TORONTO, THUNDER BAY – Mining – KWG Resources Inc. have released a study that it commissioned by the international engineering firm Tetra Tech WEI Inc. to compare the capital and operating costs of both a railroad and an all-weather road to the Ring of Fire.

Rail better than road for Ring of Fire 

The study estimates the capital costs for a roadway at $1.052 billion and a railroad at $1.561 billion.

If 3 million tonnes per year are shipped, operating costs are estimated at $10.50 per tonne for the railroad and $60.78 per tonne for trucking on the road. If 5 million tonnes per year are shipped, it is estimated that those operating costs per tonne would be reduced to $6.33 for rail and $59.28 for trucking.

KWG Resources Report

The report states, “This document summarizes the economic tradeoff study for a rail and road option along the 330 km alignment from Nakina to the mining region in the McFaulds Lake area of Ontario. This document presents the project background, geological features, corridor constraints, transportation options of rail and road, basis of design for the transportation modes, project logistics, construction elements, summary of capital cost, important elements of operational cost and sensitivity analysis for load and terms of finance variation. This report has not fully considered the environmental and socio-economic impact of the corridor on the region. Any comments made in this report are based on first principle judgment. These impacts and factors should be studied in greater details in future efforts and studies.

This study highlights the challenging geological features, acute material shortages which impact the decision of choosing either mode of transportation, and the challenges associated with implementing those modes. The shortage of critical aggregate material quantified in a separate task (Final Material Availability Assessment Report, December 14th, 2012) is discussed with its impact on the overall transportation mode development.

The effect of implementation of road corridor and its adverse impact on the rail corridor have been highlighted. The study has identified the major construction elements, the project logistics and constraints associated with the project logistics and the cost implications. The operating cost for both the modes of transportations was tabulated and the effects of transport capacity variations in finance terms analyzed.

KWG Resources – Rail vs Road Tradeoff Study Report FINAL 11Feb2013 by James Murray