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First Nation Chief plans China trip to discuss Ring of Fire rail line

Iceberg marks are pictured about 180 kilometres southeast of the proposed Ring of Fire development area.


Bruce Achneepineskum is heading to China next month to hear about a $4-billion plan that includes building a rail line to the Ring of Fire through his community's traditional territory.

The Chief of Marten Falls First Nation, a remote fly-in community of 770 registered people of which only about half live on the remote Northern Ontario reserve, says he's interested in the latest overture from a small mining company with big plans.

KWG Resources Inc. announced this week that it is working with Marten Falls First Nation on an equal partnership to develop the Ring of Fire's chromite deposits, which are used to make stainless steel. China is the world's leading producer of stainless steel and the company hopes that Chinese investors will be willing to finance the $4-billion rail line and mining project in order to secure a long-term, reliable source of chromite.

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The company has organized a trip to China next month so that First Nation leaders in the region can learn more about the potential project.

"I'm looking forward to getting there," Mr. Achneepineskum said in an interview. "If the doors are open for China to do business in Ontario, then we're supportive. I don't think it matters where the money comes from. It just matters that it's there to finance these projects."

Mr. Achneepineskum said his community will have the final say on whether to move ahead with development, but added it could bring jobs and training opportunities.

Engineers from China Railway First Survey & Design visited the region in 2016 to conduct a feasibility study. Mr. Achneepineskum and other First Nation leaders from the region are expected to join KWG officials on a trip to China in mid-May to meet with the team that worked on the survey, as well as other Chinese officials.

The Ring of Fire is a large mineral deposit about 500 kilometres northeast of Thunder Bay. The region is only accessible by air. Building a road or rail access would require crossing over rivers and wetlands, creating cost concerns. Northern Ontario First Nation members have also expressed concern about the negative environmental impact that the development could have on water quality and trap lines.

The trip shows there is still work taking place to spur major mining development in the Ring of Fire region, even though the hype has faded considerably from its peak four or five years ago. In 2013, the federal government's senior minister for Northern Ontario at the time – Conservative MP Tony Clement – argued the region's economic potential was on par with Alberta's oil sands.

Yet, just two years later, Cliffs Natural Resources, a large U.S. mining company that was the main player in the region, sold its assets for a fraction of what it had originally paid. Cliffs spent $550-million to acquire and develop its mining rights in the Ring of Fire, but sold those same assets to junior mining firm Noront Resources Ltd. of Toronto for $20-million in 2015.

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Noront president Alan Coutts was critical last year of Toronto-based KWG's proposal for a north-south rail line, arguing that an east-west road is more affordable and would allow the region to be developed in stages, while also connecting more First Nations communities to the south.

The road option is further along in the process. An environmental assessment and consultations with area First Nations are continuing, but no final decisions have been reached.

Mr. Coutts said in an interview this week that a rail line should be viewed as a longer-term option.

"Listen, all avenues of infrastructure are worth exploring. Certainly something of that kind of scale of a mega-project would be a long time out from a timeline point of view," he said. "What we still favour is the gravel road, modest approach of infrastructure that can be shared with First Nations because it can get done relatively quickly and cheaply and kind of kick-start the development."

Earlier in April, Noront announced its own partnership with Marten Falls that makes the First Nation a shareholder in the company. That announcement included a predevelopment agreement for a nickel-copper-platinum-palladium mine in Northern Ontario at a location called Eagles Nest.

Noront also has a connection to China. Its second-largest shareholder is Baosteel Resources International Co., one of China's largest steel producers.

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The Ontario government has said it is willing to spend $1-billion on the Ring of Fire but has not made any specific commitments. Mr. Coutts said he hopes Ontario will make an announcement this year about a road in the region.

The federal Liberals haven't made any firm pledges for the Ring of Fire, either. Ottawa has promised to boost infrastructure investments for Canada's First Nations. It has also signalled that attracting investment from China is a priority. A steady stream of cabinet ministers has visited China in recent months to discuss expanded trade.

Prime Minister Justin Trudeau met with a group of institutional investors last November at Toronto's Shangri-La Hotel to talk about opportunities in Canadian infrastructure at a gathering organized by BlackRock Inc., the world's largest asset manager.

The meeting included officials from China Investment Corp., the Hong Kong Monetary Authority and SAFE, the State Administration of Foreign Exchange, which manages China's foreign exchange reserves.

KWG president and chief executive Frank Smeenk said Canada's embassy in Beijing has been helpful in working with the company in advance of the trip. Mr. Smeenk noted the trip comes at a busy time in terms of increased engagement between Canada and China.

"Perhaps auspiciously, it seems the First Nations chose this point in time to engage during a rather historic period in the development of relations between our countries," he said.

Treasury Board President Tony Clement says the series of mining projects known as the Ring of Fire will be worth tens of billions of dollars. Globe and Mail Update
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