The time is now to extend railhead into Ring of Fire – KWG Resources

24th July 2013 By: Henry Lazenby - Creamer Media Deputy Editor: North America

TORONTO ( – Given the vast potential of Northern Ontario’s still-dormant Ring of Fire polymetallic region, the timing is now ideal to extend the existing provincial railway infrastructure northwards to open up the region for mining, KWG Resources president and CEO Frank Smeenk told Mining Weekly Online on Tuesday.

He argued that the historically low prevailing interest rates and reduced materials costs currently provided Canada and the province with the best window of opportunity yet to build a railway that would enable minerals to be brought to market at the lowest possible unit cost, enabling more than a century of expected mining in the region.

“Canadian chromite production would have to earn its place in the international market, where we would compete with the world’s leading producers – South Africa, India and Kazakhstan. Critical to the success of opening up the Ring of Fire is to ensure minerals could be transported to market in the most efficient manner, at the lowest possible unit costs,” Smeenk said.

Despite being joint venture partners in the development of certain projects in the Ring of Fire, KWG and US diversified miner Cliffs Natural Resources are at loggerheads over the proposed mode of transport into the Ring of Fire.

While KWG proposes a rail route to transport chromite to export markets, Cliffs proposes an all-weather road south towards Capreol, in the Sudbury area, where it has proposed to build a chromite beneficiation facility.

KWG has a 30% interest in the Big Daddy chromite deposit, located near Cliffs’ proposed $3.3-billion Black Thor chromite mine, located in the McFaulds Lake area, and also has the right to earn 80% of the Black Horse chromite project, where resources were currently being defined through a drilling programme.

KWG’s fully owned subsidiary, Canada Chrome, had staked claims and conducted an extensive C$15-million surveying and soil testing programme for the engineering and construction of a railroad to the Ring of Fire from Nakina, where the Trans Canada line of the Canadian National Railway can be connected.

In August 2012, Canada Chrome said it was pushing ahead with its proposed 300 km railway and had applied to Ontario’s Ministry of Natural Resources for 32 aggregate permits on sites located along a string of claims that could form the bed of its proposed railway. The claims on the northern half cover the only ridge of high ground where road and rail is constructible.

However, Cliffs had brought an application to The Mining and Lands Commissioner of Ontario for an order seeking that the Minister of Natural Resources grant an easement under the Public Lands Act over Canada Chrome’s mining claims. After arguments were heard during a two-week tribunal in February, the tribunal reserved its decision which, it is now believed, would be rendered at the end of summer.

Smeenk suggested that an agency under Mushkegowuk and Matawa First Nations leadership should be created under the banner of the James Bay & Lowlands Ports Authority, to take control of the Ontario Northland Transportation Commission (ONTC), which the province had proposed to liquidate.

He pointed to a plan called a ‘New Deal for Northern Ontario’, which the leadership of the ONTC’s unionised employees had developed to avert the divestiture of the ONTC by extending the Ontario Northland Railway (ONR) network to serve the development of the Ring of Fire, to which KWG responded with indicative terms on which its railroad right-of-way might be transferred under such a plan.

He suggested the provincial government should transfer the ONR as a going concern to the James Bay & Lowlands Ports Authority, which would operate on a cost-recovery basis.

Despite the proposed railway extension costing up to $2-billion to build, Smeenk said the higher capital expenditure would be irrelevant when compared with the future benefits of low-cost transport in the region, which would make future mines in the region more economical.

Smeenk criticised the Ontario government, accusing it of inconsistent decision-making. He said its aggregate-permit applications were returned by the provincial government, only for KWG to find out Cliffs had now been allowed to sample aggregate along the proposed road route. He said it was “most untoward” of Ministers to act in such an inconsistent way.

He pointed to the federal government as having taken a much more “measured” approach to developing the region.