Cliffs Natural Resources Inc.'s decision to abandon its mineral deposit in Northern Ontario's Ring of Fire underlines the mineral-rich region's critical drawback: There's no there there. And without co-operation from all levels of government and the First Nations, there never will be.
The Ring of Fire deposit is a potential $50-billion mining bonanza, teeming with chromite as well as nickel, copper and gold. But it's in the middle of nowhere: 500 kilometres north of Thunder Bay, in a remote northwestern pocket of the province that's more than 200 kilometres from the nearest highway. The area is populated by a handful of First Nations settlements, some small-plane landing strips, and a lot of wilderness.
Bob Rae, the former Ontario premier and federal Liberal leader who is chief negotiator for the region's First Nations communities in talks with the Ontario government over Ring of Fire development, recently described the area's "underdevelopment": Towns with no Internet access and only intermittent electrical service, where people living in poverty pay $8 for a carton of milk.
That, as any economist will tell you, is the cost of deficient infrastructure. And any mining executive will tell you that until the region is brought into the 21st century, the economic promise of its rich natural resources will remain out of reach. No one is going to build and operate a substantial mine – let alone an entire mining industry – without first having roads. It can't be done.
Cliffs knows this, the government knows this and the Native communities know this. The road to Ring of Fire development will begin with a road.
Yes, infrastructure development in the region is bogged down by the province's negotiations with the First Nations over how to proceed. And yes, Cliffs has been frustrated by a slow process of approvals and environmental assessments, and the recent rejection of a proposed route for the road that would cross the land of another (much, much smaller) mining company with claims in the area.
But the big issue now is cost, and who will pay for it. It won't be cheap.
The Ontario government estimates that more than $2-billion in infrastructure investment is needed. A huge part of that cost is a road that would link the region to existing transportation infrastructure and could handle heavy-duty mining traffic year-round; in a meeting with The Globe and Mail's editorial board last week, Ontario Finance Minister Charles Sousa pegged the cost of the highway at $700-million to $1-billion.
Ontario has asked Ottawa for help with the costs – which it likens to the federal government's contributions to the critical highway projects that facilitate continued growth in Alberta's oil sands. And while the province has been negotiating with First Nations, Mr. Sousa pointed out that native land-claims issues are in the federal jurisdiction, and Ottawa must play a role. The First Nations groups see the potentially huge benefits for their impoverished communities, but they want to make sure their people will participate in the business, and that their cultural and environmental concerns will be protected.
All three groups – Ottawa, the province and the First Nations – need to focus on the end result that will benefit them all, and not get so bogged down in politics and process that they drive investors' money elsewhere and doom the region to more years of development limbo. Perhaps Cliffs' decision to walk will serve as a wakeup call.