Published on: 12/9/2013 2:05:12 PM Print | Font Sizes:  Normal Text Large Text

Province offered Cliffs special power deal


By: Darren MacDonald

Energy minister says $60B chromite project exempt from new rate hike.
Energy minister says $60B chromite project exempt from new rate hike.

Ontario Energy Minister Bob Chiarelli confirmed in a conference call with reporters Dec. 4 what many people had long assumed: the province has offered Cliffs Natural Resources a special hydro rate for its Ring of Fire project.

Chiarelli was promoting the province's long-term energy plan, entitled Achieving Balance, which forecasts energy demand in Ontario for the next 20 years. Steep hikes are forecast for the first three years of the plan – 33 per cent – but he said the increases are much lower than they would have been if the province hadn't cancelled proposed gas plants and plans to build new nuclear plants.

He also touted the end of “dirty” coal plants, which he said cost the province $4.4 billion in added health-care costs, as well as polluting the environment.

But the rate increases announced as part of the plan mean Ontarians will pay about $40 a month more for energy by 2016. When asked about the implications for Cliffs, Chiarelli said a separate arrangement had already been struck.

“In the Ring of Fire, it's generally known that in our discussions with Cliffs, we were making, for that project, which is a seminal project, not only for Northern Ontario, but for the Province of Ontario, that accommodation is being made on the price side,” Chiarelli said.

“I can't tell you any more, because the negotiations (with Cliffs) are ongoing ... But there is a significant accommodation for the Ring of Fire on the table in those discussions.”

Hydro costs were a major factor when Cliffs was evaluating where it was going to build a refinery to process chromite from the Ring of Fire, the $60-billion ore discovery in remote northwestern Ontario.

The company selected a brownfield near Capreol as its preferred location in May 2012, and it was assumed the company had received assurances on hydro rates.

At the time, Bill Boor, Cliffs' senior vice-president of global ferroalloys, said concerns over hydro costs had been dealt with, but declined to be more specific.

“Our discussions with the Government of Ontario has given us the confidence to invest in a furnace operation within the province,” Boor told Northern Life shortly after the Capreol announcement.

Since then, however, the project has been plagued with difficulties.

Last month, Cliff suspended all work on the Ring of Fire, in frustration over the lack of progress related to environmental assessments and a plan to build infrastructure to haul the ore out of the Black Thor site to be processed and sold.

Provincial, municipal and aboriginal leaders – including Premier Kathleen Wynne and Greater Sudbury Mayor Marianne Matichuk – met last week in Timmins to discuss ways of getting the Ring of Fire back on track.

They also discussed infrastructure needs for the North, which will grow in importance as the chromite find is developed.

“Northern deposits, such as the Ring of Fire, have the potential to create enormous wealth for the entire province, and create new communities just as Sudbury was founded more than 125 years ago,” Matichuk said in a news release after the meeting. 

“It’s essential that the province recognize this and prepare for this development boom.”

In addition to Wynne, other ministers at the meeting included Northern Development and Mines Minister Michael Gravelle, Economic Development, Trade and Employment Minister Eric Hoskins, and Infrastructure and Transportation Minister Glen Murray.

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