Energy & environment

Still burning

Northern Ontario’s Ring of Fire could deliver enormous economic advantages but due to various challenges, the project has largely stalled. Abi Millar asks what the provincial government is doing to help development get off the ground. 

In 2007, a small team of geologists and mining executives made an astonishing discovery. They had located a vast collection of mineral deposits, nestled deep in a remote part of Northern Ontario some 500km north of Thunder Bay. Measuring 5000 sq km, the crescent-shaped ‘Ring of Fire’ was heralded as one of the largest potential mineral reserves in Ontario, on a par with the Sudbury nickel basin and Alberta oil sands.

While the region contains nickel, copper and platinum, it is most notable for its deposits of chromite, an important mineral in the production of stainless steel. These minerals have been valued at an estimated $60 billion, of which chromite accounts for $50 billion. By 2012, there had been some 30,000 claims, and 35 prospecting companies were interested in laying their stake.

Unfortunately, progress has been slower than was initially hoped. Development has been hampered by snag after snag, culminating in a major blow when a key player, Cliffs Natural Resources, dropped out. Originally set to develop the Black Thor chromite deposit, this American company threw in the towel in 2013. It is currently seeking a buyer for its assets.

Critics have claimed that the associated infrastructure challenges are too great, and perhaps more damningly that the economic case for development is hard to prove. They have also pointed to the difficulties associated with striking a deal with the First Nations communities that live near the development.

Staying optimistic

The provincial government, however, remains optimistic, pointing out that projects of this kind can often take a while to get off the ground. Michael Gravelle, Ontario’s Minister of Northern Development and Mines, believes the development has potential to create thousands of jobs in the province.

“We’ve calculated that it will create 5,000 new jobs directly in the area, with the mining development itself, but then there are the other opportunities in the supplying services and transportation sector that would provide many other jobs as well,” he explains. “The First Nations in the region will particularly benefit from those jobs and that economic growth, and we’ve already provided significant dollars to those communities to ensure they are better trained and ready to go to work when those mining projects are indeed in production.”

The provincial government has already committed $1bn to the transportation infrastructure required, and is hoping that the federal government will match this sum. Because the Ring of Fire is located so remotely, it is currently inaccessible by road and exploration efforts have so far relied on aircraft. Any work that does occur will depend on strong regional infrastructure support.

Similarly, because this is pristine land that has never before seen developments, it will be necessary to undertake extensive environmental assessments first.

“We need to be able to understand and mitigate any potential impacts a project may have on the environment, and the necessary discussions are going on,” says Gravelle. “Also, investments by the mining companies depend very much on the state of the commodity sector, and we know that commodity prices have not been at their best over the last years. These are probably reasons why the project has not moved to the next stage.”

He draws parallels with the DeBeers diamond mine site in Ontario, which did not open for production until 2006, even though the deposits were discovered in the 1990s.

“From the moment the minerals are discovered till the moment a mine site is in place, is frequently seven, eight, nine, ten years,” he says.

Working together

In the meantime, the provincial government has put together a development corporation that brings the various stakeholders together. Given the complexity of the project, it is vital that all parties collaborate and have the chance to discuss their (sometimes divergent) needs. These include representatives from industry, the provincial government, the federal government, and the nine aboriginal communities that will be affected.

In fact, the government has made significant progress on closing a deal with the First Nations communities. Around six months ago, negotiators signed a regional framework agreement with aboriginal leaders. It is designed to ensure these communities see benefits.

“We’re talking about regional infrastructure support, we’re talking about resource and revenue sharing and we’re talking about socioeconomic support,” says Gravelle. “This is the work that’s been spelled out in the framework agreement. We think it’s important that there is assurance that the First Nations will benefit from this, and companies need to understand how important that is as well. The framework agreement is historic – it’s unprecedented for a government to engage in these kinds of discussions, and we’re very proud of that.”

Moving forward

While loath to put a timeline on production, Gravelle maintains that mining companies are still showing significant interest in the Ring of Fire.

“Noront Resources has a nickel project they’re moving forward in the Ring of Fire, and KWG Resources is very actively involved in the region – they’ve completed a patent application for a new method of refining chromite ore using natural gas,” he explains. “I think the bottom line is our ministry is absolutely committed to working with any and all interested parties in the region. There is this extraordinary $60bn+ deposit of minerals, and we want to ensure that the benefits that come from this project benefit everyone in the province.”

He believes that while the mining companies themselves need to keep various factors in mind – not least market demand and commodity prices – the role of the government is to ensure that any claims are able to move forward.

“We’ve made our billion dollar commitment to the transport infrastructure, we’ve put the development corporation in place, we’ve engaged in this very significant negotiation with the First Nations to ensure they are going to be seeing the benefits of this project, and we have spent millions on skill training so the workforce will be ready for them,” he says.

“The project remains an absolute priority for our government, and we are putting in place real benchmarks so that we can drive this project forward. This is a complex undertaking and it’s one that we certainly take very seriously, but we are also conscious that in order for this project to move forward we do need to get it right.”

There is no question that this is a challenging long-term endeavour, and that the associated issues will not be ironed out swiftly. That said, the provincial government remains committed to seeing it move forward. And Gravelle believes that once the market is right, the project will be ready to go.

This article appears in the February 2015 edition of MINE magazine

 

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