China shows renewed interest in developing resource-rich Ring of Fire

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Chinese officials looking to build a $2-billion rail line to Northern Ontario's Ring of Fire will meet with MPs on Parliament Hill Tuesday, a visit that underscores China's strong interest in the region's mining potential.

A group of engineers from a subsidiary of the state-owned China Railway Construction Co. toured the Ring of Fire region by helicopter last week along with officials from KWG Resources, a small Toronto-based mining firm that hopes to secure Chinese investment for its Ring of Fire plans.

The decline in commodity prices has led to a waning of momentum around the Ring of Fire project, which is believed to hold about $60-billion in minerals and more than 100 years of mining activity.

But KWG officials say China sees the long-term potential in developing the region, which is home to large deposits of chromite, a mineral used in the production of stainless steel. The area also has potential for nickel, copper, platinum and palladium mining.

"There's enthusiasm," said Frank Smeenk, president and CEO of KWG Resources, who accompanied the eight Chinese engineers Monday for meetings in Montreal with Canadian National Railway Co. officials to discuss options for co-operation. "This is an international trade deal. From the Chinese perspective, this is an opportunity to begin the relationship with Canada that they have long aspired to and one that is really mutually beneficial and doesn't take the value-added away from Canada."

The renewed push to develop the Ring of Fire comes at a time of heightened attention on Ontario's fly-in First Nations, including an alarming spike in suicide attempts in Attawapiskat, which is east of, and downstream from, the Ring of Fire region.

Advocates for the Ring of Fire, which covers a massive area about 500 kilometres northeast of Thunder Bay, argue there is potential to achieve two goals at the same time: opening the region to development while also providing road access, revenue and jobs to remote First Nations.

Nearly two years have passed since the Ontario Liberals promised $1-billion for infrastructure to develop the region, expressing the hope that the federal government would match the pledge. Since then, the provincial money is largely unspent and the Ring of Fire was not mentioned in the recent federal budget, even though the Trudeau government pledged to spend billions more on infrastructure over the coming decade.

China appears willing to step in to that void.

Mr. Smeenk said the engineers are working on a tight time frame with the goal of having a plan in place within four months that could be presented to Chinese investors.

Mr. Smeenk said developing the Ring of Fire would require roads, in addition to a north-south rail line, that could connect some First Nations in the region. He also said KWG envisions that any Chinese financing would go to some form of negotiated business partnership that would involve area First Nations.

"First Nations have to be the proponents of this business," he said. "If it doesn't make sense to them, it's not going to make sense to anybody else."

The nine communities that make up the Matawa First Nations have been negotiating with the Ontario government on a framework agreement for developing the north but no deal has yet been reached.

Chief Elizabeth Atlookan of the Eabametoong First Nation, also known as Fort Hope, said she's concerned political pressure on First Nations is so strong that approving projects could come at the expense of a solid long-term plan for the region.

"Our way of life is at risk," she said in an e-mailed statement. "With state-backed financing and pressure of Chinese firms, there is great reason for caution here."

MP Marc Serré, who chairs the Liberals' Northern Ontario caucus and who will be meeting the delegation Tuesday, said China's interest is a positive sign that there is a business case for developing the region.

Mr. Serré said Liberal MPs have already met with officials from Noront Resources, another Canadian mining firm with large claims in the regions.

He also said budget money for First Nations and infrastructure in general means Ottawa is ready to work with Ontario on developing the north and helping First Nations.

"We're really focusing on getting the communities together," he said. "The bottom line is we need to get employment to First Nations … and the Ring of Fire will be a huge, huge economic driver."

Michael Gravelle, Ontario's Minister of Northern Development and Mines, said it has had preliminary conversations with KWG but has not yet received a detailed business plan for the proposed rail line.