THUNDER BAY – A Ring of Fire stakeholder is taking the first steps towards constructing a rail line to reach the remote and potentially lucrative mining development.
KWG Resources announced this week they have reached an agreement with China Railway First Survey & Design Institute Group, a Chinese rail building company, to create a proposal to determine the cost of building the railroad, a process that is expected to take a couple of months.
“Ultimately we see this as the first domino of many dominos that are going to fall. China is the largest consumer of chromium on the planet,” KWG Resources vice-president Moe Lavigne said in a Wednesday morning interview with CKPR Radio.
“It’s very important for any chromite operation in the Ring of Fire that China be one of their customers, otherwise you’re really limiting the success of the operation.”
According to a news release issued by KWG, the agreement has the rail company conduct a feasibility study for “all aspects of the construction of a Ring of Fire transportation corridor and railroad.”
Lavigne said the preferred option is a north-south rail corridor, which is 50 per cent shorter than an east-west route.
The agreement also includes a completion incentive, in which the rail company will receive a finder’s fee for capital expenditures “for any transportation assets with which the lands are improved,” as well as one per cent of construction expenses followed by a 1.5 per cent royalty on freight revenues.
Lavigne is hoping the agreement will spur international interest in KWG’s holdings.
“We see this particular interaction with the Chinese companies and the Chinese government as the first step to possibly leading to them entering into a contract with us to supply them with either chromite or ferrochrome. It’s entirely possible the Chinese might decide to finance the building of the railroad on the future promise of the delivery of chromite,” he said.
He added he’s hopeful the announcement will lead to progress in dealing with both the province as well as the new federal government.
