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TORONTO (Reuters) - Miner Cliffs Natural Resources Inc has lost a key land dispute at a Canadian tribunal that could cause more problems for its already troubled Black Thor chromite project in northern Ontario's mineral-rich Ring of Fire.
Cliffs cannot build a proposed highway to the wilderness region without the consent of tiny rival KWG Resources Inc, which has staked claims along the route and wants to build a railway instead, the Ontario Mining and Lands Commissioner said in a decision dated September 10 and posted online by KWG.
Cliffs spokeswoman Patricia Persico said the iron ore miner is considering its options, including appealing the decision. It was not immediately clear what body would hear an appeal.
"It does put the project in jeopardy," said Persico, who noted that the highway is a "necessary" part of Black Thor.
Cleveland-based Cliffs suspended its work on the $3.3 billion Black Thor project in June, citing stalled talks with the provincial government and other political and regulatory problems. It has struggled to win over aboriginal communities in the region.
The Ring of Fire is a cluster of mineral deposits that political leaders in Canada have said could support a century of mining. But the remote region, about 1,500 km (1,000 miles) northwest of Toronto, has no rail lines, highways or reliable power.
Chromite, which is refined into ferrochrome and used to make stainless steel, is heavy, so infrastructure is a major challenge. A highway could open up the district for smaller companies such as Noront Resources Ltd, but Cliffs is not willing to shoulder the full cost of building it, pegged at about $600 million, without government help.
TSX Venture-listed KWG, with market capitalization of about C$35 million ($34 million), is exploring for chromite in the Ring of Fire, and says a rail line offers better value for money. The two sides are fighting over a single route because there is very little high ground or gravel in the swampy region.
Reporting by Allison Martell; Editing by Janet Guttsman; and Peter Galloway