Cliffs eyes lower Hydro costs for chromite project

Cliffs Natural Resources says it will build a chromite smelter in Sudbury, but several key details still need to be worked out including how much the mining company will pay for electricity.

The rest of the north is watching closely, with the hope forestry and mining companies may also cut a deal on better hydro rates.

But Cliffs vice-president Bill Boor said the public shouldn't assume its negotiations with the province are all about electricity costs.

"It's tempting and interesting to narrow in on any one aspect," Boor said. "But really, what we're looking at from Cliffs perspective is the total picture and we're confident moving forward with Ontario."

Boor said negotiating hydro will definitely be part of the deal, however.

"[We need] some assurance that the ferrochrome production facility can be competitive and that's going to require working together on power," he said.

Other companies have also wanted to work with the province on how much they pay for power.

Xstrata closed its smelter in Timmins a few years ago, and moved the work to Quebec, where electricity rates were half.

"We did not get the government to blink and that was well over 1,000 jobs," said Timmins Mayor Tom Laughren, who has lobbied the province to give northern Ontario industries a special hydro rate.

He said whatever the province does for Cliffs will set a precedent for other companies both old and new in the north.

"Hopefully whatever deal is made for Sudbury, or the ferrochrome plant in Sudbury, is something that other mining companies, forestry companies ... that have great industrial opportunities, can take advantage of," Laughren said.

He added cheaper hydro rates will encourage more companies to set up processing plants in northern Ontario, rather than just mining and logging in the region.