Published April 08 2010

Chromite Mine

Developing a chromite mine in Ontario would be the latest new venture for Cliffs, which in recent years has added coal mines in Alabama and West Virginia and iron ore mines in Australia and Brazil to its portfolio. There has been great interest in the Ring of Fire area northeast of Thunder Bay after exploration, above, found huge deposits of valuable minerals.

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A company owned by a Knife River family is helping to determine whether Cliffs Natural Resources can diversify its business by opening a chromite mine in a vast roadless area of northern Ontario.

Krech Ojard and Associates of Duluth is studying the feasibility of building a 210-mile-long railroad from near Nakina, Ontario, and north to the McFaulds Lake area, where Cliffs and KWG Resources hope to develop deposits of chromite.

“It is just a really exciting project to be part of,” project manager Nels Ojard said. “We’re ultimately trying to address the feasibility and the economics of putting the project together.”

Nels is the the son of Krech Ojard owner Rich Ojard of Knife River.

The mining venture could require $1 billion to launch.

“Things look really quite favorable,” Nels Ojard said. “This is really a world-class deposit.”

Chromite is the chief ore of the mineral chromium, which is smelted into ferrochromium for use in making stainless steel and other alloys. According to the U.S. Geological Survey, about 19.2 million tons of chrom-ite were mined in 2006, with mines in South Africa, India and Kazakhstan producing about three-quarters of the total. In 2009, the U.S. consumed about 7 percent of the world’s chromite production, according to the USGS. The U.S. has one chromite mine, in Oregon.

While Cliffs still is studying the deposit, the company believes it can mine between 1.1 million and 2.25 million tons of ore a year from an open-pit mine. Processed nearby, the ore would yield 448,000 to 672,000 tons of ferrochromium.

“North American suppliers need to do a lot of importing [of ferrochromes], so this would be a pretty significant deposit when it is running,” Cliffs spokeswoman Christine Dresch said. “We’re excited about it and where it’s going to take us.”

It could take between $800 million and $1 billion to develop the project, Dresch said.

“This is going to be a long-term project,” she said. “We’re not expecting to see any production until around 2015.”

Developing a chromite mine in Ontario would be the latest new venture for Cliffs, which in recent years has added coal mines in Alabama and West Virginia and iron ore mines in Australia and Brazil to its portfolio.

“They are getting more diversified in terms of minerals,” said Michigan State University professor and mining expert Peter Kakela.

“It’s always been our intention to broaden our product base because it’s never good to put all your eggs in one basket,” Dresch said. But the company’s diversification remains within the steelmaking industry “because that’s what we know best.”

Cliffs owns Northshore Mining Co. and United Taconite in Minnesota with a plant in Silver Bay. It also is the majority owner of the Empire and Tilden mines in Michigan and a minority owner of Hibbing Taconite.

It’s also partial owner of KWG Resources Inc. Last year, KWG’s subsidiary Canada Chrome Corp. hired Krech Ojard to provide engineering services for the construction of a railroad to reach deposits controlled by Cliffs and KWG. The 210-mile, single-track railroad will cross the James Bay Lowlands, an area of spruce forests and muskeg, to a region known as the Ring of Fire.

Through aerial photographs and field work, Krech Ojard found a possible route. It’s refining the route this year and working on a feasibility study that will recommend a route for more detailed study.

“Through a blessing in terms of geology there is a virtually continuous string of glacial sand ridges that was discovered in our initial field review,” Ojard said. “That’s what the corridor follows. It essentially takes advantage of the only dry ground within the James Bay Lowlands to reach the Ring of Fire. We will literally end up on the doorstep of the potential mineral deposit.”

Cliffs is one of about 40 mining and exploration companies examining the mineral potential of the Ring of Fire. Deposits of nickel, copper, platinum, palladium, chromite, vanadium and gold may lie beneath an area covering 3.7 million acres.