A U.S. mining company’s decision to halt operations in Ontario’s Ring of Fire has brought a sense of urgency to the province’s long-delayed efforts to build transportation links to the region.
The remote area, 500 kilometres north of Thunder Bay, is believed to contain $60-billion worth of minerals but lacks a road or rail line to ship ore out. Cliffs Natural Resources Inc., which had planned a $3.3-billion chromite mine, suspended the project late Wednesday, citing “risks associated with the development of necessary infrastructure.”
The province said it had got the wake-up call. “We recognize that government is going to have to partner with the enterprises that are interested in developing the Ring of Fire, and we understand there will have to be collaboration on infrastructure development. We’re absolutely clear on that,” Premier Kathleen Wynne said Thursday. “It’s about a huge opportunity.”
Cliffs had been sending warning signs for months, putting environmental assessments on hold last summer and indicating publicly this fall that it might have to suspend operations.
Ms. Wynne’s government tried to show progress, announcing two weeks ago that a new development corporation would build $2.25-billion worth of infrastructure in the region. But the plan appeared rushed.
The government announced it before working out many key details on how it will operate, and stopped short of actually committing the money to fully fund it. In the end, it was not enough to convince Cliffs.
“Without land surface rights, without infrastructure certainty, without the [environmental assessment] process terms of reference being approved … we can’t continue to spend at the levels we’re been spending,” Pat Persico, a spokeswoman for the Cleveland-based company, said in an interview.
Cliffs has already spent about $500-million (U.S.) for the project, including $350-million for the mineral rights to three chromite deposits. This year, the company is on track to spend $50-million more. Ms. Persico said the company will hold on to its rights to mine in the region, and that it still sees potential in the area – once the problems are taken care of.
On top of the infrastructure deficit, the province must also reach a deal with First Nations who live in the area. Queen’s Park appointed former Supreme Court justice Frank Iacobucci to lead its negotiating team; aboriginal groups are represented by former premier Bob Rae.
The opposition parties charged that the government has dragged its feet in the area and failed to get the project going. “Their bungling has snuffed out an amazing opportunity,” said New Democrat Leader Andrea Horwath.
The move by Cliffs comes as mining companies are slashing project budgets amid a financing drought and volatile prices for many commodities including metals. Cliffs, which mines iron ore and metallurgical coal in North American and Australia, has seen its share price drop 31.5 per cent in the face of cooling demand from China.
Another player in the Ring of Fire, Noront Resources Ltd., said it will move ahead with plans to mine the deposit of nickel, copper and platinum it calls Eagle’s Nest, and will file a draft environmental impact assessment by the end of the year.
In an interview, Noront chief executive officer Alan Coutts pointed to one positive outcome of Cliffs’ decision: That it could finally light a fire under Queen’s Park and force it to act.
“We’re hopefully going to see a bit of a silver lining come out of this decision by Cliffs in that it does underline the fact that the processes like environmental approval and decisions around infrastructure have to be taken on a timely basis,” he said.