Ring of Fire delay highlights need for mining infrastructure

Cliffs Natural Resources' decision to suspend operations in the Ring of Fire has sent waves through the mining sector. Some players say it sends a bad message about Ontario, but others believe it could provide the impetus to develop infrastructure.

The head of the Prospectors and Developers Association of Canada said he hopes Cliffs' decision will spur action on developing infrastructure.

“It's up to everyone to come together, and that includes the government, the industry, and First Nations to look at what are the challenges ahead,” Glenn Nolan said.

“But what are the opportunities for participating in this opportunity, and do we want to see delays?”

Cliffs’ announcement was not what Barb Courte-Elinesky wanted to hear.

The owner of Northstar Drilling in Thunder Bay and director with the group Women in Mining said the largest player in the Ring of Fire freezing its project puts Ontario in a poor light.

“We need to show the world that we are open for business,” she said.

“When something like this happens, it's not good for our economy, but also it sends out a message.”

Nolan, who is also a vice president with Noront Resources, said Cliffs’ announcement wasn't a complete surprise, based on statements Cliffs had made in the past.

Noront and KWG Resources have both re-affirmed that it's business-as-usual for their operations in the Ring of Fire.

"It's a challenging time for the mining industry,” Nolan said.

"It's a wake-up call for the government to look at what they can do to help the industry in supporting the development of infrastructure. I think with the development of infrastructure into the far north, [it] also benefits the local First Nation communities."

‘A more thorough analysis’

The head of the Ontario Prospectors Association said Cliffs' decision is just the latest move in what he calls a "poker game" the company is playing with the province.

“I think Cliffs just played a card and now it's up to the government to … respond to it,” Garry Clark said. “Most of the things have … been lining up, though not as quickly as … Cliffs wanted.”

Clark noted the suspension could do some damage to Ontario's image, but said the province remains one of the better jurisdictions for mining in more accessible areas.

Stainless steel markets 'are flat'

The editor-in-chief of The Northern Miner said Cliffs would have only added five per cent to the world's chromite supply and the company was off in its predictions of ferrochrome prices.

“Stainless steel markets are flat and you have … slightly increased production from China,” John Cumming said.

“And you have the other main producers [such as] ... South Africa, India, Brazil ... [and] Kazakstan. So the market is well supplied with chromite. So there's this issue [of] ... who needs the supply and then … the actual price.”

Cumming said it's still worthwhile to do some more exploration in the area, but people shouldn't expect a mine to be built anytime soon.

A 'gift of more time'

The odds of Cliffs coming back to the Ring of Fire "are probably less than great," said mining industry writer Stan Sudol  — but it is also dependent on what happens in global metal markets.

The interruption in development presents an opportunity, he noted.

"We've been given a gift of more time,” Sudol said. “So let's take a look at this project in a more thorough analysis on how to benefit the northwestern region. And so that's a win."

Sudol said the delay will give the province more time to build infrastructure and agreements with First Nations.

However Sudol pointed out the critical factor is the lack of infrastructure in the area. Until that issue is resolved, he said it will keep a lot of major mining companies away.

But once the infrastructure is in place, and revenue sharing agreements have been made with First Nations, then "I think this project could be brought back to life fairly rapidly,” Sudol said.

The chromite deposit is so rich, "there will be a lot of major mining companies in the world who will look at this as a great opportunity to develop."

“Even though, right now, a lot of people are concerned or saddened that Cliffs has pulled out … the minerals are [still] in the ground, and they're not going to rot."