Northern Ontario’s Ring of Fire needs a road, not rail, Noront CEO asserts

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The biggest player in Northern Ontario's Ring of Fire says government infrastructure cash should focus on an east-west road rather than grand plans for a $2-billion north-south rail line.

Alan Coutts, president and CEO of Noront Resources Ltd., responded to a proposal recently promoted to the federal and Ontario governments for a 340-kilometre-long rail line that would be built and financed by Chinese investors.

"What we're saying is let's not blow our brains out building the biggest, costliest infrastructure known to mankind without the economic justification," Mr. Coutts told The Globe and Mail.

Both Ottawa and Ontario are looking to make major investments in infrastructure to spur the economy and help struggling First Nations communities. Recent attention on youth suicides in Ontario's fly-in reserves has heightened the political focus on social and economic challenges faced by isolated First Nations.

The Ring of Fire contains mineral deposits in a massive area located about 500 kilometres northeast of Thunder Bay.

Ontario has already pledged $1-billion toward Ring of Fire infrastructure and has asked Ottawa to match that amount. The federal budget included $8.4-billion for indigenous issues, including social and green infrastructure.

But the focus on developing the North comes at a time of weak commodity prices, meaning mining projects such as the Ring of Fire that once generated grandiose claims of development on par with Alberta's oil sands are now viewed with strong skepticism.

Just last year, Cliffs Natural Resources Inc. sold its leading stake in the Ring of Fire to Noront for $20-million (U.S.) after spending $550-million to acquire its rights in the region. Cliffs' CEO dismissed the Ring of Fire's potential, predicting that nothing would be developed over the next 50 years.

Ontario's Minister of Northern Development and Mines, Michael Gravelle, said that, in spite of current conditions, a flurry of activity is taking place behind the scenes to map out roads that will serve some First Nations and open the door for future mining as the market improves.

"We have made it quite clear [to Ottawa] that this is obviously a huge priority project for us," he said Thursday in an interview.

Ottawa and Ontario are paying for a study of a possible east-west road route conducted by four area First Nations. The proposed road would connect the Ring of Fire and the First Nations of Eabametoong, Neskantaga, Nibinamik and Webequie, to Pickle Lake, Ont.

That work is scheduled to be finished in June, and Noront is hoping the Ontario government could announce a plan as soon as July on how the road plan would move ahead.

Mr. Gravelle said he could not confirm a timeline but that the route selected by the First Nations would then form the basis of Ontario's talks with the federal government about new funding for Northern Ontario's indigenous communities.

Much of the region's potential has centred on its deposits of chromite, which is needed to produce stainless steel. This week, officials with KWG Resources Inc. – which has claims on some of the region's chromite deposits – brought a team of Chinese engineers to Parliament Hill to promote a proposed rail line.

Mr. Coutts of Noront, who also met with Liberal MPs this month, said the current market for chromite doesn't support such a rail line and that the focus should be on road access to mine nickel, copper, platinum and palladium.

"Let's start modestly. Let's get this shared infrastructure in place where there's a social benefit and an industrial benefit, and we support the one mine right now that is economically viable. Will there be economically viable chromite operations in the future? I think there will be. But the market certainly isn't there right now. It's going to take some time to get the confidence back that will justify those kinds of huge investments," he said.

Moe Lavigne, a vice-president at KWG, said he supports an east-west road that would ultimately help make the case for a rail line. He also insists that the potential for major financing from China is serious and could come soon.

"Having an east-west road built helps us a lot because it helps us to build the construction of the railroad," he said. "If the timing works out well, there's going to be synergies between our chromite mining and their nickel mining that we're going to be able to exploit and save a lot of money."