In 2009, KWG started to stake mining claims in the Ring of Fire for a future railroad from its isolated Big Daddy chromite deposit, heading south for 328 kilometres to a point on the Canadian National Railway's main cross-Canada line, just west of the village of Nakina in northwestern Ontario.
Both companies were development partners in the Ring of Fire at one time, but had a falling out when Cliffs approached KWG to gain access to its transportation corridor. KWG refused and the matter went to the Mining and Lands Commissioner.
The commissioner ruled against Cliffs, which later filed an appeal, with a hearing scheduled June 16 and 17, 2014. The provincial government has requested to weigh in on the appeal.
Lavigne didn't pull any punches against the province, which he said has not done enough to support development in the Ring of Fire.
“They don't understand there's another way besides the project Cliffs presented to them,” he said. “I don't know if they have the technical capacity to understand what we're doing. I don't know if they understand mining strongly enough to be able to make these decisions.”
Cliffs ceased work on its $3.3-billion Ring of Fire development in November 2013 due to a number of hurdles. According to the company, those included lack of agreements with First Nations in the area and a lost appeal to the Ontario Mining Commissioner, that would have allowed the company an easement on the property to begin planning the necessary infrastructure.
But KWG and junior miner Noront Resources have continued to push forward with their Ring of Fire operations.
Lavigne said for development to move forward the province must invest in the necessary transportation infrastructure.
“The problem with all those deposits is that we simply can't go up there as a private corporation and start building roads on Crown land,” he said.
That takes co-operation firstly from the First Nations, but it also takes participation from the province.
“They really have to take the lead on regional infrastructure. Private corporations don't do regional infrastructure, they develop mines.”
At a Sudbury Chamber of Commerce luncheon in March, Aime Dimatteo, director general of FedNor, said companies with stakes in the Ring of Fire would have to make the business case for development before any federal government investments.
“It is a business decision,” he said. “At the end of the day the businesses will make the decisions on whether they're going to go forward with these projects.”
Lavigne said KWG has made its business case with a sustainable plan for rail transportation to the Ring of Fire, and more efficient gas furnaces to process the chromite.
“We don't want to build a fragile industry that shuts down one year and opens the next year, and creates chaos in the communities,” he said. “You've seen that movie, and we don't want to do that.”
KWG has estimated a north-south railroad to their Ring of Fire deposits would cost $1.55 billion to build, while a road along the same route would cost $1.05 billion.
But the lower operational costs for a rail line would overcome the initial capital expenditure in six years, Lavigne said.
According to KWG, with a road it would cost $60.78 to transport a tonne of ore, while a rail line would cost $10.50 per tonne.
“A railroad is the way to go,” Lavigne said.
To refine chromite to make stainless steel, KWG has filed a patent for a method to process the ore with a natural gas furnace, instead of electric.
The technique, which introduces an accelerant into the mix to process the ore at a lower temperature – 900 C instead of 1,600 C with an electric furnace – would free the company from Ontario's high hydro rates and drastically reduce greenhouse gas emissions, Lavigne said.
Gas furnaces have been used to process iron-ore, but the technique has never been used with chromite, Lavigne said.
There are four natural gas furnaces used to process iron-ore, and Lavigne said they could be used for chromite after some modifications.