Ring of Fire development plans spurred by Ontario’s outrageous energy prices

As Dominic Fragomeni recalls it, his firm’s big idea for the Ring of Fire just came from a willingness to try something new.

“Innovation comes from people sitting back and thinking about what’s possible given their experience and background,” the director of XPS Consulting & Testwork Services said in an interview.

“That’s basically how these ideas were hatched. Our guys have 30-plus years of experience in metallurgical engineering and have tested a lot of different concepts in their day.”

Northern Ontario’s remote “Ring of Fire,”a huge mineral belt named after the Johnny Cash song, is the most exciting new mining opportunity the province has seen in decades. Rough estimates suggest the region could hold $60-billion worth of minerals, with chromite being the most important.

But moving the project to development has been a very slow and arduous task, as stakeholders have struggled to find solutions around key challenges like infrastructure.

One of biggest obstacles is power supply. Processing chromium ore is extremely energy-intensive, requiring a whopping four megawatts per tonne of ore. To support the Ring of Fire, there were plans to build a 300-megawatt smelter near Sudbury. That is enough electricity to power a city of roughly 300,000 people.

When you have a proven process and you have cheap power, you basically stick to your knitting. There’s risk associated with going ahead with a new and novel process

That level of power usage is a big problem in Ontario because of the province’s exorbitant electricity rates. As such, power costs are a central issue for any mining company trying to determine if an investment in the Ring of Fire makes economic sense.

That is where Sudbury-based XPS comes in. The metallurgical consulting firm, which is a standalone unit of Glencore PLC, got to work on a test pilot furnace for a chromite smelter about three years ago on behalf of its partner KWG Resources Inc.

At first, the XPS team ran tests using traditional electric furnace smelting, similar to what is being used in South Africa, the world’s biggest chromite producer. They confirmed that they could get results that were roughly equivalent (and in some cases a bit better) to the work being done in South Africa.

Then they started to think a little more creatively.

“We asked, ‘What can we do to improve the business case?'” Mr. Fragomeni said. “It’s not a big surprise that electric furnace smelting in Ontario is not going to be cheap. And chromite ore smelting requires a huge amount of energy.”

They decided to see what would happen if they scrapped the traditional electric furnace and developed a process that used cheap natural gas instead.

After giving the challenge some thought, they worked on a direct reduction process in which chromium oxide ore is heated by natural gas and other catalysts are also applied to help burn off the oxygen and leave the chrome and iron. The process, owned by KWG, is now being tested by XPS on KWG’s ore from the Ring of Fire.

With conventional smelting, the electric furnace has to be heated to almost 1,700 degrees Celsius to separate the chrome from the oxygen, requiring enormous amounts of power. The process, if successful, would allow the same reaction to happen at a significantly lower temperature with lower energy requirements.

Initial estimates from XPS suggest that power costs could drop more than 50% with this method. Greenhouse gas emissions would be significantly lower. And capital costs to build the smelter should be cheaper because there are fewer infrastructure requirements than a traditional smelter. Cliffs was talking about spending US$1.8-billion to build a traditional smelter before it backed away from the Ring of Fire.

Natural gas furnaces are already used in the iron business to produce iron ore out of iron oxide. But they haven’t been tried in ferrochrome, partly because the business is concentrated in South Africa where there is very little natural gas output.

“When you have a proven process and you have cheap power, you basically stick to your knitting,” Mr. Fragomeni said. “There’s risk associated with going ahead with a new and novel process.”

There is still a long way to go with the XPS method. The company is busy with lab work, and the next step will likely be pilot plants. There is no rush to commercialize the process, as the Ring of Fire still appears to be years away from development. In the meantime, XPS is trying to make the process better. The firm understands the fundamental chemical reactions, but is now trying to increase the rate of reaction and reduce the temperature at which it occurs.

The smelter is only one element of the Ring of Fire, and at this stage, it is not as daunting as the challenges around infrastructure. But there is a chance that solving the power issue could have a positive influence in overcoming some of those other issues and bring development closer to reality.

“We’re obviously excited to continue to work with KWG and continue to move on this path of changing the business case for the Ring of Fire,” Mr. Fragomeni said.

“We’re going to make it happen.”

pkoven@nationalpost.com
Twitter.com/peterkoven

Correction: An earlier version of this story referred to the technique of using natural gas to extract chromite as an “XPS process.” The process and intellectual property associated with it are owned by KWG Resources Inc.; XPS Consulting & Testwork Services is conducting the test work.