Noront Resources

KWG vice-president Moe Lavigne speaks about the Ring of Fire at the sixth-annual Nishnawbe Aski Development Fund Mining Summit held in Timmins on Thursday.

TIMMINS - KWG Resources vice-president Moe Lavigne warned a gathering of Indigenous community leaders and mining industry members that until there is money behind them, the proposed mines that make up the Ring of Fire development will only ever exist on paper.

“Until this proposed development is funded, it’s not a project; it’s just a study of an opportunity. There are plenty of people out there that think this is an actual project — it’s not — it’s an opportunity,” said Lavigne.

The KWG executive was speaking at the sixth-nnual Nishnawbe Aski Development Fund Mining Summit held in Timmins this week.

He continued to say the federal and provincial governments are being prevented from fully backing the projects by their voter bases which “want this part of Canada to be a park, or museum, and don’t want to see anything happening here.”

With neither government willing to go against the political pressure he believes is holding them back, Lavigne argued the only realistic way to get the Ring of Fire mines off the ground is through China.

“The people who understand this opportunity the best is China. They get the whole picture, they want to get their hands on some of our chromium, and they are willing to put their money on the table to make it happen,” he argued.

KWG is putting most of its eggs in China’s basket when it comes to getting its mines in the Ring of Fire off the ground. The company, which is the smallest stakeholder in the chromium development, is working to get China to not only pay for and engineer a railway to the site but also to buy the refined ore it will produce.

The fact of the matter, said Lavigne, is that China’s steel industry needs a secure, long-term chromite supply because the country has no deposits of its own and the supply it gets from South Africa is produced by high-cost mining operations that are “constantly on the brink of collapse.”

KWG could provide a more stable supply at lower cost, the executive argued, because of savings from rail transportation and a new patented refining process that uses natural gas rather than expensive electrical arc furnaces.

“We want to build the railroad because that’s the best way to reduce our costs,” Lavigne explained. “The cost of shipping by road would cost $60 per tonne, verses $10 by train.”

The biggest hurdle in front of KWG’s ambitions for the Ring of Fire is to get everything it needs to convince the Bank of China to supply the financing for the railway corridor to the deposits.

To get there, they need to perform a feasibility study that meets Chinese standards, but even more crucially, they need to secure an off-take (selling) agreement with a Chinese company.

“If you don’t have a sales agreement for your product in any business, banks will not lend you money,” said Lavigne. “China is showing more interest than just building the railroad, they want to buy chromium in Canada.

Another hurdle facing the project is that any railway corridor to the Ring of Fire will need to cross through the traditional territories of several First Nations, so coming up with some kind of agreement on benefits for all of those communities will be important.

Lavigne told the mostly-Indigenous audience that KWG would honour the spirit and letter of the treaties and that any agreement would go well beyond just consulting them and accommodating their concerns.

“Sharing the land is more than consultation and accommodation. I don’t think the ideas of sharing the land and consultation and accommodation match,” he said. “From our point-of-view, sharing the land means sharing the resources down to the bottom line. We think we can structure much of the ownership of what going on so that impacted First Nations get a piece of the action – not just sit on the sidelines.”