Unlocking the Ring of Fire

By: Mitchell Davidson

Every year in the first week of March the mining world congregates in Toronto for the Prospectors and Developers Association of Canada annual convention. Once again, one of the main topics of conversation is the Ring of Fire, a unique chromite and nickel deposit in Northern Ontario nearly 500 kilometres Northeast of Thunder Bay that requires $1 billion of government cash to build a set of roads to access it.

The conversation about the Ring of Fire has changed over the years. It started as an exciting new opportunity that can transform the mining industry in Canada, and has become just another example of a major project that just can’t get built in today’s day and age.

The deposits in the Ring of Fire are worth far more than the government’s controversial $60 billion figure. The reality though, is that the costs of getting the deposits out of the ground, processed, and to market means that the net profit is somewhere in the tens of billions of dollars range.

Essentially, the Ring of Fire is Ontario’s oil sands and the roads to the Ring of Fire are Ontario’s pipelines – and we all know how difficult building a pipeline is these days.

Standing in the way of the roads to the Ring of Fire are fragile Indigenous relations, funding requests of government, and new environmental assessment requirements. Any approach to this development needs to account for all three in separate and unique ways.

On Indigenous consultations, the Ontario government is actually furthest along. First, the government scrapped the original regional framework agreement which meant every Indigenous community had to sign off on the road proposal, regardless of their proximity to the road itself. Instead, the government has decided to work with willing partners – meaning the North-South road has taken precedence over the East-West road proposal – and real progress is underway.

Second, Noront, the company that owns the majority of the mining deposits in the Ring of Fire, has taken a largely unprecedented step of having local Indigenous communities become the proponents of the roadways through their area. That means more than just say over where the route goes, but local employment benefits and shared revenue and prosperity.

When these considerations are added to the province’s resource revenue sharing policy that will see a share of provincial mining tax revenue returned to host Indigenous communities and local municipalities, the future for stronger government-Indigenous relations is bright.

By working with the Indigenous communities that are willing partners, the province and Noront have set themselves up for success. Individual consultations are bearing results and should be announced soon, quite literally paving the way for road work.

The monetary challenges – as ridiculous as it may sound – are the easiest ones to solve. The provincial government has already set aside $1 billion for road development. They’ve also asked their federal cousins for another $800 million for critical infrastructure, like broadband, to go alongside the roadway.

If the Federal government’s eagerness to spend money applies to projects that create jobs in struggling communities and help Indigenous groups prosper, securing funds should be the easiest part of the equation.

On environmental assessments, the work becomes trickier. With the new Bill C-69 passed by the federal government in place, Ottawa has taken upon itself to do its own environmental assessments for the region. How large of a barrier this added work represents is not yet known, but nonetheless it is a barrier.

The federal and provincial governments have long fought over environmental assessments for projects squarely within one province’s borders. The common middle ground is that both parties require some form of work to be done – causing an even longer approval process.

IAMGOLD’s $1.15 billion Coté Gold Mine project just outside of Gogama, Ontario is permanently on hold after being discovered in 2010. The project had to go through both federal and provincial approvals and ultimately lost out to the company’s investment options overseas. 10 years of permitting for a mine that only has a shelf life of 16 years, as is the case in Gogama, just isn’t feasible.

As Alan Coutts, the CEO of Noront, said on the StrategyCorp Institute podcast recently, “It’s such a rigorous and lengthy process…it’s troublesome because, in our markets, investors and their money are not playing the long game like they used to. They’re saying ‘I don’t need to watch a company go through 10 years of permitting in order to get to a position where they can have a producing mine. I’m just not that patient with my capital.’”

Both levels of government will ultimately have to decide if they are in for a penny or in for a pound when it comes to resource development. The Provincial government seems eager to move the project forward, shown by the scrapping of the regional framework agreement and the steadfast commitment to $1 billion for the road. However, writing a $1 billion cheque is free if you never have to cash it.

The federal government will have to decide if it intends to invest in the project or delay it further. If the environmental assessments aren’t done in a steadfast manner the capital will leave. With it goes an increased quality of life for Indigenous communities in the far North as well as thousands of new jobs in Northern Ontario and billions for the country’s GDP.

The importance of creating well-paying jobs in Northern Ontario cannot be understated. The chromite would be processed in Sault Ste. Marie and the nickel deposits processed in Sudbury. The Greater Sudbury area, which is the centre of the mining industry in Northern Ontario, experienced negative job growth over the decade ranging from 2008-2018. The Ring of Fire’s direct and spin-off employment would go a long way to helping Northern Ontario prosper.

Ultimately, Ontario needs to fight for the Ring of Fire just like Alberta is fighting for pipelines and resource projects. Ontario is more than just Toronto and Ottawa, and their governments need to show that they understand the concerns of the North.

If lengthy new environmental assessments and an increased hesitancy to invest are the only things on the menu, it won’t be long before the Ring of Fire turns into the Ring of Smoke.