Cliffs makes case for $1.8B smelter

By CAROL MULLIGAN, THE SUDBURY STAR

Updated 2 hours ago

Cliffs Natural Resources is looking to spend close to $3 billion to get its chromite project in Northern Ontario into production, with $1.8 billion of that going to build a ferrochrome processing plant, the company said this week.

Cleveland-based Cliffs released its 2012 capital expenditure plan Thursday.

The company said it will spend $150 million to develop the Black Thor mine site, one of three sites it controls in the Ring of Fire, and $800 million to construct a near-mine concentrating plant.

Not included in those estimates is $600 million to build an all-weather road it says will benefit remote northern communities and other Ring of Fire mining projects.

Because of that, Cliffs says it will be looking to private and "government entities" to share the cost of the road.

The City of Greater Sudbury is keen to have the processing plant, with its hundreds of jobs, located at a brown site in Sellwood near Capreol. Cliffs used that site as a base case in some of its prefeasibility work on the processing plant.

Two other locations, Thunder Bay and Greenstone, are also vying to have the plant built in their communities.

More information on the project will be provided when the company finishes its prefeasibility study in the first half of 2012, the company said in a news release issued this week.

Cliffs spokeswoman Patricia Persico wouldn't say if Cliffs is showing a preference for a location for the chromite processing plant.

"Cliffs understands there are many interested stakeholders following this project," said Persico in an e-mail Friday afternoon.

"We have not made a decision about the location of the ferrochrome processing facility, nor do we have a target date to share," she said.

"Cliffs is still assessing and evaluating a number of alternative locations to select a preferred site to locate and develop the prospective ferrochrome production facility."

Cliffs is aiming to have Black Thor in production by 2015.

When Cliffs first invested in the chromite deposits in 2009, it predicted production of about 600,000 tons of ferrochrome annually.

After completing some feasibility work, it expects to produce one million tons of export chromite ore concentrate in addition to the original 600,000 tons of ferrochrome.

There was no mention in the capital estimates report about the cost of hydro-electricity, which could be a deal-breaker for the company building its processing plant in Sudbury or even Ontario.

The suggestion is that Cliffs may choose either Quebec or Manitoba to process its ore because their electricity rates are less expensive.

Sudbury MPP Rick Bartolucci was appointed Northern Development and Mines minister after last fall's provincial election.

Bartolucci said Friday he can't speak for Cliffs, "nor can we speculate as to what the company might request in terms of support from various levels of government.

"Cliffs is best positioned to speak to its own financial matters and business plans. It is premature to comment on what, if any, investment/ support might be negotiated between the province and the company.

"Any discussion of this nature would occur directly with the company," said Bartolucci.

During the fall campaign, Premier Dalton McGuinty said his government would wait to see how much the private sector is willing to invest in infrastructure to develop the chromite deposits before it puts government money into the area.

Ontario will have to help build infrastructure such as roads to bring the project online, said McGuinty, but it wants to maximize its opportunities when it does.

And any public investment would have to benefit Ontarians, said the premier.

"We've got an opportunity to do this in a way that's never been done before, so we're excited about that," McGuinty told The Sudbury Star at Laurentian University's J.N. Desmarais Library in August.

"But, yes, at some point in time, it will call for an investment in infrastructure."

Before investing in the Ring of Fire, 240 kilometres west of James Bay, his government would monitor private-sector involvement in the project "to see what we need to do in a supportive role," said McGuinty.

Meanwhile, a federal environmental assessment is under way by the Canadian Environmental Assessment Agency for Cliffs' Black Thor deposit, which is also subject to provincial environmental assessment requirements. That should be completed some time next year.

cmulligan@thesudburystar.com Twitter @Carol_Mulligan

-With files from Harold Carmichael

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