Chinese engineers endorse plans for $2-billion rail line to Ring of Fire

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A team of Chinese engineers is endorsing a planned rail line to Northern Ontario's Ring of Fire and says the project could open the door to Chinese bids on other Canadian rail projects.

If approved, the planned $2-billion rail line to the Ring of Fire mineral deposits would mark the first time that a Chinese rail company plays a major role in rail construction in Canada. China's state-owned rail companies are aggressively eyeing international expansion, particularly in the area of high-speed commuter rail.

In an interview with The Globe and Mail in Ottawa, senior engineer Zhu Lizheng spoke positively about the potential of building a north-south rail line about 340 kilometres long that would connect the Ring of Fire to an existing CN Rail line near Nakina, Ontario.

"Now with this trip under our wing, understanding what the situation of the project is, our company thinks this project has very good potential. It's a very good project," Mr. Zhu, who is vice-president of China Railway First Design Survey Institute, a subsidiary of state-owned China Railway Construction Corporation, said.

Mr. Zhu and eight other engineers were on Parliament Hill Tuesday, along with officials from Canadian mining firm KWG Resources, to talk to MPs about KWG's proposal to build the rail line using engineering expertise and long-term financing from China.

In addition to financing, the project would also require approval from Ottawa, Ontario and area First Nations.

The engineers toured the Ring of Fire region by helicopter last week and concluded there are no major construction challenges.

The institute has worked on major long-distance railways across China, as well as subway projects.

The engineers expect to complete a detailed feasibility study on the rail project within four months that would then be presented to Chinese financial institutions.

China has made major investments in high-speed rail domestically in an effort to tackle pollution and congestion and is now looking to export that expertise.

A Chinese state-owned rail company is currently involved in a planned high-speed rail line that would connect Las Vegas to California's rail grid.

In Canada, the Ontario government is currently studying how to deliver on a pledge to bring high-speed rail to the Toronto-Windsor corridor.

"Chinese railway construction has had rapid growth and the government encourages all the Chinese enterprises to go and seek more opportunities to develop. So this project could be a very good start for Chinese companies, especially Chinese railway companies, both in construction and design and consulting services to go to Ontario and Canada," said Mr. Zhu.

China is the world's largest importer of chromium, which is used in stainless steel. Chromium deposits, which were first discovered in 2008, are the main source of mining interest in the Ring of Fire. There is potential for several other types of mining activity. About 80 per cent of the world's chromium production comes from just four countries: South Africa, Kazakhstan, Turkey and India. There is currently no chromium mining in Canada, but the United States buys about 15 per cent of the world's supply.

China's role in Canadian mining is not without controversy. Private, B.C.-based HD Mining, which has ownership links to China, was at the centre of concern in 2012 over the company's plans to bring in temporary foreign workers from China in part by stressing the importance of Mandarin language skills as an asset.

Employment benefits related to any Ring of Fire projects will be closely watched because Ontario's Far North is home to several remote First Nation communities facing economic and social hardships.

"We'll follow the protocols and policies of Canada and Ontario [related to labour]," Mr. Zhu said when asked if railway construction would involve the use of temporary foreign workers from China. "The local economy will definitely get development … It's a good future for them."

David Paul Achneepineskum, CEO of Matawa First Nation Management, which represents nine First Nation communities in the region, said members are generally supportive of development provided that the environment is protected and communities benefit from jobs and infrastructure.

"Overall, they see the Ring of Fire as an opportunity, once it's developed, to advance their standings in their own communities," he said. "But they also want to be assured that there is minimal impact to the environment, to the water and to the land that they are living in."

NDP MP Charlie Angus, who represents the large northern riding of Timmins-James Bay, said China's interest highlights the lack of provincial and federal action in developing the Ring of Fire and serving northern communities. He criticized Ontario's cuts to provincially owned Ontario Northland, including the 2012 cancellation of the Northlander train that connected Toronto to Cochrane, Ont.

"Why are we having the Chinese government doing the job that really should be the job of the Canadian and provincial governments?" he asked.