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Competition stays hot for Ring of Fire processing plant

Noront Resources boss offers insight into ferrochrome facility selection process
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Noront Resources president Alan Coutts said a final decision on the location of a ferrochrome production plant should come by year's end.

Alan Coutts is dragging out the suspense to find a Northern Ontario home for a Ring of Fire ferrochrome production plant for just a few more months.

The president-CEO of Noront Resources wants to keep the competitive process going to get the best deal possible to place the Toronto mine developer’s $1-billion smelter project in either Sault Ste. Marie or Timmins.

Instead of announcing a landing spot for its plant this summer, the company decided to drop Sudbury and Thunder Bay from its four-city bidding process, and is punting its final decision toward the end of this year.

Land negotiations are getting underway with the selected property owners in the two remaining cities.

Coutts said what became clear during their internal site-selection evaluation process was the requirement to find a property that best fits their needs, but also get discussions going on reaching a deal.

“Even if we saw the cost advantages with a site, if we couldn’t achieve a commercial arrangement with the owner, it negated part of the reason to pick that site.”

The Sault is touting the industrial lands owned by Essar Steel Algoma, west of the steel plant and just north of what’s known as the export dock, run by the Port of Algoma.

Timmins offers the Metallurgical Site (Met Site), owned and still operated by Glencore as a concentrator. That site is slated for closure in 2022 when production halts at the Kidd Creek Mine.

In selecting two finalists, Coutts wants to “keep the tension in the process so that these owners would be motivated to give us a good deal to use the property.”

In the Sault, Noront is waiting for Essar Steel Algoma to clear CCAA protection which, Coutts has been told by city officials, should take a couple more months.

The restructuring process has approval of both unions at Essar but a complicated debt settlement must be worked out between the steelmaker, the port operator and its financier.

“We’re hearing there are no real issues there but it takes time,” said Coutts.

At the Met Site, Glencore has certain remediation obligations depending on whether or not the property will be used for industrial purposes.

“They have some closure obligations they may start or defer depending on whether or not we take over the site,” said Coutts.

The Met Site was the last smelter permitted in Ontario. Redeveloping it requires a full and lengthy environmental assessment because situating a new smelter can’t be grandfathered in under the old permitting regime.

Coutts acknowledged the owners of both properties are eager to reach an agreement and bring the process to a conclusion.

“We’d like to do that by the fourth quarter.”

Noront has been searching Ontario for more than two years to find suitable space for the ferrochrome plant and the coveted 350 direct jobs that come with it.

To keep development costs low, Noront wanted a relatively turn-key property with enough space, transportation and power infrastructure to host a first-stage 200,000 to 280,000-tonne annual production facility.

With a stable of nickel, chromite, base metal – and now gold – properties in the Far North, Noront is just scratching the surface of a vast Far North mineral discovery that could last for generations.

The company’s first mine out of the gate will be its Eagle’s Nest nickel-copper deposit. Mine construction starts in early 2020 with production kicking off in mid-2022.

With the mine infrastructure in place and revenue flowing from nickel sales, Noront’s string of high-grade chromite deposits would follow suit.

Chromite is used in the making of stainless steel.

Noront’s semi-finished ferrochrome product will be shipped to undisclosed U.S. stainless steel producers with plants in the Ohio River Valley and on Alabama’s gulf coast.

Coutts isn’t giving an edge to Sault Ste. Marie over Timmins because of its port facilities.

The Sault presents piggybacking opportunities with Essar to share inbound shipments of anthracite coal and limestone needed for production. But the Great Lakes winter freeze-up diminishes the Sault’s advantage, he said.

Outbound ferrochrome shipments to customers would have to go by rail, which can be accommodated from either city.

Factoring into Noront’s decision to eliminate Sudbury, Coutts explained the cost to redevelop the former Coniston smelter site was just too exorbitant.

“The issue with the Coniston site was we couldn’t place the (ferrochrome) smelter itself right where the former smelter was because it was too close to the town. When we relocated a bit further to the east, we ended up in some very hummocky, outcropping rock.”

To level the site by drilling and blasting, plus install new road and rail infrastructure, would’ve added “hundreds of millions” to the project costs.

Comparatively, the cost to erect earthworks in the Sault or Timmins is “quite minimal.”

To a lesser extent, Coutts admitted, community opposition played a role.

Greater Sudbury Mayor Brian Bigger and Coutts were on the receiving end of an organized letter-writing and email campaign from residents citing potential environmental and health hazards.

In contrast, the other competing cities offered support and encouragement, Coutts said.

“There was a fair amount of resistance from the local people. Like we said, if we’re going into a process where we’re going to spend five years and lots of money permitting a plant, what we don’t want to do is pick the wrong partner right off the bat.”

But Sudbury isn’t totally out of the Ring of Fire picture.

Either Vale or Glencore will be selected by Noront to process nickel from Eagle’s Nest.

The processor will be named when the mining company edges closer to the date of shipping the nickel concentrate, again, “just to keep the competitive tension in the process,” said Coutts.

But unless road and rail is built into the Ring of Fire, scoping out where a ferrochrome plant will go is a moot point.

The proposed north-south route, north of Nakina, is the corridor that’s advancing based on where provincial environmental assessment (EA) work is being conducted.

With Indigenous support for an east-west road to Pickle Lake either soft or in total opposition, the Ontario government is taking the path of least resistance by flowing EA funds to where the First Nation communities are more pro-development.

Coutts was non-committal on Noront’s preferred route. “We’re wedded to the road that gets built first.”

Should chromite come down a north-south corridor to Nakina, Coutts said it would connect with CN Rail’s transcontinental line and be shipped east to Oba, a CN junction point, northeast of Wawa.

If the Sault site is chosen, ore would go south on the former Algoma Central Railway (owned by CN).

If it’s Timmins, freight would go north and hook up with the Ontario Northland Railway at Hearst for the haul into that city.

Logistics played an unfortunate role in sinking Thunder Bay’s hopes to bring the plant to McKellar Island, an industrial property on the city’s waterfront.

Back in 2009, when the Ring of Fire discovery was still in its early stages, CN removed the tracks from its dormant Kinghorn line, linking Longlac and Thunder Bay.

It created a scenario where chromite would have to be railed west toward the Manitoba border and re-routed east toward Thunder Bay.

“It was problematic,” Coutts said.

Funding the transportation corridor will be on the Noront’s agenda when Coutts eventually meets with Kenora MPP Greg Rickford, the new Ford’s government super minister, who holds down the Energy, Northern Development and Mines, and Indigenous Affairs portfolios.

Coutts wants to confirm if the previous Wynne government’s $1-billion promise for Ring of Fire infrastructure remains on the table.

“When I did talk to Doug Ford during the campaign he assured me this was of utmost importance to get the Ring of Fire developed.”

Under the Wynne government, negotiations with area First Nations and Far North development moved at a snail’s pace.

But Coutts said the prolonged planning exercise eventually got First Nations buy-in for a north-south corridor.

“I think this government will be able to take off with that and execute. I think this a government that will be more focused on outcomes rather than process.”

It still remains unclear how the communities of the Matawa First Nations will participate in construction, operations, and supply chain contracts.

Noront is working closely with two Matawa communities; Marten Falls, which is on the north-south route, Webequie, the community closest to Noront’s deposits.

“We’re not dealing with the tribal council as such,” said Coutts. “We’re dealing with the two traditional land holders in the region.

"We do have formal talks going on, especially with Marten Falls First Nation where we do have a pre-development negotiation happening which nuts out exactly that; who does what, how do we get involved, where are the jobs, what’s the longer term involvement?"

Eventually moving and processing Ring of Fire ore could be five to 10 years off given the sensitive nature of introducing industrial development to the wilderness of the James Bay lowlands.

Coutts said Noront is fully prepared for that.

“The reason we’ve given ourselves such a long window for the ferrochrome plant is that we expect this to be a very thorough process that’s going to take time. Just how much time that takes and how onerous the process is to be determined.

“But this will probably take years and that’s really why we’re giving ourselves so much lead time. It’s a bit of a concern, but it’s fair. You’re permitting a large ferrochrome plant and there hasn’t been one permitted in North America.”

“We’re at the leading edge and we’ve got to make sure we’re doing things well and that we’ve satisfied a lot of the concerns of the local communities.”