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Gimme smelter

With no government road, Ring of Fire developer takes its case to Northerners
Port of Algoma docks (Kenneth Armstrong)
The Port of Algoma property is one of the industrial sites Noront Resources likes for a ferrochrome smelter to process Ring of Fire chromite ore. (Kenneth Armstrong photo)

It’s time to get political about the Ring of Fire.

Noront Resources, the leading mine developer in the Far North, is eyeing Sault Ste. Marie as one of four sites in Northern Ontario for a potential ferrochrome smelter.

Company president-CEO Alan Coutts is making it known he’s putting mining on the campaign agenda in that city’s upcoming provincial byelection on June 1.

Coutts is speaking at a Sault Ste. Marie Chamber of Commerce luncheon on May 10.

The Sault is on Noront’s shortlist – along with Timmins, Sudbury and Thunder Bay/Fort William First Nation – to be the host community for a $600 million to $800-million plant to process chromite into ferrochrome, a critical ingredient used in stainless steel production.

Between now and the end of June, Coutts and his chief development officer, Steve Flewelling, will be visiting prospective sites and making public presentations in each city.

“We’re going through this process, and we’d like to have the site selected by the end of the summer.”

There hasn’t been a new smelter permitted in Ontario since the Kidd Metallurgical Site in Timmins, which was built in 1980 and closed in 2010.

On a site they want close to the Great Lakes, Coutts said they need an appropriate brownfield site, power and rail connections, a skilled workforce, community support, and access to the northeastern U.S. market, where potential stainless steel customers are located.

But with no infrastructure money coming from Queen’s Park to build an access road to reach Noront’s nickel and chromite deposits in the remote James Bay lowlands – and even more government foot-dragging on selecting a route – Noront’s mine construction plans for 2019 and beyond, is on hold.

“We’re using the Sault byelection in our favour,” said Coutts.

“We’re talking to the community and saying, we want to consider you as a viable site for the ferrochrome plant but, ultimately, until we get a road in place, there’s nothing,” said Coutts.

For three years, Queen’s Park has promised to earmark $1 billion to build an all-season and shared industrial and community corridor to move ore and connect isolated First Nation communities to the provincial highway system.

But when Ottawa didn’t allocate any matching dollars in the March federal budget, the province backed off, too.

The Ring of Fire didn’t even garner a mention in the April provincial budget.

For Noront, if there’s no clarity on the road, there will be no mines.

The company’s timetable is to start construction of its Eagle’s Nest nickel-copper deposit first, beginning in late 2019, followed by the Blackbird chromite deposit.

The chromite would be trucked and railed to a ferrochrome processor, which is scalable to become a bigger operation if world stainless steel demand dictates that Noront needs to bring its larger chromite deposits into commercial production.

Noront intends to make a “modest” entry into the North American market with the small Blackbird deposit. The 500,000 tonnes of chromite mined annually would convert to about 200,000 tonnes of ferrochrome, enough to serve about half of the U.S. market.

American stainless steel producers currently import ferrochrome from South Africa and Kazakhstan. It arrives through the Gulf of Mexico and is barged north through the inland waterways, the preferred method of transportation.

“We can do that from Chicago, coming down the Great Lakes,” said Coutts.

Depending on the plant's size, the smelter would require between 100 and 130 megawatts of power. A long-term power price agreement would have to be negotiated with the province.

“But it doesn’t matter what we do and what we talk about,” said Coutts.

“This is an economic development project that will be in place for 100 years…but with no road, there’s no point.”

Immediately after the budget omission, Coutts received a flurry of phone calls from the Ministry of Northern Development and Mines and the Ring of Fire Secretariat, assuring him that the province’s $1 billion commitment remains solid.

“What they were saying was that it’s still in their fiscal plan, not necessarily in the budget,” he said.

“There seems to be some willingness to get something moving. I think everyone’s feeling frustrated that nothing’s happened all this time and this is time to get it done.”

In a speech in Sudbury last January, Coutts said Noront’s financiers were losing patience and hinted the project could be mothballed unless the province tables a road plan.

At one point, Coutts said he had the deputy minister of Northern Development and Mines meet directly with its largest shareholder, Resource Capital Fund, to provide them with more certainty on the government’s commitment to the development.

The company is now facing two looming deadlines this year that will impact cash flow and ongoing exploration work.

“Our flow-through financing finishes at the end of September,” said Coutts. “We’ve got to make a decision to make at that point whether or not we can attract more financing and whether or not we can keep that exploration camp open.”

And by year’s end, Noront is scheduled to meet with Resource Capital to renegotiate or extend a US$15 million loan.

“They’re going to have to be in a position where they’re satisfied with the advancement (of the project) to enter into those negotiations about that debt.”

Coutts said provincial mines minister Bill Mauro is well aware of their deadlines.

After years of industry and First Nations consultation, plus independent engineering analysis on corridor studies, Coutts said it’s high time the government released a regional infrastructure plan.

“Let’s get something on the table,” he said, “and let’s get the appropriate people to fine-tune it.”

To expedite the process, Coutts said they’ve offered the province their environmental assessment data for an east-west road to the Ring of Fire, along with the files for a north-south corridor that they inherited from Cliffs Natural Resources when they acquired their chromite deposits in 2015.

“It doesn’t matter to us (on the route). We’ll use what gets constructed. It’s ultimately a question of the First Nations and the province settling on something.”

Reaching a consensus among the Matawa First Nations communities on how development should proceed appears to be a tough slog for the Ontario government through its regional framework negotiations.

“From what I’m hearing, it’s a very complex, slow moving discussion,” said Coutts, whose company trains and employs Indigenous people in its exploration programs.

Coutts questions if the discussions have morphed from addressing First Nations’ environmental concerns and economic participation on the mining and transportation project to a more wide-ranging dialogue on national reconciliation.

“I believe that’s what’s getting them bogged down. They’re talking about nation-wide constitutional issues, and it’s probably the wrong forum. It should be a much broader conservation with all First Nations and Inuit.”