and I was totally taken aback at the lack of technical capacity within the various ministries of the Government of Ontario to (challenge the notion of road access.)”

In discussions with the Wildlands League, Smeenk says he learned that disturbance of a large wetland area for a road would release mercury into the watershed and open a highway for predators, especially wolves, that would have a deleterious effect on the endangered woodland caribou.

A railroad, in the long run, is also the more cost effective option, according to a KWG-commissioned study by Tetra Tech.

The capital cost for a railroad, according to Tetra Tech, would be significantly higher – $1.5 billion versus $1 billion for a road – but operating costs would be lower by a factor of six: $10.50 per tonne for rail versus $60.78 for a road.

Responding to Cliffs’ vice-president Ken Pavlich, who told a PDAC audience in March that the interest on the incremental capital cost for a rail line would exceed the annual cost of truck haulage and road maintenance, Smeenk argued that low interest rates and the longevity of the project suggest otherwise.

Interest Rate

“We’re unaccustomed to factoring in very low cost of money and a very long-lived asset,” he noted. “If it’s Cliffs borrowing the money, the cost might be five, six, seven, eight or nine per cent. If it’s the federal government borrowing the money through a Ports Authority, it might be two or 2.5 per cent.”

As for Pavlich’s claim that differential compaction or settling “favours a more forgiving road option,” and could result in “catastrophic” derailments if a rail line is built, Smeenk accused him of “grasping at straws.”

“The standards of construction and the scrutiny of third party review by environmental lobbies are such that it’s hard to imagine a railroad could be built which would suffer that flaw and still be licensed to operate.”

Turning the safety argument on its head, the Tetra Tech study concludes “rail transportation offers a higher level of safety, lower accidents and higher hazard protection in this region compared to truck traffic.”

The proposed James Bay and Lowlands Port Authority would be an ideal vehicle for creating an infrastructure asset for the Ring of Fires, claims Smeenk.

If the Government of Ontario is intent on divesting the Ontario Northland Railway, or parts of it, creation of a Port Authority would allow for the preservation and extension of the assets.

“We shouldn’t be tearing up railroads in Canada, particularly in this case when the ONR could be made productive and profitable (by extending service) to the Ring of Fire,” he said.

KWG proposes to “domicile” its subsidiary, Canada Chrome Corporation and its mining leases – “should we be succeed in bringing our claims (along the 330-kilometre route) to lease” – with a Port Authority through a trustee corporation.

KWG, said Smeenk, would benefit by having “something to say about how it was done” and could have some costs reimbursed, “but what we’re more concerned about is the use of the route to benefit our interests in the mineral deposits.”

Persuading Cliffs to develop Big Daddy instead of Black Thor would be one way to accomplish this, but isn’t very likely.

“We’ve also suggested to Cliffs that we would trade some of our interest in Big Daddy for some interest in Black Thor, but those conversations haven’t gone anywhere,” said Smeenk.

Black Horse

As an alternative, KWG has partnered with Bold Ventures Inc. to earn an interest in the prospective Black Horse chromite deposit on property optioned from Fancamp Exploration, which lies between the Big Daddy deposit and Noront Exploration’s Black Bird deposit.

“We’re drilling the Black Horse to see if it’s an extension of the Black Bird that was drilled off by Noront,” said Smeenk. “If it is, it may well be a deposit that can be most profitably mined.”

Smeenk was circumspect about commenting on Cliffs’ ability to follow through with its $3 billion proposal to develop Black Thor given its recent financial challenges and search for a partner, but if it doesn’t, KWG will be more than happy to pick up where Cliffs left off.

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PostPosted: May 28th, 2013, 6:50 am 
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We're not holding our breath up here for anything to happen. As the article mentioned, still lots of unresolved issues.


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PostPosted: May 28th, 2013, 9:38 am 
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Access to capital could be another problem since metals prices are down and so are miner's profits. During this year's mining conference in Toronto, industry analysts forecast that half the mining businesses in North America could go bankrupt if this trend to low prices keeps up.

Banks are also unwilling to lend money to miners with the uncertain markets. That leaves government to fund the project but deficit and debt is high, with infrastructure stimulus spending over and done with, and the costs of that still have to be recovered.

Quote:
Ring of Fire in jeopardy over miner’s money problems

Allison Martell, Reuters | 13/04/16


TORONTO — The future of Canada’s Ring of Fire, a remote cluster of rich mineral deposits in northwestern Ontario, is looking increasingly dim as the finances of its biggest private investor, Cliffs Natural Resources Inc, have taken a turn for the worse.

Crouched in swampy lowlands and named for a Johnny Cash song, the 4,000 sq km zone has no rail lines, highways or reliable power. Political leaders say the Ring of Fire could support a century of mining, but the cash-strapped government has yet to commit infrastructure funds.

...

Cliffs has been battered by weak iron ore prices, and a key growth project, Bloom Lake iron ore in Quebec, faces higher-than-expected costs. The stock has plunged more than 70% over the last 12 months, as soft Chinese demand weighed on companies that supply steelmakers, hitting relatively high-cost iron ore producers like Cliffs.

“For Cliffs, this constitutes an existential threat,” said Morningstar analyst Daniel Rohr. “If we head down the road I think we’re heading down, there’s not going to be a lot of capital in Cliffs’ piggy bank to fund something on the scale of this Ring of Fire project.”

...


http://business.financialpost.com/2013/ ... -problems/

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