Renewable energy a tough sell for prospective RoF developers

16th October 2014 By: Henry Lazenby

TORONTO (miningweekly.com) – Among the many challenges facing as many as 20 mining companies holding claims in the Ring of Fire (RoF) mineral region of Northern Ontario, most significant might be that there exists no infrastructure.

However, besides having to deal with exploration, project planning, First Nations negotiations and local capacity building, project proponents were under mounting pressure from stricter legislation, environmental lobby groups and locals to include renewable energy sources in their future project plans.

Ontario government RoF Secretariat senior policy advisor Blaine Bouchard on Thursday morning told delegates at the Renewables and Mining Summit and Exhibition, in Toronto, that the Matawa group of nine member First Nations who inhabit the province’s Far North, had made it clear in multilateral discussions that current diesel-based electricity generation was prohibitive of economic development and posed serious environmental impacts.

The First Nations living in the remote region were completely dependent on diesel electricity generation for their energy needs, owing to the province’s energy grid only reaching as far north as the Dryden region.

Mining sector expansion was the main driver of growth in electricity demand in the area, through expanding existing mines and the development of new mines in the RoF, as well as growth in the industries and communities that support the mining sector. Currently existing customers fully utilised the capacity of the electricity transmission system serving the area.

Bouchard said the province had committed to developing infrastructure such as electricity, broadband internet, and transport in the Far North, and funding was indeed already flowing for a feasibility study looking into the best energy strategy for the region.

He referred to the North of Dryden draft regional resources plan, which was completed by the Ontario Power Authority in August last year, which contemplated two potential scenarios.

Bouchard said the report proposed to either build a new transmission line north of Dryden to Pickle Lake, near to the RoF area, or to upgrade existing lines from Dryden to Ear Falls, and then on to Red Lake.

REGIONAL INFRASTRUCTURE

The RoF, in the McFaulds Lake area of the James Bay Lowlands – about 553 km north-east of Thunder Bay – has attracted much attention over the past couple of years, with exploration drills turning for minerals, including chrome, nickel, copper and platinum-group metals. It included the largest deposit of chromite ever discovered in North America, which is a critical ingredient used to create stainless steel.

The remoteness of the area was underscored by the fact that five First Nations are only accessible by air or winter road, while four of the First Nations are drive-in communities. However, all nine First Nations would be impacted by resource development in the RoF.

There were three main mining first movers in the region, including US diversified miner Cliffs Natural Resources, which had proposed to develop a significant C$3.3-billion chromite mine in the RoF, as well as a processing plant near Sudbury. The company had, however, recently signalled its intentions to sell its assets and exit the region.

Toronto-based junior Noront Resources was also planning to build the Eagle's Nest nickel, copper, platinum and palladium mine, while KWG Resources held partial interests in the Big Daddy chromite deposit and the Black Horse chromite deposit.

Matawa First Nations Management economic development advisor Jason Rasevych told the summit that most communities were reliant on diesel and were looking towards renewable sources of electricity to relieve the economic and environmental burdens diesel generation posed.

Rasevych underscored the fact that the key to gaining social approval for new mining projects in the area would be community engagement on all fronts. “Call us, visit us and let’s talk. First Nations have lived in these regions for time immemorial and they are not going anywhere – they are going to seek to benefit from any economic development that comes their way,” he said.

The results of a recent opinion poll, released on Thursday, pointed to First Nation residents being in favour of proposed new mining projects in the RoF to incorporate sources of renewable energy, which could also be used to supply local communities with a steady stream of electricity.

KWG Resources VP for exploration and development Moe Lavigne, however stressed the need for mines to have ready access to reliable base-load energy sources, on a scale he believed renewable energy simply could not provide.

“Down time at any mine is very expensive, and this inherent risk involved with renewable energy is enough to scare potential users away,” he said.

He noted that it was still early days and that KWG still had to do trade-off studies to determine where the bulk of their operations would be located. “We still need to decide whether we will build a concentrator in the ‘ring’; or will we transport ore down to ‘civilisation’, where we would surely be able to process it cheaper. These decisions alone would completely alter our energy-needs profile,” he said.

Goldcorp VP for operational support Gill Lawson said that it was an unfortunate fact that when it came to renewable energy needs and mine budgets, such projects usually took a backseat in priority. “It all boils down to basic economies to realise value,” he said.

Lavigne said it was clear that the RoF would become a new mining camp. The added advantage now was that all parties could collaborate to go about establishing operations in the most sustainable way.

He said KWG, which was rumoured to be in talks with Cliffs to buy its assets, was looking at developing its projects on a more sustainable basis, having already invested heavily in new technology such as natural gas-fired furnaces to melt its ores into ferrochrome. It was also apparent in the company’s staunch belief that a north-south railway would provide more sustainable and improved economies of scale for all future operators in the region to transport their products, when compared with Noront’s proposed east-west all-weather road, or Cliffs’ north-south all-weather road.

Ontario and local First Nations also in March signed a landmark regional framework agreement to develop the RoF.

The agreement was billed as a first step in the historic, community-based negotiation process that would aim to bring together the nine First Nations and Ontario to discuss and negotiate an approach for development in the First Nations' traditional territories. The process would help ensure that First Nations participate in, and benefit from, RoF developments.

The Ontario government in August established the RoF Infrastructure Development Corporation, first mooted in November last year.

Located in Thunder Bay, the not-for-profit corporation’s mandate is to bring First Nations, the public and private sectors together to create partnerships and facilitate investment decisions in strategic infrastructure.

As participation in the corporation evolves, the board would be expanded to include membership from First Nations and industry partners. In its mature state, the corporation would be in a position to advise on crucial infrastructure investment decisions, including how to best use Ontario's $1-billion funding commitment to RoF infrastructure.