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Cliffs Natural Resources Inc. announced today that the Company's Board of Directors approved advancing its proposed chromite project, located in the Ring of Fire area of Northern Ontario, Canada, from pre-feasibility to the feasibility study phase. (Cliffs Natural Resources/Cliffs Natural Resources)
Cliffs Natural Resources Inc. announced today that the Company's Board of Directors approved advancing its proposed chromite project, located in the Ring of Fire area of Northern Ontario, Canada, from pre-feasibility to the feasibility study phase. (Cliffs Natural Resources/Cliffs Natural Resources)

ADAM RADWANSKI

Ring of Fire mineral development faces burning issues in Ontario Add to ...

Seeking to get in on a resource boom that to this point has passed it by, Ontario has taken a major step toward developing the mineral-rich “Ring of Fire” in the province’s far north.

Northern Development and Mines Minister Rick Bartolucci announced Wednesday that the government has reached a framework agreement with the U.S.-based Cliffs Natural Resources Inc. for a $3.3-billion investment, including a $1.8-billion smelting plant in the Sudbury area.

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But despite the buoyant tone from both sides of the deal, sources in and around government acknowledge Mr. Bartolucci’s target date of 2015 is highly optimistic. That’s because there remain a great number of hurdles to be overcome before much-needed jobs can be created from extraction or processing of chromite, a key ingredient used to make stainless steel.

Those hurdles can be lumped into three categories: a lack of necessary infrastructure, dissent from first nations, and a cumbersome process to get environment approvals.

The infrastructure issues revolve partly around availability and affordability of electricity. Insiders speculate that, with energy rates soaring, the government will need to provide a price break to Cliffs in order for the Sudbury plant to start up – a risky move, since other companies could demand equal treatment. The province also needs to build transmission lines to the Ring of Fire, about 540 kilometres northeast of Thunder Bay.

The remoteness of that area, currently accessible only by plane – and even then with some difficulty – will also require major transportation investment in a new railway line, new roads, or some combination thereof.

Then there are more nuanced community-building requirements. Those familiar with the Ring of Fire suggest there’s potential for the equivalent of Sudbury or Timmins a century ago. But that will require a degree of planning that, by most accounts, is still a long way off.

In the event of that development, the region’s first nations – some of whom are living in appalling conditions – could be the biggest beneficiaries. And the province is hoping Wednesday’s announcement will help spur Ottawa to invest more in education, skills development and social services.

But on Wednesday, there were complaints from aboriginal leaders that they were bypassed in discussions between the government and Cliffs, and that the smelter will be located so far away.

Ontario Liberals, who came to office shortly after the fatal police shooting of unarmed native protester Dudley George during the Ipperwash land dispute, have tried hard to avoid confrontation with first nations – arguably to a fault, in their handling of the Caledonia land occupation. But if they’re serious about moving purposefully on the Ring of Fire, their enthusiasm for accommodation will be tested.

In a press release, Aroland First Nation chief Sonny Gagnon accused the government and Cliffs of trying to “divide and conquer” – comments indicative of intraband politics that make the situation more volatile.

To some extent, the government is counting on the third hurdle – the environmental assessment process – to help with the second one. While federal streamlining of regulations could speed things up, a provincial official suggested there’s some benefit in moving slowly enough to ensure aboriginal leaders are fully engaged.

Even so, there’s potential for that process to drag beyond anyone’s wishes. After all, it’s not just the mining developments that will be scrutinized, but also the planned transportation and energy transmission lines.

The good news for Premier Dalton McGuinty is that his new chief of staff, David Livingston, is well-positioned to help overcome these various challenges. Sources say that, in his erstwhile capacity as the head of Infrastructure Ontario, Mr. Livingston played an integral role in getting Cliffs to make a reasonably strong commitment.

A significant chunk of Mr. Livingston’s time will continue to be taken up with this key component of the Premier’s economic development strategy. As much of an accomplishment as Wednesday’s announcement may have been, the hard part is only just starting.

Follow on Twitter: @aradwanski

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