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Great Lakes port swayed Noront Resources in picking Sault for ferrochrome plant

Smelter announcement sets wheels in motion for Queen's Park to release Ring of Fire development strategy

Noront Resources president-CEO Alan Coutts decided it was finally time to end the suspense.

After months, even years, of deferred decisions by the Ring of Fire mine developer to select a location for its ferrochrome production facility, the Toronto-based junior miner picked Sault Ste. Marie to be the host community for the proposed $1.1-billion smelter. 

The company made its announcement in the Sault, May 7, informing the community of its plans to place the facility on Algoma Steel's expansive brownfield port lands, just west of the steelworks.

The Sault and Timmins were the two finalists in the running to host the smelter in a site selection process orchestrated by Noront in February 2018. Thunder Bay and Sudbury were eliminated from contention last July.

“We just felt we were at a point where we’d kept these communities hanging long enough,” said Coutts.

“We’d come to a conclusion and they (the Sault) checked the final boxes that we had and we thought, let’s make the decision.”

Though the ribbon cutting for the processor remains years away - with a mid-2025 groundbreaking followed by a three-year build - with it comes the promise of 300 to 500 direct jobs and spinoffs of more than 1,000 indirect industrial supply jobs.

The completion of the plant coincides with Noront's start of commercial production at its proposed Blackbird chromite mine project in the James Bay region in mid-2028.

Noront designed the Sault processing facility to be scalable as it gradually brings its stable of chromite deposits into production over the next several years.

"It’s still down the road but it’s still a major announcement for us," said Coutts.

"It determines who we’re going to be working with for decades to come. It’s a great level of support we’ve gotten here and we’re feeling the love." 

Noront is the leading player in the mineral belt of the James Bay lowlands with three mineable base metal deposits, four chromite deposits, and a number of promising exploration plays, mostly acquired from Cliffs Natural Resources in 2015.

For the Sault, landing the ferrochrome smelter is a sorely needed bit of economic good news for a struggling city, still recovering from the lengthy bankruptcy protection process of its largest private employer in Algoma Steel.

In making their selection, Coutts said both Timmins and the Sault had their strong points.

The Kidd Metallurgical Site in Timmins offered lower capital costs since the former base metal smelter is a permitted heavy-industrial site that had been operating up until 2010.

But what worked in the Sault's favour, Coutts said, was having access to a Great Lakes port to cheaply float in supplies and raw materials like coal and various fluxes for the facility, and ship outbound ferrochrome product to stainless steel producers in the U.S.

Ferrochrome is a semi-finished product made from chromite which is a main ingredient used in stainless steel production.

Coutts said the ability to use the available industrial infrastructure on the Algoma Steel propertyalso delivered better plant operating metrics.

The steelmaker, now under new management, emerged from three years of creditor protection last fall.

Coutts admitted it played a factor in Noront delaying its ferrochrome plant site decision.

“We wanted to allow that CCAA (process) to pan out and see who the new owners were.”

After meeting with newly installed Algoma CEO Michael McQuade and leadership from Batchewana and Garden River First Nations, to explain their timelines and how the Indigenous communities can participate, “we knew we had our spot.”

For years, during his many presentations across Northern Ontario, Coutts said until the Ontario government invested in the infrastructure to carve out an access corridor to reach the Ring of Fire deposits, he saw little reason in announcing the site for the ferrochrome plant.

Despite plenty of campaign rhetoric, Ford government made no new commitments in its spring budget to further develop that corridor other than what's already being spent in early-stage planning and environment assessments of the first leg of a north-south route.

Coutts said they've received assurances from the province that the government is close to announcing its strategy for development in the Far North exploration camp.

Ontario's Energy, Northern Development and Mines Minister Greg Rickford was briefly a Noront director before the Kenora native and former federal natural resources minister in the Harper cabinet resigned from the board to take a stab at provincial politics.

"We're going to keep that at face value and hopefully hear from them pretty soon," said Coutts. "Ultimately, we still want to see an announcement."

Coutts said Noront is also in talks with the province on reaching a long-term power agreement at a specialized rate, similar to what Cliffs Natural Resources negotiated with Queen's Park.

In return, Noront has to guarantee a certain level of capital investment and job creation.

The selection of the Sault also ensures the long-term viability of an historic piece of regional transportation infrastructure.

Noront’s plans to move chromite from the Blackbird deposit to the Steel City is good for the survival of the former Algoma Central Railway (ACR) line to Hearst, now owned by CN Rail.

The 476-kilometre line has seen limited freight since Algoma Steel closed its Algoma Ore Division in Wawa in 1998.

Noront’s plans are to truck nickel and chromite ore from its deposits down a proposed north-south road to a railway trans-load facility in the Nakina-Aroland area of northwestern Ontario that's on CN’s cross-Canada line.

From there, the ore would be hauled to a junction at Oba, 395 kilometres north of the Sault, that ties into the former ACR, and shipped south, directly to the ferrochrome plant.

Coutts considers the likelihood of a Ring of Fire ore-haul railway a remote possibility at this point; not until other regional mining players emerge that would generate the volume of freight to justify a multi-billion-dollar transportation project.

Funding a 300-kilometre railway across swampy terrain would require 8 to 10 million tonnes of material being moved annually to get a decent return on investment, he said. Noront only plans to move 2 million tonnes from its first two mines.

“Ultimately, it’s not what the First Nations need or want in the region. What they need is roads to link their communities to the paved highways in the south."

Coutts insists their mine project economics are robust enough to bear the cost of trucking the ore to a railhead.

The Blackbird chromite project will be the second mine in the Ring of Fire that Noront expects to commission.

First out of the gate will be its high-grade Eagle's Nest nickel-copper-platinum group metals deposit, slated for production in 2024. That ore will be railed to Sudbury for processing at either Glencore or Vale.

The cash flow from nickel sales are earmarked for developing their chromite projects and to finance construction of the Sault ferrochrome plant.

Coutts said other sources of project financing are Resource Capital Funds, Noront's largest shareholder, and possibly from offshore through strategic partnerships and ferrochrome offtake agreements with Asian interests, such as in Japan.

“Having a strategic partnership in place would really help from the point of view of technology and capital. “

After we satisfy needs of the U.S. market, we would have ample resources available to develop and expand the plant and service the Asian, and maybe the European market as well.”

Much of the U.S. stainless steel capacity resides in Pennsylvania, Kentucky, Indiana, New York, North Carolina and Alabama.

Coutts said Noront has no deals in place with these companies but has met with some to show them processing test work results done with their chromite ore samples to determine if there's interest.