This article was originally published in Northern Ontario Business in the June, 2010 issue. Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

Ontario Northland Could Play a Role in the James Bay Rail Link

The first tentative steps toward building an ore haul railway to the James Bay lowlands began this past winter. Helicopters moved drills into place as geologists tested frozen riverbanks north of Nakina taking core samples to determine where bridges can be built to haul ore from a chromite open pit in the Far North’s ‘Ring of Fire’ exploration camp.

Building a railroad through the Canadian Shield and into vast boggy plain of the lowlands will be a huge and complex feat of engineering and construction. The railway engineers have already begun studying the footing and economics of how to move millions of tonnes of chromite out of McFaulds Lake in time for mining operations to begin by 2016.

About $100 million will be spent by KWG Resources and their mining partners in environmental and other consulting studies before any approval for mining is ever given.

“It’s an exciting time,” said Nels Ojard, special projects manager at Krech Ojard & Associates. “If there’s one thing you can say about this endeavor is that it’s anything but boring.”

Canada Chrome, a subsidiary of KWG Resources, hired Krech Ojard, a Duluth, Minn. railroad engineering and logistics firm, last year to start the engineering work for the rail connection.

In concert with a scoping study of the Big Daddy chromite deposit, KWG launched a a rail feasibility study to construction a 350-kilometre long railroad from the McFaulds Lake site, south to Exton in northwestern Ontario.

Ojard said the construction will require a huge coordinated effort to assemble people, material and large pieces of equipment in an inaccessible area. New rail construction of this size in North America is a rarity.

Ojard compares it to the Wabush Lake Railway constructed 50 years ago that cuts through the wilderness of northeastern Quebec and western Labrador. “This is a very exciting and interesting project of a size that would large for anybody.”

The Ontario Northland Transportation Commission (ONTC) could play a major role in the construction of this rail corridor. KWG Resources and Krech Ojard have been tapping into the expertise of the North Bay-based rail carrier.

“There’s been ongoing discussions with a wide range of people in industry including Ontario Northland,” said Ojard. “We’re working very closely to learn the lessons that others have taken to heart and have turned into successful business operations.” KWG first approached the ONTC two years ago, excited about their mineral findings in the ‘Ring,’ and knowing a railroad to move ore out of the James Bay region would be an eventuality.

The railway has 100 years of experience operating in the rocky terrain of the Shield and the swampy muskeg of the Far North.

ONTC maintains 1,100 kilometres of track from North Bay to Moosonee, and from Calstock (near Hearst) to Rouyn-Noranda, Que. They’ve built spurs to serve mines in northeastern Ontario.

The Ring of Fire rail project is reminiscent of the ONTC’s early decades that involved extended rail to the mouth of the Moose River during the 1920s and 30s.

“They’ll face some of the same challenges we do,” said Steve Carmichael, ONTC President and CEO. Carmichael said extremely cold temperatures can expand and contract steel cargoes, freezing and thawing ground can warp track beds, and there are constant year-round drainage problems in low-lying areas.

While it hasn’t been determined if an established rail carrier will haul out the chromite ore from the Ring, Ontario Northland is receptive to picking up those future tonnes.

With the closure of Xstrata Copper’s Kidd Metallurgical site in May, ONTC will lose $8 million to $9 million in metal and sulphuric acid freight, though they will continue to ship concentrate from Timmins. The Crown agency has a mandate for economic development and wouldn’t mind being the exclusive carrier of James Bay ore. “Well of course,” said Carmichael. “I’m sure we’re not the only ones.”

In their year-end 2009 financial statement, KWG Resources made overtures for the ONTC to take a “leadership role” in creating the rail corridor.

Carmichael said their role with the project has yet to be determined. They are assisting Krech Ojard and the mining company in an unofficial capacity but have not been asked to come aboard as a consultant. He categorized their discussions so far as “mostly conceptual but good conversations.”

“Whether this will work for us in the long term we don’t know but we’re certainly here to help in any way we can,” said Carmichael.

The KWG-Canada Chrome project – centred around the Big Daddy chromite deposit — has the backing of iron and coal giant Cliffs Natural Resources, a major shareholder.

The southern terminus of the route starts west of Nakina, at Exton, where there is a 6,000-foot railway siding on the Canadian National Railway main line near the location of a closed-down sawmill. Highway access as well as sand and gravel reserves are close by. “For staging, it’s really a good starting point,” said Ojard.

Mining claims along the entire route secured the corridor. The route would ride on the glacial eskers that start south of the Albany River and make for ideal track bed.

“It’s really a blessing of nature that these sand ridges exist,” said Ojard. The route represents “the shortest path that takes advantage of the best ground.”

Building the line would cut through three provincial parks and involve 90 water crossings ranging from creeks to major rivers like the Albany and Attawapiskat. Ojard said a great deal of time is being spent studying the river crossing locations, hydrology and anticipated ice flow conditions. Besides hauling an initial one to two million tonnes annually of ore, other mining players may use the line and even passengers could be accommodated.

“There’s nothing in the infrastructure that would preclude it from passenger service,” said Ojard, along with nickel, copper, zinc and forest products. “The corridor would be there to serve them as well.” The feasibility study will be finished and presented to KWG this fall.

It’s unclear whether a concentrator will be built at the mine site or near Nakina and the location of the furnaces to process ferrochrome has been yet not be determined.

Ojard said it’s too early to speculate on projected railroad costs until the review is complete. The number being popularly used by the KWG-Canada Chrome for the entire mine railroad project is more than $2 billion.

Carmichael said when ONTC built a new spur into an Agrium phosphate mine near Kapuskasing, the cost per kilometre was about $1 million. Adding a major bridge can cost as much as an entire section of new track.

He said doing structural work on their quarter-mile-long bridge spanning the Moose River will cost between $18 million -$20 million over five years.

Ojard said consulting with First Nations is not within the scope of the engineering but they are working with KWG-Canada Chrome to provide supporting information to facilitate those discussions.

He adds this is only “the start of the start” and the engineers are keeping an open mind on the route as they move through the process. “It’s an opportunity for all the interested groups to really pull themselves together, organize their thoughts, plan for the future so that if and when this project moves forward they’re all prepared for it.”

Carmichael said there must be a real effort somehow to joint venture with First Nations to make them part of the railway through training and employment opportunities.