By Carol Mulligan, Sudbury Star

Friday, April 4, 2014 9:42:38 EDT AM

Maurice Lavigne’s obligation, as a mine developer, is to optimize economic stability.

And that’s what the vice-president of exploration and development with KWG Resources Inc. says his company will do with its plans to build a railroad and process chromite ore with natural gas from its holdings in the Ring of Fire.

You have to keep your costs low with any project, let alone a project on this scale, Lavigne said in Sudbury on Thursday

A “railroad drives down your cost, the gas drives down your costs,” Lavigne told reporters after speaking to a noon crowd at a luncheon held by the Greater Sudbury Chamber of Commerce.

“We're going to make this project economically robust and we owe that to society.”

Lavigne said KWG doesn’t want to build a fragile industry that “shuts down one year and opens the next year and creates chaos in the communities.

“You've seen that, you know that movie, we don't want to do that,” he said.

Nor does his company want to go to government and taxpayers looking for subsidies to electricity rates, he said.

Lavigne said he came to Sudbury, at the invitation of the chamber, knowing he was coming to “Cliffs-friendly territory.”

Cliffs was to build a $1.8-billion ferrochrome processing plant near Capreol, but that plan is now on hold.

Cliffs and KWG started out as partners, and both were interested in building a railroad to transport chromite ore out of the Ring of Fire to an existing rail line near Nakina.

Lavigne told chamber members he still can’t figure out why, after the two companies parted ways, Cliffs began to favour the road option.

KWG had staked claims to the natural north-south eskers and Cliffs lost its attempt to win an easement over those claims from the Ontario Mining and Lands Commissioner, although Cliffs has appealed that decision.

As far as Lavigne is concerned, the commissioner was so definitive in the decision favouring his company, the matter is over and done with.

Cliffs’ business case for a road didn’t make economic sense, said Lavigne. While the capital cost was cheaper -- $1.05 billion compared with $1.55 billion for a railroad – it is more expensive to maintain and to ship at $60.78 a ton versus $10.50 a ton by rail.

Cliffs’ model for a ferrochrome processing plant fired by electricity doesn’t make economic sense either, said Lavigne. KWG has developed a natural gas process for smelting chromite that would cost less than half that of electricity. It depends upon the use of an additive for which KWG is seeking a patent.

When asked if KWG would consider Sudbury as a site for a natural gas plant, Lavigne said he was open to the idea, but that it was too soon to say.

Lavigne said it is up to the Government of Ontario to take the lead on financing regional infrastructure, not private corporations.

“(We) develop mines,” he said.

KWG hasn’t had much of a profile in Sudbury, but Lavigne said he has never visited a community whose residents were more interested in what is going on in the Ring of Fire, 500 kilometres northeast of Thunder Bay.

“Sudburians really track what's going on in the Ring of Fire and they're very interested,” so he wanted them to know “the KWG side of story.”

Lavigne spoke about a sophisticated group of companies called Outojumpu in Finland, which has a large ferrochrome processing plant and stainless steel plant on the same complex.

The government of Finland was behind that project from the beginning and it has produced 20,000 jobs and has stainless steel plants all over the world.

It took a vision, and “this is doable here,” Lavigne told the audience.

There are many advantages to help Ontario develop the Ring of Fire such as a skilled workforce and the high grade of the chromite ore located there. Another is the fact Ontario Northland Transportation Corp. already has rail lines in the area.

Working against developing the ring are the remoteness and wetness of the area and the high cost of electricity.

“There used to be a stainless steel industry in Canada and in Ontario,” said Lavigne after the luncheon. “Our discovery of chromite might be the revitalization of the stainless steel industry in Canada and it's all very doable."

http://www.thesudburystar.com/2014/04/04/rail-natural-gas-power-kwg-plan-2