Sault Ste. Marie Mayor Christian Provenzano harbours no worries that the CCAA process with Essar Steel Algoma will jeopardize his city’s pursuit of a ferrochrome plant.
Sault councillors were given a briefing by city and economic development staff on Nov. 20 on their preparations to provide Ring of Fire developer Noront Resources with a compelling case to select the northeastern Ontario community as the host site for a chromite processing facility.
The Sault, Sudbury, Thunder Bay and Timmins are the four cities in the running as part of a competitive process staged by Noront.
In early November, the Toronto mining company sent out the formal request for information documents for each city to make their best pitch. The proposal deadline is Feb. 2.
“When we look at the document that the EDC (Economic Development Corp.) and the city received, we can provide all the information that they’re looking for without being hampered by the CCAA (Companies' Creditors Arrangement Act) process,” Provenzano told councillors.
Essar Steel Algoma entered creditor protection in November 2015.
Based on his knowledge of the proceedings, Provenzano expressed confidence that the CCAA process will finish in early 2018.
He assured council there’s been a positive and supportive stream of dialogue with executives at Essar Steel Algoma and CCAA lenders.
“We haven’t seen any roadblock or negativity either from the term lenders or the Algoma executive.”
Noront president-CEO Al Coutts told Northern Ontario Business last summer that the company was delaying its decision on a smelter site until the restructuring process at Essar was concluded. He did not give any indication which city the company preferred.
Provenzano said he’s briefed Noront officials on the status of the CCAA restructuring talks and relayed to them that the term lenders are “happy to meet with them and they can have discussions amongst themselves about the use of the land.”
“Obviously they need to have the participation of the company (Essar Steel Algoma) because that’s where it’s going to be located, but we have no reason to believe at this point that we don’t have the participation of the company.”
The EDC and city staff are busily preparing a proposal document for Noront as part of the mine’s development process for the plant site.
The city has chosen a four-person project team to put the package together, with input coming from Essar Steel Algoma, local utility and gas providers, rail carriers, airport management and the workforce training board.
Noront’s preferred site in the Sault is on Essar Steel Algoma property, west of the steelworks, on some expansive brownfield acreage that offers port and rail access.
The mining company is proposing a 100- to 130-megawatt scalable furnace to convert chromite ore from its Blackbird deposit into ferrochrome. The material would be sold to U.S. stainless steel producers.
Approximately 350 plant jobs would be created at the $600-million to $800-million facility, plus a multitude of new jobs and business spinoffs in the host community.
High on Noront’s list is a suitable location with power, gas and water connections; road and logistical infrastructure; a stable of nearby industrial suppliers and service companies; an available labour force; and a community offering a good quality of life.
Provenzano said Noront officials have made it abundantly clear they’re looking for “sincere” community support, beyond just political pronouncements.
“This thing will not likely locate in a community unless there is actual real community support for that processing facility.”
City officials plan to prepare an engagement strategy involving First Nation consultation and open houses with all the necessary project information in order to win over community support.
Should the Sault land the plant, council was cautioned not to expect immediate construction given that an access road to the Ring of Fire has not yet been built.
“There’s a lot of work that has to be done to get to that stage,” said Dan Hollingsworth, the EDC ‘s lead on the Noront project.
He estimated a five- to 10-year window for such a plant to be operational, “and I’m being optimistic.”
As to when the city expects to hear back from the mining company on their site selection, Hollingsworth said Noront has not provided that information.
Provenzano expressed confidence that the city and EDC staff will “hit a home run” in its submission to Noront.
“We’re going to be very thoughtful and careful throughout this process and, frankly, I think Noront wants to see a thoughtful and careful partner. We’re going to be measured in our approach and we’re going to make sure that what we do is in lock-step with our communications with them, and we have to date.”