Recently, Lourenco Gonclaves, the president, CEO and chairman of Cliffs Natural Resources, stated he didn’t think the chromite in Northern Ontario’s recently discovered Ring of Fire would be developed for another 50 years.
That was a strange comment for a company’s most senior executive who is supposed to be trying to sell off all of its Canadian assets, including its wholly owned Black Thor chromite project and its 70 per cent share of the nearby Big Daddy property.
Given the competing development visions, the remoteness of the site, the lack of any infrastructure, Ontario’s high electricity costs, the current economic climate, plunging commodity prices and the challenge of bringing multiple First Nation communities onside, who can blame him?
Cliffs has a few choices – none of them very appealing. It can continue to spend money on the claims to keep them in good standing for the next 50 years in the hope that at some point, the province of Ontario and the First Nations will create an environment conducive to development, or it can sell its Ring of Fire assets for whatever it can get for them and move on.
We know there’s at least one very interested buyer, KWG Resources, Cliffs’ 30 per cent partner on the Big Daddy property. As a junior miner with a share price of 4.5 cents, KWG isn’t exactly flush with cash as Gonclaves himself observed, but given KWG’s interest in the Black Horse chromite deposit and everything else, the value of Cliffs’ assets doesn’t amount to much anyway.
Consolidating the chromite deposits may be a step in the right direction, but there is still no guaranty that the Ring of Fire will be developed in the next 50 years. For that to happen, it will take leadership above all else to untangle all the knots, bring everyone together, achieve buy-in from the First Nations and decide on an infrastructure development plan that provides for the prosperity of future generations and optimizes the potential of Ontario’s mineral endowment.
The province of Ontario has set up a development corporation presumably for this purpose and set aside $1 billion for infrastructure development.
We also have distinguished lead negotiators on both sides – former Supreme Court of Canada Justice Frank Iacobucci for the province, and former Ontario premier Bob Rae representing the Matawa First Nations. All of this gives the appearance of progress, but not much else.
The stark possibility of nothing happening for 50 years or longer should be a wake-up call for everyone.
Another 50 years of isolation, unemployment and despair for the affected First Nations would be a tragedy. In the absence of compromise, moderation and good will, Lourenco Gonclaves’ prediction will surely come to pass.
