After posing the questions in my previous I did some research on various costs to figure out the significance of transportation cost compared to other costs for production, but it appeared too complicated to separate these components out. Hence I decided to put that to the one side.

Just saw some discussion on from SH board (notably from rof's posts). Carrabba of CLF was quoted for saying during CLF Resource 1012 Conference Call (there is a transcript somewhere):

"We're having excellent discussions and we're very close to announcements on agreements with provinces on where we're going to site the smelter and the road and those types of things that will allow us pin down the feasibility that goes with it."

Various SH posters speculated about a potential agreement between CLF and McGuinty on various items, such as the road easement, location of the ferrochrome smelter and the power subsidy, etc...

It would appear that CLF was playing one province againt the other (assuming "provinces" was quoted correctly with respect to the smelter location. In effect, CLF was saying "you (Ontario) give us the road (or part of it) and the subsidy for power, then we (CLF) would locate the entire package in Ontario. if not, we build the smelter ($1.8 B out of the total $3.35B capital budget for their chromite project) in Quebec". Sounds like a good and simple enough strategy, just like children bargaining.

Looking at CLF entire package, keeping in mind that production target is planned for 2015 (3 years from now), the following points seemed to jump out of the page.

1. CLF needs to get going with some kind of transportation access to Black Thor/BD mine site, starting with the road leading to it, assuming that easement on KWG's corridor is granted, with KWG concurrence) but CLF will need to negotiate with its neighbours for sending those big trucks on their claims. CLF would need this road initially to get the stuff, especially material and heavy equipment, up to the site. Note: This same road would be needed to bring material and equipment up to build the RR by whoever building it. I am betting that the Province the Fed and everyone else want both the road (to serve the FN communities as well) and RR (for mining and tourism?).

2. When the initial phase, building the mine to dig up the chromite ore, has been completed, the ore will be transported out form the RoF by RR (much cheaper, and having 100 huge trucks (70 tons each) a day, running along that road would be a NO NO, since they will tear up the road pretty quickly and who would want to compete with those monsters with passenger vehicles (even if you have one of those powerful pick-ups). By that time the RR would be ready (hopefully, it can be build in 3 years, starting from now..I doubt it very much, unless we have a labour force like the Chinese, the Japanese. or the Koreans who would be willing to work around the clock).

3. However, the above statement by Carrabba does not prelude KWG and partners from building the RR, especially if PM Harper is supporting it with some $B (say $0.5-1.0B, and we don't even need to go through the PPP route). CLF wants to fast track this transportation thing anyway, hence CLF it may start some TO (friendly or hostile) very soon. It would be advantageous to take KWG under its wing as a Canadian subsidiary (better dealing with the governments and the FN...and apparently, there is some tax advantage as well).

4. Potential stakeholders: CLF is not the only entity, there are others: Baosteel, Kashing Li, CN, and the latest one is our home-grown OMERS and one of itspartners Mitsubishi (they are building a war chest of $20 B for investing in infrastructures of about $2B each such as RR, etc in stable areas, e.g. North America and Europe)..Ref.: Babjak at NOT board.

Things seem to line up. Your take?

goldhunter (bracing for a TO)