TORONTO—China Railway has agreed with KWG Resources to undertake a feasibility study into building a rail line between Nakina, Ont. and KWG property in the Ring of Fire. But even if the railway is eventually given the green light, full development of the mine remains a distant prospect.
Moe Lavigne, vice-president of exploration and development for KWG, laid out a possible development scenario and indicated that environmental approvals, permits, funding, other infrastructure plans, co-operation with First Nations and construction timelines are still uncertain.
Here is a closer look at some of the issues:
■Construction at the Black Horse site would be relatively simple, with the cost to dig the shaft as low as $250 million, says Lavigne. But the railway, which might employ 1,000 construction workers, might have a price tag of $2 billion. Who would foot the bill? China could be one investor — it needs chromite so it might take payment as a partner in the enterprise.
■Nakina has been selected by KWG as the southern terminal of the new railway because of its location just north of the national CN Rail line and also the Trans-Canada highway. China would be able to transport raw chromite west to British Columbia by rail, to be shipped overseas. Nakina also sits on an abandoned rail bed with a connection to Pagwa and Hearst. Can Ontario Northland be convinced to retrack the line from Nakina to Pagwa, so that ferrochrome produced at Nakina can be shipped through to Montreal?
■Nakina does not have the power infrastructure needed to run the chromite processing plants that KWG and eventually others may build. A 300 MW gas-fired power plant might cost $1 billion, Lavigne says; who would pay? The plants KWG proposes for Nakina — one a concentrator, the other an innovative gas reduction furnace — would cost KWG several hundred million dollars combined. Lavigne predicts over 1,000 jobs would be created in Nakina during the construction period.
■What role will the provincial and federal governments play in supporting development and helping pay for infrastructure? Both governments have pledged to invest in First Nations communities in the north, to provide essential infrastructure such as adequate drinking water and roads.
"There is no way they (First Nations) can look at this positively unless they get some infrastructure," said Lavigne.
■The province has established a Ring of Fire Secretariat and signed co-operation agreements with members of the Matawa Tribal Council. Could a port-authority type of governance be introduced for some of the major infrastructure projects including the railroad that would have the First Nations and Chinese investors as key stakeholders? If so, bonds could easily be floated to raise the huge sums needed, Lavigne suggests.
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