Cliffs puts Black Thor project on the backburner

The Ring of Fire's biggest mining player has called an indefinite halt to its chromite project in Northern Ontario.

Cliffs Natural Resources announced late Wednesday, Oct. 20 that is it suspending its $3.3-billion Black Thor chromite mine and mill project, and it is not allocating any further capital to the deposit in the James Bay lowlands for 2014.

All technical work, including the feasibility study, development and exploration activity, is under suspension. The company has not assigned a project restart date.

Cliffs spokesperson Pat Persico said the challenges and uncertainties to advance the project timelines, and the associated risks concerning unresolved infrastructure issues with the Ontario government, “really brought us to this decision.”

“We're allocating capital for the project and there's a point where we can no longer continue to do that without further clarity and movement in that area.”

After an Ontario Mining and Lands Commissioner ruling went against the Ohio mining giant last September, Cliffs management had stated that the clock was ticking as the company began re-evaluating the roughly $4 million a month it spends on the project.

Cliffs had also been urging the Ontario government to resume talks on addressing some project-critical issues related to public investment in transportation infrastructure, securing a favourable power rate and getting the provincial approval of the terms of reference for the mining project.

In an earlier interview, Bill Boor, Cliffs' vice-president of global ferroalloys, said there had been no meaningful talks with the Wynne government on these issues since the leadership changeover last winter.

Persico said Cliffs still sees value in the Far North chromite deposit and will not be divesting itself of its mining claims.

“We do not have plans to sell the mineral deposits and we are looking to still have dialogue with the Government of Ontario and other parties and First Nations around infrastructure.

“We're hoping to come to some resolution on financing and development of that so we will continue to put forth the effort.”

The suspension of the project means the closure of its exploration office in Thunder Bay, affecting 14 staff, and 17 seasonal workers at its James Bay exploration camp. Cliffs' Toronto office will be closed, impacting 15 staff and 17 personnel at its Cleveland office will either be reassigned to other mining projects or laid off.

The commissioner's decision was the last straw for Cliffs on a languishing development with a production start date that had been steadily pushed back from 2015 to 2017, and maybe beyond.

The independent tribunal's ruling denied Cliffs overland access to the Black Thor deposit over the mining claims of a Toronto junior miner, KWG Resources. Cliffs was seeking an easement to run a road corridor north, 320 kilometres, to the future mine site. 

Cliffs decided to appeal the commissioner's decision to the Ontario Superior Court, but faced with months of waiting to get a hearing, management decided to publicly apply pressure on Queen's Park to come up with a solution.

With no clear provincial direction on how development would unfold in the Ring of Fire, Persico said Cliffs was faced with little choice.

“The uncertainty of the timeline is why we had to make the decision related to our project suspension. As far as dialogue (with the province), we do want that to occur, but those could be lengthy and depending on the timing, we can't continue to operate with a lot of critical issues still outstanding.”

Persico gave no indication of the future of a proposed ferrochrome refinery planned for Capreol, nor if the economics of the entire project's base case would be revised at some point.

“We don't have the timelines of how long the suspension will be. If and when we do a restart, we'll have to look at where we are and determine the focus of our path forward. It's really premature to speculate.”

Two weeks ago, Northern Development and Mines Minister Michael Gravelle attempted to throw out an olive branch by asking all the mining companies, First Nations and the federal government to come to the table under the umbrella of a Ring of Fire development corporation.

No specifics were given on its governance structure and no funding commitment was made toward addressing the Ring of Fire infrastructure deficiencies.

“The dialogue is important. We do want to be at the table to talk about the infrastructure issue. Infrastructure has been in place to open up that district. We're not alone if others want to come in.

“We're in a tough spot and we had to make a tough decision to suspend things.”