The Ring of Fire project is "beyond the point of no return" in spite of renewed government pledges to move ahead, says the CEO of the mining company that owns the rights to most of the resources in the remote Northern Ontario mineral deposit.
Cliffs Natural Resources Inc. CEO Lourenco Goncalves made headlines last month with his declaration that he had "zero hope" that the Ring of Fire would be developed in his lifetime.
In an interview with The Globe and Mail this week, Mr. Goncalves said recent pledges from the federal and Ontario governments to support the project with public infrastructure cash have not changed his assessment of the project's viability.
"Last month I said it would not happen in the next 50 years. This month I will say it's not going to happen in 49 years and 11 months," he said. "We are beyond the point of no return."
The Cleveland-based company bought three chromite deposits in 2010 for $350-million and has spent about $200-million on development. Since large chromite deposits were first discovered in 2008, estimates have pegged the mineral potential of the region at $60-billion. But the area is about 500 km northeast of Thunder Bay and is not accessible by road or rail. Industry has suggested that the project would be viable if governments help pay for road or rail access and power lines. Development is also contingent on support from area First Nations.
Mr. Goncalves took over as company CEO in August. He said he would have never invested in the Ring of Fire had he been in charge at the time.
"I did not buy that area and I would have never done that in the first place. But someone that was at Cliffs before me did," he said. "The acquisition was made based on the belief that a connection, a railroad would be built between the Ring of Fire and the south. That railroad never materialized. And at this point in time there is no hope that it will materialize… So without infrastructure there is nothing we can do over there."
Cliffs was by far the largest company interested in developing the Ring of Fire and its September announcement that it is looking to sell its assets in the region was widely viewed as a significant blow to the overall project's momentum.
Smaller firms with interests in the region are trying to put together financing in order to buy some or all of Cliffs' assets.
Moe Lavigne, vice-president of exploration for KWG Resources, confirmed in an interview that his firm is hoping to have a deal in place soon.
"We're having some discussions that we're fairly optimistic will come to a conclusion before Christmas," he said. "We don't know exactly how that deal will be structured but there are other people on this planet that are very interested in being involved in owning or participating in the development of these chromite assets."
Another firm, Noront Resources Ltd., was mentioned this week by federal Natural Resources Minister Greg Rickford as a company that is eager to begin work in the region and that is going through environmental approvals.
This week the Ontario government used its economic update to re-state its commitment to spending $1-billion on Ring of Fire infrastructure and urged Ottawa to match that amount. Meanwhile Mr. Rickford gave two speeches pledging federal support should Ontario apply for funding under an existing infrastructure fund.
Ontario's minister of northern development and mines Michael Gravelle said the project has "enormous" economic and social potential and he expects private sector interest would pick up if Ottawa matches Ontario's $1-billion infrastructure pledge with new money.
"This would send a very strong signal – certainly to the investment community and may I say also to the First Nations [in the region] – that indeed both levels of government were very serious about moving forward on this project," he said in an interview.
As for Cliffs, Mr. Goncalves confirmed he has had discussions with KWG Resources but expressed doubt that the company can find the financing for a deal.
"We were in talks. But the problem is not talks. We talked. And we have been talking. But they don't have the most important part of the thing. They don't have money," he said. "I'll be happy to sell to KWG or to any other player that has one thing that I need. And that thing is money."