Thank you, Mr. Chairman, and distinguished members. Good morning, my fellow witnesses.
My name is Bill Boor. I'm the senior vice-president of Global Ferroalloys. My role includes responsibility for all aspects of the proposed Cliffs chromite project in the Ring of Fire. Cliffs Natural Resources very much appreciates the opportunity to appear today as part of your study.
In my remarks I would like to briefly tell you about our company, provide an overview of our proposed project, and outline the key opportunities and challenges in developing a mining project in the Ring of Fire.
First let me tell you about our company. Cliffs Natural Resources is a 164-year-old international mining and natural resources company headquartered in Cleveland, Ohio, and we have a long history of operating in Canada. We have been in Canada since 1961, and we have owned and operated mines and processing facilities in Ontario, Quebec, and Labrador. Today we employ over 1,000 Canadians.
Our business is built around our core values of social, environmental, and capital stewardship, and we strive to provide operating and financial transparency to our stakeholders. We are the largest producer of iron ore pellets in North America, a major supplier of direct-shipping lump and fines iron ore out of Australia, and a significant producer of high and low volatile metallurgical coal. Our strategy is to continue to serve the world's largest and fastest-growing steel markets.
Last year we completed the $5 billion acquisition of Consolidated Thompson, giving us operating control of the Bloom Lake iron ore mine located in Fermont, Quebec. In the near future we plan to invest approximately $1 billion to expand these operations. Canada holds an important place in our company's strategy and represents the bulk of our company's recent and future investments.
Now I'd like to tell you about our proposed project in the Ring of Fire. In late 2008 we began working with exploration companies in the region, supporting them both technically and financially. This led to the acquisitions of Freewest Resources and Spider Resources in 2010, which is when we began studying the proposed chromite project in the Ring of Fire.
Our proposed project has four components. The first component is a mine that would produce over 4 million tonnes per year of chromite ore.
The second is a processing plant that would be located at the mine site to produce a concentrate product for direct sale or for conversion to ferrochrome. Together the mining concentrator would create approximately 400 permanent jobs.
The third component is an all-season road to transport the concentrate to the CN rail line at Nakina. As I will mention in a few minutes, while our project would be the catalyst for this Ontario infrastructure, in a larger sense this road would serve to open up the Ring of Fire to further investment by other mining companies. The transportation corridor would create approximately 300 permanent jobs.
The fourth component would be a ferrochrome production facility to refine approximately 60% of the concentrated chromite ore into ferrochrome, which is used in the production of stainless steel. We have not yet decided on the location of this furnace operation, but we do know that it will be in Canada. This facility would create approximately 450 jobs.
In total this project would represent an investment of approximately $3.5 billion, create over 1,100 permanent jobs, an equal number of construction jobs, and 2,000 to 3,000 indirect jobs. Importantly, this project has the scale to assist with the infrastructure that would open up the Ring of Fire to further mining development by other companies.
We are very excited about the potential of our proposed chromite project, but the project is just that: proposed. It is not yet a certainty. The environmental and community impacts need to be assessed, and Cliffs also needs to continue assessing the project's viability by looking at both its technical and commercial potential.
With respect to the environmental assessment process, which began last year, we are committed to a thorough and rigorous process, which is why Cliffs volunteered to conduct an individual Ontario environmental assessment. The federal and provincial processes are being carried out as a single coordinated process. We are committed to doing the environmental assessment right.
We have been communicating, consulting, providing capacity funding, and working directly with directly affected first nation communities in the Ring of Fire since early 2010, when we made the acquisition that began our involvement in this project.
We will continue this work. As part of our definition of success for the project, and beyond any legal requirements, Cliffs is committed to seeing the first nations participate and benefit, assuming the project proceeds. Ultimately we view the first nations as our partners in this development, and their benefits would include training, employment, capacity-building, business opportunities, social funding, and increased year-round access.
Now I'd like to tell you about the opportunities and challenges in developing a project like ours in the Ring of Fire.
The key challenges are the result of global market conditions and the lack of existing infrastructure. While we are certainly optimistic about the global demand for chromite and ferrochrome, it would be fair to say that the market is extremely volatile and that this project is aggressive in its market outlook. Global developments, such as Chinese demand, heavily influence the economics and stability of this operation.
These global conditions mean that Cliffs has to be very mindful of all of the upfront investment and the ongoing operating costs of the project, and we have to work hard to keep these costs as competitive as possible. The quality and stability of the jobs are dependent on our ability to develop a low-cost project that can compete with established world competitors.
Our proposed project includes exporting approximately 40% of the product produced on site. Being able to sell into the global market for chromite concentrate is key to being able to build a mine, concentrator, and ferrochrome facility on the scale we are proposing, and 60% of the mine's production will be shipped to the furnace operation.
We recognize that a number of communities would like to see this facility built in their region. We have not yet made a decision about where this facility should be located. Our decision will be based on what is best for the project as a whole—that is, what best supports the project's chances of proceeding as planned. I'm pleased to say, though, that this facility will be in Canada.
As we are all aware, the Ring of Fire location has significant potential for a range of minerals, but the single biggest challenge facing the region's development is its remoteness and lack of existing infrastructure. To make this project a reality and to open up the Ring of Fire for further development by other mining companies, significant transportation investment is needed. We have studied many routes and modes of transportation, and have concluded that an all-weather road running north from Nakina will make the most sense from the short- and long-term economic standpoints.
In addition to opening up the region, the all-weather road would provide connection opportunities for remote first nation communities. It's important that we get this route right, because there will be substantial construction costs in the range of $500 million. The ongoing transportation and maintenance costs that will be determined by the choice of route will be a major determiner of global cost competitiveness for the entire region.
In summary, we at Cliffs are very excited about our existing presence in Canada and the potential of our proposed projects, but this project is still in the early stages. We need to continue to work on our environmental assessment with all of our stakeholders and the affected first nation communities, and we must determine how to keep the project infrastructure costs as low as possible so that the project can proceed at the proposed scale.
Cliffs plans to be involved in the Ring of Fire for a long time, with a multi-generational operation. With this mindset, we're committed to working with the local communities to do it right, as we do in all of our operations. This project appears to fit with our strategy, and also has the potential to make a real difference in the local communities, which is important to us as well.
Thank you for your time, and I look forward to taking your questions.