There is only one route into the Ring of Fire from Nakina, the closest existing rail access, on a natural esker that is unique in the muskeg of the region. KWG Resources has staked mining claims along the entire route and wants to put a railroad in.
Cliffs Natural Resources, after negotiating with the Ontario government, wants to put a road over the same route and has applied for an easement over the mining claims of KWG.
In advance of a ruling that is expected any day on that application, Cliffs has also filed application for permits on every aggregate source along the route, since there is not enough material in the region, to build either a railway or a road and the balance will have to be transported into the area.
The impact on the First Nation's in the area must be considered also. There are several FN communities in the region whose isolation can finally be addressed by the transportation needs of the mining development.
First Nation communities are also the most affected by any environmental damage done by the project and are justly demanding close attention be paid to the ecological effects from the start.
When one considers the positions of these stakeholders and the fact that the Ontario government operates a railway that suffers from a lack of revenue, one has to wonder about how the road option has made it this far.
The road option involves hauling ore concentrate out of the region in 70 ton trucks, such as the model as pictured here.
Given the expected 3000 to 4000 tons of concentrate per day, that would require 40 to 60 trucks of this size per day making the 8 hour trip at top speed of 40 mph. With this volume of traffic with only one development, it is no wonder the deal would restrict First Nation's from accessing the road. The difference in size of the vehicles involved is evident in the picture and I believe safety would be compromised.The other issue which immediately comes to my mind, is how much has been budgeted for road maintenance, given the size and weight of these vehicles and the effects of spring on northern roads. Would half load restrictions in the spring double the number of vehicles or the amount of road maintenance required?
In my previous post, I spoke about the comparison of 100 car train versus 157 trucks, but if only one mining project is considered that comparison should be scaled back to one 30 or 40 car train, ONE rail engine, and two crew members versus 40 to 60 trucks each with an engine and driver. Again the environmental superiority of rail in the base case and an expanded volume case is clearly evident.
The other issue to be considered is how the transportation system would be financed. The road option advanced by the government and Cliffs would be a toll system, proportionally paid for, by each company that shipped product on the road. If we assume that each company is going to track the number of vehicles they put on the road, then this proposal will require oversight by the government and a new bureaucracy to bill and collect revenue.
Compare the efficiency of that model to the rail one, where administration is already in place to handle billing and the shipping charge that companies are going to have to pay anyway, will include an amount required to payback the capital investment.
Since the Ferrochrome Production Facility (FPF) has only been located in Capreol as a Base Case scenario, the final location is still open for negotiation. If the government wanted to direct revenue into their own operation, it would make sense to bargain for the FPF to be located in Timmins.
This makes sense for a number of reasons.
First, combined with ownership of the new rail line into the Ring of Fire and the construction of a line over the abandoned rail line from Nakina to Hearst, the initial rail movement would be entirely under government control from the mining site to the FPF. I have posted before about the benefits of working with a company which has a mandate to economically develop the region opposed to a President who answers to American shareholders.
Further to that, Cliffs has stated they want to sell Ferrochrome to the world first, then sell chromite directly after that. The main users of ferrochrome are stainless steel producers, the majority of which, are located in the eastern US and in Europe, so producing it in Timmins would be enroute to final market, which makes sense from a business and environmental perspective.
I believe ferrochrome also requires iron and nickel, so with the proposed Noront nickel development in the Ring of Fire, those two commodities could travel on the same train. Cliffs has iron ore capacity at their mines in eastern Canada, so Timmins would minimize the transportation of that commodity as well. The ONTC portion of that freight revenue would again offset the cost of the initial capital expense.
Turning our attention back to the needs of the First Nations in the area, ONTC is already well experienced in providing rail passenger service combined with freight operations. The rail option could include a service similar to the Polar Bear Express which can offer passengers the ability to ship their vehicle on the same train. See Photo
If one considers all these points, I fail to understand the apparent government position in these negotiations. One can only hope the "new" Liberal government brings a new position in these negotiations. The New Deal could incorporate all these factors within their proposal. They deserve a place at the table to explain how.
References
http://www.thesudburystar.com/2013/02/02/ring-of-fire-rail-or-road
http://www.nan.on.ca/upload/documents/energy2012-pr-harvey-yesno---rof.pdf
http://wawataynews.ca/archive/all/2012/9/13/ontario-negotiating-build-ring-fire-toll-road_23458
http://www.northernontariobusiness.com/Industry-News/mining/2012/10/Toll-road-to-the-Ring-of-Fire-.aspx
http://www.republicofmining.com/2013/01/10/project-focus-ring-of-fire-by-john-chadwick-international-mining-january-2013/
http://www.cliffsnaturalresources.com/EN/aboutus/GlobalOperations/chromite/Documents/Ferro%20Report%20Updates%20-%20January%202013/Final%20Amended%20ToR%20-%20January%202013%20-%20Attachments.pdf
http://www.cliffsnaturalresources.com/EN/aboutus/GlobalOperations/Pages/Ferroalloys.aspx
http://www.republicofmining.com/2013/02/22/rail-over-roads-the-way-to-go-for-ring-of-fire-study-by-jeff-labine-tbnewswatch-com-february-22-2013/
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