Cliffs to decide this year on smelter site for Ontario chrome project

TORONTO (miningweekly.com) – Cliffs Natural Resources wants to get its chromite project in Ontario's Ring of Fire moving as quickly as possible and expects to have a prefeasibility study, which means decisions on transport infrastructure and where to build a smelter, by around September this year.

Cliffs ferroalloys president Bill Boor told Mining Weekly Online that the company will then target a feasibility study by the end of next year, followed – if all goes smoothly – by permitting approvals in 2013.

“And then if we can get permits in 2013 we are looking at a 2015 start-up for mining operations,” he said in an interview at the Prospectors and Developers Association of Canada convention.

The company is positive on the outlook for chrome, which is used to prevent corrosion in stainless steel, but realises that markets tend to be cyclical, Boor said.

“So we are concentrated on getting things moving, to take advantage of where the markets are at this point in time.”

South Africa and Kazakhstan are the top two chrome producers, and Cliffs' project will be the only chrome mine in North America.

The company will be looking at selling ferrochrome in North America and Europe, but also into the commodities-hungry Asian markets.

“Bringing a country as stable as Canada into that market, with an opportunity as big as this one, it really is a whole new dynamic for the supply of the industry,” Boor said.

SMELTER SITE

Cliffs said last month that it had identified a potential site for a smelter in Sudbury, but indicated it needs commitments from the Ontario government on power rates to ensure the project will be viable economically.

It is also looking at sites in Timmins and Thunder Bay, the firm said at the time.

The facility will use 300 MW of power, and will likely be the biggest electricity consumer in Ontario, Boor said.

“So when you are using that much power obviously it's a big part of your cost structure, so we've got to work out whether we can justify having that furnace in Ontario.”

Discussions with the government have been positive “and we've just got to get to the decision”, he said.

The prefeasibility study will also need to include plans for an all-weather road, potentially as a precursor to a railway, linking the mine site to existing Ontario rail lines.

And Cliffs is hoping it will not have to carry the burden of the infrastructure on its own.

The company has been talking to the Ontario provincial government, as well as First Nations and other firms in the region, and has had generally positive discussions over the last year, Boor said.

Talks are getting more serious after the company published a detailed project description last month, but it will still be a challenge to get all the parties on the same page and to a collective decision in a relatively short timeframe, he conceded.

Cliffs would ideally like to see some kind of public-private partnership that could also include ownership or other participation by First Nations groups, as well as other mining companies active in the region, he said.

“There is clearly a need for this infrastructure and so the size of our project means it can act as a catalyst to get it done.”

“We have obviously also looked at the project from the perspective of whether Cliffs can carry the cost of the road, but I don't think that's where you want to end up from a provincial perspective,” Boor commented.

“You don't want a private road up there, you want public infrastructure.”

There are two routes that have been proposed for the transport corridor, but Cliffs is advocating for the north-south option over the east-west option.

MORE IRON-ORE PROJECTS

Cliffs bought its first holding in Ring of Fire chrome deposits in 2010, when it beat out junior Noront Resources to acquire Freewest Resources Canada.

The company followed that up with the acquisition of another explorer, Spider Resources, later last year.

The firm is not actively looking at more acquisitions in the area, Boor said.

“I won't rule anything out but we're pretty focused on working with what we've got right now, and it's got plenty of challenge for the moment.”

However, Cliffs does continue to look at potential deals in the iron-ore space, including in Canada, he said.

The Denver-based iron-ore and coal producer announced in January it had agreed to buy TSX-listed iron-ore producer Consolidated Thompson Iron Mines, in a move to boost exposure to the lucrative seaborne iron-ore market.

“Iron-ore is the heart of the company...we're very active and interested in iron-ore projects,” Boor said.