KWG Longs,
Since its discovery, the Ring of Fire has faced two significant barriers to its development. The first major obstacle has been infrastructure to access the deposits and bring them to market. As we are all well aware on this board, this obstacle is being dealt with in the form of a partnership between KWG and China FSDI.
The second major obstacle has been agreements with the First Nations. My feeling is that KWG’s Friday announcement is the second and final piece of the ROF development puzzle. I hope everyone understands what this means to us. Bringing them into a shared and equal partnership is an absolutely brilliant move:
1.If the First Nations say no to Ring of Fire development, then it’s no and I completely respect that. This is not about appeasing them or about some large cash payment to make them go away. Recall First Nations of BC were offered $1b for the LNG project and rejected it. It has to be about inclusion, sharing of the pie, lifting everyone up and providing meaningful and sustainable opportunities for generations of First Nations. This is what I see being created by First Nations ownership in the project.
2.In my mind, creating an organization where our First Nations are equal partners and that can operate the mine (and maybe the railway too?) is the way to go. These two operations could operate on a cost-plus basis (to keep costs low in a commodity market) and could act as suppliers to the gas ferrochrome facility to ensure global competitiveness.
3.I have heard unofficial and unconfirmed reports that China FSDI recently lost a sizable project in Massachusetts. Apparently, the key reason they lost this railway project was because they wanted to use Chinese manufactured and shipped rail cars rather than relying on local labour and suppliers to manufacture the cars on site for the project. I have to think that something like this will not happen again. I’m sure China FSDI is supportive and encouraging of this move and want to engage our local First Nations in an inclusive way.
4.If our First Nations are equal partners in the development, do they not instantly become proponents of the project? They will play a large role in the permitting processes, environmental assessments, government relations as well as being key advocates when it comes to dealing with the environmental groups. What environmental group is going to fight a First Nations in whose backyard the development stands to occur?
As we see progress on the KWG side, bear in mind that both the infrastructure and relations with the First Nations were supposedly on the agenda for the provincial government to address with respect to development of the Ring of Fire. I’m not sure if there are any Gravelle fans left on this board, but a few of us here would agree that he has done absolutely nothing of value for the ROF. In fact, I would go as far as to say he has been a big red pylon that we have had to work around. KWG has stepped up and is in the process of completely delivering what he was assigned to do. There are rumours that a cabinet shuffle is in the works and my sources around Queen’s Park are telling me that Gravelle will be sent off to get something else ‘right’.
To me, this is all a stark contrast to what’s going on at Noront. On the infrastructure side, Coutts is still whining about his road on the taxpayer’s dime. Why would Queen’s Park fund a road with taxpayer’s dollars from the ROF to Pickle Lake when Noront can’t even mine nickel profitably at current prices? Ferrochrome has withstood the recent downturn in commodity prices so maybe we should be looking to that? As well, is Noront still sending frozen turkeys and toys for the kids at Christmas to the First Nations? Noront’s First Nations relations strategy seems to be taken from the Cliffs’ playbook. Sorry if I’m bashing but I genuinely think that both Coutts and Gravelle could learn a lot from the initiative, innovation, creativity and leadership that Frank has shown with respect to infrastructure and First Nations relations. If First Nations are in a joint venture with KWG – whose chromite will be mined and processed first? Hint – it won't be Noront’s. If I were to make a prediction, I think KWG will eventually acquire Noront’s chromite claims.
This is all in my opinion. Happy to hear other thoughts but in my mind, this is all coming together and the two big outstanding pieces of the puzzle are being solved for in the short-to-medium term. I think this will be a pivotal year for KWG.
My best to all KWG Longs,
Keep Digging
