Town hires ex-minister to lure smelter northwest

By MIKE WHITEHOUSE, THE SUDBURY STAR

Posted 10 hours ago

A provincial and federal commitment to build a 350- kilometre railway could be key to keeping ore from the largest mining find in a generation in Northern Ontario, an analyst says.

But what community that railway leads to is one of the most hotly contested questions in the north this summer. The prize -- a billion-dollar ferrochrome smelter and hundreds of high-paying jobs -- has communities across the north queuing to position themselves on the other end of the proposed railway.

Cleveland-based Cliffs Natural Resources will announce a site as early as September. Cliffs estimates 500 people will work on the smelter during construction and up to 500 when it's operating.

Cliffs' preferred location is a site just north of Capreol. But the company also said it would consider other locations in the north, including Timmins, Thunder Bay and Greenstone, the community closest to the mine site in the James Bay lowlands.

This week, Greenstone retained former Liberal energy minister and deputy premier George Smitherman to lobby the province and Cliffs on the community's behalf.

"The siting of the smelter for Ring of Fire chromite is an extremely important opportunity for the Greenstone region," Mayor Renald Beaulieu said.

"We have invested a great deal of time and effort in developing a response that will benefit our municipality, first nations, Cliffs Natural Resources and the provincial and federal governments."

Greenstone has applied for FedNor and Northern Ontario Heritage Fund grants for $125,000 and $176,500 to fund its lobbying efforts.

As well, Timmins Mayor Tom Laughren and MP Charlie Angus have been working to entice Cliffs to the abandoned Kid Creek smelter, closed by Xstrata last year.

Thunder Bay, meanwhile, has developed an elaborate strategy billing itself as the "Gateway to the Ring of Fire," anticipating much of the staging for the mine site will originate at the lakehead.

So far, Greater Sudbury has taken a pragmatic approach to the negotiations, CAO Doug Nadorozny said.

"Certainly, we are not taking anything for granted, but we are not in a position to hire consultants," he said.

Cliffs has hired SNC Lavalin to perform a feasibility study on the site in Capreol and much will depend on the outcome of that study.

Nadorozny said he has been in discussions with company's leadership about kick-starting the planning approvals process as soon as a decision is made.

Most of the company's issues, though, have to do with transporting the ore from the mine site to the nearest railway, which is 300 kilometres away, and Ontario's uncompetitive electricity rates. Despite its preference to process ore in Ontario, the company has made it clear it would be cheaper to process its ore in either Manitoba or Quebec, where electricity prices are much lower.

Negotiations over those issues are taking place in Queen's Park, he said.

Mining analyst Stan Sudol argues government should pick up the estimated $2-billion cost of building a rail line to move ore from the yet-to-be-developed Ring of Fire deposits to potential processing sites. That investment, he said, would be easily made back through the resulting economic development and taxes created by the Ring of Fire deposits, which include nickel, copper, zinc, palladium, platinum and chromite -- an essential ingredient in the making of stainless steel.

It was the Canadian government's construction of the CPR in the 1880s that led to the discovery of nickel and copper in what would become Sudbury, Sudol said.

"People have to realize the chromite deposit is a multigenerational deposit," he said.

"You are looking at a long life. Building the railroad into the Ring of Fire allows other projects to become more economically feasible."

KWG Resources, a junior mining company that owns close to 30% of one of the chromite deposits and controls the best land route into the region, has a $2-billion rail proposal already in the works. The company has spent about $15 million on engineering and environmental studies.

Part of the proposal suggests that aboriginal communities would eventually own and operate the railroad.

Cliffs hope to start production in 2015, which is optimistic, Sudol said. A rail line would be the best and most likely way to make that possible.

mwhitehouse@thesudburystar.com