Northwestern Ontario suppliers ideally positioned to serve growing list of mines in region
The 2013 Mining Readiness Strategy commissioned by the Thunder Bay Community Economic Development Committee (CEDC), the City of Thunder Bay and the Fort William First Nation identified 10 mine development projects predicted to create 10,000 new jobs per year for northwestern Ontario over the period of a decade, and economic revenues of between $1 billion and $1.7 billion per year.
Reality has watered down these projections as gold and iron ore prices fell and it became clear that the development of the mineral wealth in the Ring of Fire wouldn’t be happening anytime soon.
But several significant mine development projects are underway and being welcomed in communities across northwestern Ontario and by suppliers providing a wide range of products and services to the mining industry.
“It’s part of the cascade of five new gold mines in the next four years in northwestern Ontario, which is really going to impact not just direct jobs, but mine service and supply opportunities as well,” said Mason, project manager, mining services for the CEDC.
Most people don’t realize that about 25 per cent of Canada’s gold production already comes from northwestern Ontario. The good news is that percentage will likely rise as new mines come on stream. Rubicon Minerals’ Phoenix project in Red Lake, for example, poured its first 741 ounces earlier this year and is continuing to ramp up.
6,100 spinoff jobs
The other four projects include Goldcorp’s Cochenour deposit in Red Lake, New Gold’s Rainy River project near Fort Frances, Treasury Metals’ Goliath deposit near Dryden, and Premier Gold’s Hardrock project in Greenstone. Combined, all five new mines should add 1,520 direct jobs and up to 6,100 spin-off jobs.
In a region of about 220,000 people, those numbers represent significant growth.
Smaller towns near new gold mines stand to have the largest population growth. Fort Frances, for example, is gearing up for a large influx of new residents as New Gold’s mine gets closer to opening. The community, which lost its main employer – the Resolute Forest Products’ pulp and paper mill – in January 2014, is already rebranding itself as the “next hometown” for miners. There are new residential subdivisions and condos planned and an industrial park already underway, said Tannis Drysdale, economic development officer for the Rainy River Future Development Corporation.
“Everything looks like it’s all systems go, so we’re quite excited about the opportunities,” Drysdale said.
The town is positioning itself as a mining hub that could service and supply the New Gold mine as well as nearby exploration and mining in the Iron Range region of bordering Minnesota.
“We have the lowest cost of power in Ontario – about 25 per cent lower than any other jurisdiction – and some of the least expensive industrial properties,” Drysdale said.
Other communities anxious to benefit from the surge in mining activity include Sioux Lookout, Dryden and Greenstone.
Several other gold projects are also in various stages of development throughout the region, and non-gold projects that could be near term under the right conditions include Zenyatta Ventures’ unique graphite deposit near Hearst and Rockex Mining’s Lake St. Joseph iron ore deposit 80 kilometres northeast of Sioux Lookout. On the back burner are Ring of Fire chromite development, which is bound to happen sometime given the quality of the deposit, the Noront Resources’ nickel-copper-PGM Eagle’s Nest project in the Ring and Stillwater’s copper-PGM project near Marathon.
“We’re a multi-metals region… led by gold, the yellow metal. There is no question that gold is our bread and butter,” Mason said.
Supplier benefit
Mining supply and service companies will benefit from this growth as well. Industrial suppliers once dependent and focused on the pulp and paper industry have branched out to serve the mining industry.
For example, Venshore Mechanical provides mechanical services to its customers and also fabrication services “pretty much all over Canada” – mostly piping and some modular construction. In northwestern Ontario, Venshore works with North American Palladium, Goldcorp, and now New Gold. But, as part of the Thunder Bay Metal Fabricators Association (TBMFA), the company’s opportunities in mining go further afield.
“We probably do just as much work in Saskatchewan in mining as we do in Ontario,” said John Jurcik, president of both Venshore and the TBMFA. Customers come to northwestern Ontario for the proximity as well as the quality of work.
“We deal with some pretty demanding clients – a lot of QA, a lot of really stringent procedures… it’s just that level of quality that separates us from other shops,” Jurcik said.
Venshore can provide highly skilled labour as well as products. When shops out west are overcapacity, Venshore can cover the labour gaps to keep projects moving forward.
The story is similar at another Thunder Bay company, Payford Steel, which specializes in custom steel fabrication, steel erection, and conveyors. Industrial work in northwestern Ontario remains its focus. For example, Payford will be providing the embedded steel for New Gold’s Rainy River mine.
“(Mining) has been a huge mainstay for us,” said Terry Olsen, vice-president and part owner of Payford Steel.
But there are opportunities elsewhere, including Alberta’s oil sands and Saskatchewan’s potash and uranium mines – markets that Payford found through the TBMFA. Payford Steel is also making a name for itself as a co-generator contractor, building bio-mass generators at Resolute Forest Prosucts’ Thunder Bay mill and Alberta-Pacific’s mill near Athabasca, Alberta, the largest pulp mill in North America.
“The biggest part of it is our talent pool here,” Olsen said. “We do good quality work at a good price. That’s been a huge difference.”
Andrew Sinclair, projects controller at EKT Industrial in Thunder Bay, echoed those remarks.
“We’ve got a really good group of tradespeople here. I don’t want to downplay anybody else, but we’re really happy with the quality of work we’re getting from these people, and have been for years,” he said.
EKT, another company that grew from the pulp and paper industry, won the contract for the Rubicon mill in Red Lake. Sinclair said they hope to be involved in the other upcoming mine projects as well.
“If any of those projects go, it’s nothing but good for the area,” Sinclair said. “We’ll benefit one way or another. If nothing else, then the pool of resources that we rely on is busy and the work stays local.”
Sling-Choker Manufacturing Group has grown with mining from the start – the company is celebrating 40 years in business this year. Hugh Paxton, who operates several Sling-Choker branches including Thunder Bay and Red Lake, said the company serves the mining industry as well as other industries with a wide variety of supplies including proprietary products.
Proximity is key. Sling-Choker has 15 branches from Quebec to Manitoba, most strategically located in mining areas. It constantly sources new, generally higher-end products for its customers, including the best mine pumps and diamond drill bits available. Recent downturns in exploration have impacted the company, but diversity keeps it moving forward.
“We’re not filling a pot with gold, but we are keeping the doors open,” Paxton said.
