KWG Resources Inc.

June 11, 2014

Ring of Fire bigger than an election issue: Thomas

RICHARD GILBERT
Senior staff writer

A construction leader in northern Ontario says the Ring of Fire is too important to be reduced to a point on a political party’s platform.

“The Ring of Fire is not an election issue, because it is a far bigger endeavour than is warranted by an election platform,” said Rick Thomas, manager of the Sault Ste Marie Construction Association. “Whatever government is in power will generate a lot of money from this project.”

Liberal leader Kathleen Wynne launched her re-election platform on May 25 in Thunder Bay, which includes investing $1 billion for the construction of a road to the Ring of Fire region in northern Ontario.

During an election debate in Thunder Bay on May 25, Ontario NDP Leader Andrea Horwath said her party would also contribute $1 billion for Ring of Fire infrastructure development.

Progressive Conservative Leader Tim Hudak did not participate in the debate, but his party’s platform includes the repeal of the Far North Act, which involves the development of the Ring of Fire.

Hudak has also promised to appoint a senior cabinet minister to head development of the Ring of Fire, which would be developed through a public-private partnership.

“We don’t pick sides, because we work with all the local officials who are elected in our region from each political party,” said Denis Shank, executive director of the Sudbury Construction Association. “I just want to do everything we can to make sure that major projects like the Ring of Fire go ahead, especially if there is going to be a plant in Sudbury.”

Cleveland, Ohio-based Cliffs Natural Resources is proposing to mine chromite from its Black Thor deposit, which is located about 535 kilometres northeast of Thunder Bay in the McFaulds Lake area.

Chromite is used to make ferrochrome, an alloy that is a component of stainless steel.

Black Thor is part of the Ring of Fire, which is about 5,000 square kilometres in size and contains the largest known deposit of chromite ore in North America. Most of the mineral discoveries to date are located within a 20-kilometre–long strip.

A report from the Ontario Chamber of Commerce (OCC) estimates the Ring of Fire could contribute $5.1 to $10 billion to the province’s Gross Domestic Products (GDP) in the first 10 years and $14.4 to $27 billion in the first 32 years.

“We obviously support the Ring of Fire, because it would be a huge economic uprise for the whole area from Sudbury to Thunder Bay,” said Shank. “It will be a boost for the whole of Ontario and the rest of Canada. It will also develop international trade, so we hope it goes ahead.”

The OCC also predicts that the GDP impact of Ring of Fire projects in other provinces and the rest of the world would range from $2.1 to $6.3 billion in the first 10 years. In the first 32 years, the GDP impact outside Ontario would range from $5.8 to $16.8 billion.

Despite these potential benefits, Cliffs decided in November 2013 to halt the development of the chromite mining project.

The company experienced problems related to the environmental assessment process, land rights and negotiations with the Province of Ontario.

In particular, the Mining and Lands Commission rejected a plan by Cliffs in September 2013 for the construction of a proposed 340-kilometre all-weather road, which is a critical component of the overall project.

An order was sought by Cliffs to dispense with the consent of KWG Resources Inc., which had previously staked mining claims on lands that were needed for an easement to build the road.

In response, Cliffs decided not to invest any additional capital for the project, because of the uncertain timeline and risks associated with the necessary infrastructure.

Cliffs is appealing the decision in Divisional Court and argues that this is not an appropriate use of mining claims under Ontario’s Mining Act.

The proposed road is necessary to provide for all mining and business opportunities to access the Ring of Fire region.

The 2014 Liberal budget which was presented on May 1 and rejected May 2, set aside $1 billion for development of the Ring of Fire. However, this commitment was contingent on matching federal dollars.

The Liberals have promised to make decisions on the Black Thor project through a development corporation that they will create within 60 days of taking office.

The new body will include provincial and federal governments, as well as First Nations and private companies.

Follow Richard Gilbert on Twitter @buildingcanada.