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| "STEEP ROCK DEVELOPMENT" By M. S. FOTHERINGHAM * * (President and General Manager, Steep Rock Iron Mines Limited, Steep Rock Lake, Ontario.) 1. Recognition of the Growing Importance of Iron and Steel Few Canadians or Americans have yet become aware that Canada's iron ore resources, most of which are only now beginning to be developed, will inevitably have a profound effect on the entire Canadian economy, benefitting in some measure the people of both Canada and the United States. The great iron mining developments of Ontario, Newfoundland, Quebec and Labrador are destined to make Canada one of the world's major producers and exporters of this material on which our industrial civilization is based. These developments will create new employment, new communities, new transportation facilities, and new investment opportunities. Iron ore is the foundation and the keystone of modern mechanized civilization. The most prosperous nations of the world are the highest per capita consumers of iron and steel, and in these countries the per capita consumption is increasing steadily despite the advent of light metals, plastics, and other competitive materials. Three-quarters of the human race have too little steel- and consequently too little mechanization-to provide for themselves the necessities and comforts of civilized living. Progressively they will demand, and acquire, the machines, the transportation and communication facilities now lacking, and they will win them by making greater use of the world's iron resources. It is the good fortune of this generation of Canadians that their "iron age" is just getting well under way. Very recently there has been a revival of interest in the long overdue development of Canada's valuable and strategically located iron ore fields now so urgently needed to supply the rapidly expanding needs of the continent steel industry. The wealth and power of the United States, which is the envy of all other nations, is due in large measure to the high efficiency of its productive and distributive industries, efficiency made possible by its high per capita use of iron and steel. It is no mere coincidence that the United States, with its industrial pre-eminence, its high standard of living, and its vigorous population growth, is also the world's largest producer, largest per capita consumer, and largest exporter of steel. The industrial dominance and prosperity of the United States is attributable fundamentally to the tremendous development of its iron resources and its steel industry over the past fifty years. In the last hundred years, total iron ore production in the United States amounted to over two and one-half billion tons. In this same period, Canadian sources yielded only twenty million tons, or less than one per cent of the United States total. 2. Steel Plant Expansion The steel industry of this continent has grown, and is continuing to grow, at an astounding rate. During the past fifty years, while the population of the United States doubled, its rate of steel production increased nearly sevenfold. Three years ago, the American steel industry had an annual ingot capacity of 96 million tons and it was estimated that expansion of this capacity to 110 million tons by 1960 would be ample to meet all requirements. The fact that the industry is now building for an annual rate of 120 million ingot tons by 1953 is impressive evidence of the growing demand for steel. To feed these plants at capacity, some 150,000,000 tons of iron ore will be required each year, this being some 30,000,000 tons more than 1950 consumption. This tremendous programme has been inspired by three factors: (1) defence needs, (2) encouraging results of market studies on the long-range demand for steel, and (3) government action permitting accelerated depreciation and amortization of capital investments. Canada is in a preferred position to benefit from the growing demand for iron ore. Spread throughout the world there are many huge deposits of iron-in Brazil, Venezuela, Africa, Chile, Mexico, and elsewhere; but these, because of their relative inaccessability, higher development costs, and vulnerability in time of war, are not the most attractive sources of supply for the North American steel industry. Certain of the Canadian deposits, in striking contrast, are strategically located on established arteries of communication, they are amenable to low-cost development and operation, and they are free of the hazards of sea transportation over great distances. It is important that the opportunity which now exists be seized to develop Canadian potentialities with ingenuity and aggressive courage. Apart from new ore sources still to be located in this country, Canada's already known major iron deposits can-and are likely to-provide between 30 and 40 million tons of high-grade iron ore annually for the steel industry of North America within the next ten to fifteen years. For the immediate future, Canada's great opportunity in the iron and steel industry lies in becoming a maj or exporter of iron ore to the United States. Undoubtedly there will be progressive expansion of the Canadian steel industry in line with the country's growth in population, in industrialization, and in greater per capita use of steel, but as yet our domestic market is not large enough to justify the production of many types of steel. The suggestion has been advanced that, in the interim, Canada should produce pig iron and steel ingots for export instead of shipping unprocessed ore. The answer, to this is that it is not economically feasible at the present time and, although the United States is facing a scarcity of ore for the first time, the American steel industry is determined to produce its own iron and steel. Also, Canadians should not be unmindful of the fact that in past years the largest part of Canada's steel industry was made possible by ore provided by the United States, who have provided capital for the development of Canadian resources. 3. History of Steep Rock Range Using Steep Rock as an example, it may be of interest to review some of the problems involved in the development of a Canadian iron range and the influence that such development may have on our economy. Steep Rock, like the Mesabi Range, is favourably situated within one railway divisionĘs distance (140 miles) west of the head of Lake Superior. The district aroused considerable interest among gold and iron prospectors in the early 1880's. The abundance of high-grade hematite float which littered the land to the south of Steep Rock Lake was studied in the early 1890Ęs by W.H.C. Smith and W. Mclnnes, of the Geological Survey of Canada. Their map, published in 1897, carried the following marginal notation: "An iron-bearing horizon, with hematite of good quality, appears to be generally covered by the waters of the (Steep Rock) Lake" Sporadic efforts to locate the source of the float-ore under this deep and extensive lake were all abortive until exploration undertaken by Julian G. Cross and the late Joseph Errington located ore on the uA~~ zone in the late winter of 1938. From then until the end of 1942 a very extensive drilling programme, mostly from the ice of Steep Rock Lake, outlined two ore-bodies now known as the Hogarth (A) and the Errington (B) zones. In the same period geological studies and some drilling indicated the probable existence of several other ore zones in the bed of Steep Rock Lake. It was evident that the river flowing into the lake would have to be diverted and the lake de-watered before large-scale mining could be undertaken; throughout the exploration period, extensive engineering studies of this problem proceeded. By the end of 1942, sufficient ore had been located to more than justify the expense involved in the diversion project. By May of 1943 the necessary funds were made available and the diversion work commenced. The redirection of the flow of the Seine River to a new course four miles northwest of its original position, necessitated solving many unique engineering problems. By the end of the year the diversion was completed and Steep Rock Lake, with an area 0f seven square miles and depths ranging from 140 to 350 feet, had been isolated by dams. By mid-December, 1943, a battery of fourteen 24-inch pumps with a capacity in excess of 300,000 gallons per minute commenced de-watering the lake. By late October, 1944, over 75 billion gallons of water had been pumped and sufficient overburden removed to permit commencement of mining operations. Since then, Steep Rock's first mine, the Errington Pit ore zone, has yielded about 7,000,000 gross tons of high-grade ore and it is now producing at the rate of 1,200,000 tons annually. Work is proceeding on the development of the first underground mine on this zone, which is designed for an annual output of 1,500,000 tons and which, after 1953, will supersede the Errington open pit. The plant will incorporate some novel installations, including an underground headframe, and plant buildings inset into a rock dome. Block caving and conveyor hoisting will be used. Simultaneously, another orebody, the "A" or Hogarth zone, is being prepared for production by open-pit methods. This project involves the removal by dredging of some 45 million cubic yards of clay overlying the ore-body. The dredging plant now operating cost two million dollars, has a designed capacity of ½ million cubic yards per month, and is the largest of its kind in the country. The Hogarth open pit mine is expected to commence production in 1953, and is designed to produce about 2 ½ million tons per year. The Errington underground production is scheduled to commence also in 1953, with a production rate of 1 to 1 ½ million tons a year. Thus the present development programme will step up the production rate from 1 1/4 million to 3 ½ million tons per year, and consideration is now being given to further expansion. 4. Future Expansion Programme The policy of the Steep Rock Company is directed towards the most rapid development of its full resources with minimum capital expenditure. The Company has retained all of the western two-thirds of the 8,000-acre property for its own mining operations, and has made areas in the eastern third of the Range available to other operators on a royalty basis. Arrangements have been made recently with two groups of iron and steel companies for development of the "C", "D" and "E" areas. These agreements provide for intensive exploration over a short term, followed by immediate development on a royalty basis and on a scale consistent with the reserves disclosed by complete exploration. With these experienced operators providing the capital and management for development of the eastern third of the Steep Rock Range, the Steep Rock Company plans to develop systematically the several deposits in the western two-thirds of the property. The retained areas include the "A" and "B" orebodies as well as the intervening 6,000-foot-long zone known as the ~ ore zone; these three zones together extend over a total length of almost three miles. Also included is the geologically favourable "H" zone in the West Arm of Steep Rock Lake. Preliminary exploration recently carried out on the "G" zone has yielded most encouraging results. As mentioned earlier, the current development programme calls for the establishment of a stabilized production rate of 3 ½ to 4 million tons annually. Because of the great increase in the demand for iron ore, the Company has been considering a much larger expansion programme on the "A", "B" and "G" areas. The studies suggest that complete development of these zones could result in expansion of production to a rate of between 6 and 9 million tons annually. Current exploration on the eastern part of the property optioned to others is expected to justify an additional production of as much as six million tons annually. In these circumstances the Steep Rock ore deposits would yield as much as 10 to 15 million tons per year. 5. Forecast of Potential Tonnage It would be a wonderful thing of one could determine in advance the full extent of any natural resource which one was undertaking to develop. Unfortunately, this is very far from an attainable objective in the case of mineral deposits, where one or more of the three dimensions of each deposit is usually not established until late in the life of the mine. The ore-bearing horizon of the Steep Rock Range lies along the 11-mile M-shaped axis of Steep Rock Lake. Along this axis, on the nearly vertical contact of the Steep Rock sedimentary formation and the overlying volcanic series, are found extensive deposits of high-grade iron ore of hydrothermal replacement origin. Because of the great extent of the property, exploration has been concentrated largely on three of the seven or more geologically favourable areas. Exploration is under way on two other zones, and at least three more remain to be investigated. Geological evidence indicates that each of these ore deposits should extend with undiminished grade and area to great depths-possibly to 3,000 feet or more. In order to appreciate the long-term implications of the Steep Rock deposits and to arrive at an idea of the possible ultimate ore potential, one must couple actual exploration results with all of the existing geological evidence. The combined length of these deep-seated deposits is believed to be about four, miles and the average width about two hundred and fifty feet. This suggests a prospective ore potential of possibly five hundred million tons per thousand feet of depth. 6. Cost of Development The seemingly insatiable demand for iron ore, coupled with the rapid depletion of direct shipping ores of the Mesabi Range, is compelling the opening of new ore sources in remote locations and the development of low-grade taconite ores in the United States. These will be high-cost developments-probably close to $20 per ton of annual production. In contrast, the development expenditures at Steep Rock will be much more attractive. Pre-production expenditures at Steep Rock amounted to a little over $10,000,000 and this sum included acquisition of the property, widespread exploration, diversion of the Seine River, and de-watering of Steep Rock Lake. The indicated overall development cost for Steep Rock, including future expansion plans, is less than $10.00 per ton of annual capacity-a very favourable figure as compared with other new iron developments. Incidentally, and quite apart from the effects of further inflation, costly development of new iron deposits outside of Canada would seem to presage an upward trend in iron ore prices. In this connection it is interesting to note that the price of iron ore since 1939 has increased to a much lesser, degree than have prices of many other products. In that period, iron ore prices rose oniy 68 per cent, whereas in the same period of time coke has increased 100 per cent, wholesale commodity prices 13 1 per cent, copper 119 per cent, pig iron 149 per cent, and scrap 164 per cent. 7. Influence on the Canadian Economy At the beginning of this paper, it was suggested that Canadians would benefit profoundly from the development of their iron ore resources. A few final comments will serve to illustrate this point. Iron ore mining requires and justifies huge capital expenditures for transportation facilities, mining equipment, power supply, housing, and many other items. In the case of Steep Rock, we estimate that transportation companies will derive about $25,000,000 from the transportation of each 10,000,000 tons of ore. We estimate also that approximately 100,000 H.P. costing $2,000,000 per year will be required in the development of the full ore potential of the property, and that the annual fill for fuel oil and other petroleum products at this level of activity will be about $2,500,000. Every new Canadian iron mining development in prospect today requires the creation of entirely new communities. A few years ago Steep Rock's railway point- Atikokan, Ontario-was a hamlet of 300 people. Today it is a vigorous young town, rapidly acquiring the amenities of civilization. Its population is now close to 3,000, and, as it grows pro rata with expansion of mining activities, a population of over 20,000 people within the next few years is not beyond reasonable expectancy. In the mining communities of Minnesota-and the situation in Canada should be comparable-it has been found that for each thousand persons employed at the mines there are approximately two thousand employed in other trades, with the total working group supporting 4,500 dependents, this making a total population of 7,500 per 1,000 mine employees. Further, it has been established that an average mining community requires a retail establishment of some kind for each 75 persons, and each person accounts for an annual retail trade of almost $1,000. On this basis, annual retail trade directly within a mining community would total $7,000,000 per 1,000 mine employees. Steep Rock's 1951 production of 1,326,724 tons was sold at Lower Lake ports for $11,589,000. Multiply this sum by 25 and you arrive at a reasonable expectation of the annual value of Canada's iron ore production within a very few years. In the face of such figures, none can deny the terrific impact which iron mining is bound to produce upon the Canadian economy. The importance of the Canadian mineral industry is generally recognized, but only in very recent years has iron ore been a significant factor in the growing value of our mineral production. Last year the value of iron ore ranked sixth in the list of metallic minerals. When iron production climbs to a rate of 30 million tons annually, as it will in all probability, its value will far outrank that 0f any other mineral-metallic or, non-metallic-produced in Canada. |