Red Lake's loss may be Thunder Bay's gain.
Power distribution issues in one of Canada's historic mining districts may force a Vancouver mining company to ship iron ore concentrate – and potential processing jobs – to Thunder Bay.
Northern Iron Corporation is advancing an iron ore property south of Red Lake in anticipation of starting production by late 2015.
But with gold discoveries and mine development in this remote area of northwestern Ontario occurring at a rapid pace, it's fuelling calls for more transmission capacity.
Company president and CEO Basil Botha doesn't know if the Ontario Power Authority (OPA) can supply enough juice for a potential mine and mill operation.
“Power requirements are of concern going forward.”
A high-voltage line runs within a few kilometres of the property, but at 115 kV (kilovolts), it's woefully inadequate to meet his future needs and those of the mining companies around him.
Northern Iron is drilling off an ore deposit and dewatering the former Griffith Mine as his project team dives into prefeasibility planning. A topic that's under discussion is where to place a processing plant that makes hot iron briquettes (HBI) for the steel industry.
“If we had to do the full processing on-site at Griffith, we would need 54 to 60 megawatts of power,” said Botha.
With Goldcorp having the area's largest load demand, it might make better sense for Northern Iron to rail the concentrate 370 kilometres to Thunder Bay and set up the processing there.
The collapse of the forestry industry in that city has served up 700 megawatts of stranded surplus power that community leaders are now pitching to Cliffs Natural Resources to set up a ferrochrome processing plant.
The thirst for electricity in the Red Lake district only figures to grow.
Three new gold mines are coming onstream over the next five years creating a need for 100 additional megawatts.
That will put a strain on the single 115 kV line, known as the E2R, that's already prone to as many as 10 scheduled and unscheduled outages every year.
“There's been a lot of attention given to the Ring of Fire which is years off,” said Bill Greenway, Red Lake's economic development officer, “but we have a pressing problem up here...and this is becoming critical. The faster that (the price of) gold goes up, the worse that our problem gets.”
Activity is bustling in this northwestern Ontario town of 4,500 at the end of Highway 105.
Goldcorp is building the Cochenor-Willan headframe, which will be the access point for its Bruce Channel Discovery, scheduled for production in late 2014. The project will include a high-speed underground tramway connected to a new processing mill.
Goldcorp officials were not available for comment, but the company told town officials last year that it's forecasting an 80-megawatt shortfall within the next five years.
Rubicon Minerals is advancing construction of its Phoenix Gold project with a production start slated for 2013.
Claude Resources is rehabilitating the former Madsen Mine with plans to be in production by 2015.
With a cluster of other exploration firms in the high grade gold camp, another four or five mines could be operating by 2031. “In less than 20 years, we would need a minimum side of 300 megawatts capacity,” said Greenway.
All this activity has attracted a wave of new retailers, contractors and mining suppliers setting up shop along McNeeley Road in Balmertown, the blue collar side of Red Lake.
“Industrial space is at a premium right now,” said Greenway.
The town's population could double in the next 20 years. And if a much-discussed all-season road north into the remote First Nation communities ever occurs, to open up that area to logging and mineral exploration, another 10,000 people will come into Red Lake's catchment.
The OPA is working on a 20-year electricity plan for the northwest and acknowledges more capacity is needed to serve mine expansions in Red Lake and to connect isolated communities.
The options for Red Lake being evaluated is an upgrade of the existing 115 kV line or adding more 115 kV lines.
Greenway said simply twinning the line does nothing to address long-term load requirements. He favours a more reliable system by tying Red Lake into a proposed a 230 kV looped system between Dryden and Pickle Lake.
But Greenway said his frustrated calls for better grid connections and more supply have fallen on deaf ears with OPA.
“This area has been ignored. These things go way too slow. I brought this problem up five years ago and literally nothing has been done. A lot of talk, but little action.”
Botha agrees: “We're dealing with an animal here where the body takes a long time to move.”
Some miners are considering diesel generation as a stop-gap measure, but that only provokes laughter from Botha, a 30-year mining veteran.
“We've just gone through that exercise in dewatering (Griffith). You're probably looking at four times the cost with diesel. One has to look at whether there's more opportunity to ship it south where the power is, rather than try and generate it with diesel.”