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Province takes steps to develop the Ring of Fire

May 28, 2014
by Norm Tollinsky
In: News

Michael Gravelle, Minister of Northern Development and Mines, commits $1 billion for Ring of Fire infrastructure.

Days before facing defeat in the legislature over its May 1 budget, Ontario’s minority Liberal government committed to spending $1 billion to develop “all-season industrial and community infrastructure in the Ring of Fire,” a newly discovered, mineralrich region in the province’s Far North. The $1 billion announcement was made by Minister of Northern Development and Mines Michael Gravelle in Thunder Bay April 28th.

“Now we need the federal government to match this commitment so that we can move forward on realizing the Ring of Fire’s potential,” said Gravelle.

The funding commitment could go a long way toward removing one of the major obstacles to the development of the highly prospective region, but is conditional on both matching funds from the federal government, and the outcome of the provincial election expected to take place in June.

Gravelle did not specify which transportation mode—road or rail—the government favours. The Ring of Fire, located 540 kilometres northeast of Thunder Bay, is the site of a currently suspended chromite project proposed by Cliffs Natural Resources, and the Eagle’s Nest nickel-copper-PGE mine proposed by Noront Resources.

Framework agreement

The funding announcement followed the signing of a regional framework agreement with nine First Nations in March committing the Province to offering “enhanced participation in environmental assessment processes, resource revenue sharing, economic supports and regional and community infrastructure,” as part of the development of the Ring of Fire.

The so-called “landmark agreement” is short on specifics, but sets the stage for negotiations.

“With this agreement we have taken an important step forward together,” said Ontario Premier Kathleen Wynne at a signing ceremony in Thunder Bay April 24. “We have adopted a different kind of negotiating process that is based on respect. We now have a framework to guide our discussions as we work toward achieving our common goals, and ensuring that everyone benefits from development in the Ring of Fire.”

The framework agreement is the latest in a series of steps taken by the Province to advance development of the Ring of Fire.

In November 2013, the Province announced it would establish “a development corporation to bring together private and public partners, including key mining companies, First Nations and the provincial and federal governments” to develop the infrastructure necessary for accessing the remote, mineral-rich region. Then in February, it hired Deloitte LLP to “set clear paths and timelines for decision-making, create guiding principles for the development corporation and seek consensus on the corporation’s next steps.”

The rail link option also got a boost in April when the Province announced support for the development and renewal of the Ontario Northland Railway (ONR), reversing plans to sell it. KWG Resources president Frank Smeenk hailed the move as a positive development, noting that the discovery of the Ring of Fire’s chromite deposits would ensure substantial bulk freight traffic for the ONR for many generations.

Ontario Northland

“The ONR has lost one freight customer after another in recent years, to the point where its survival became very questionable,” said Smeenk. Building and operating a railroad to the Ring of Fire would be consistent with its original economic development mandate when it was created as a Crown corporation in 1902, he noted.

KWG owns 30 per cent of the Big Daddy chromite deposit and has the right to earn 80 per cent of the Black Horse deposit. It’s subsidiary, Canada Chrome Corporation, has staked claims along a narrow 300-kilometre sand ridge from the CN rail line through the swampy terrain to the Ring of Fire.

The route is acknowledged to be the only high ground in the region capable of accommodating a transportation corridor.

In the first decade of its development, the Ring of Fire could generate up to $9.4 billion in GDP, sustain 5,500 jobs annually and generate $2 billion in tax revenues, according to a recent study by the Ontario Chamber of Commerce.

“Ontario, now more than ever, must identify and champion opportunities where it can be a global leader,” said chamber president Allan O’Dette. “The Ring of Fire is such an opportunity. We believe that this globally significant deposit of minerals in Ontario’s Far North is one of the province’s greatest economic development opportunities in a generation.”

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