TORONTO (Reuters) - Developing the Ring of Fire chromite deposit in northern Ontario could bring decades of economic benefits for the region and the rest of Canada, the federal government’s point man on the challenging and ambitious venture said on Monday.
“We understand the importance of developing this series of projects. We see how important it is not only to the region, but its significance ultimately to the province and the country,” Tony Clement, the minister responsible for leading the push to develop the region, told Reuters.
“We are talking about a 100 years of mining activity that will spin-off jobs and economic activity for generations,” he said in an interview in the government’s Toronto offices with views over Lake Ontario.
The Ring of Fire deposit, in the far north of Ontario some 1,000 miles northwest of Toronto, contains rich mineral resources that could transform the area much as the oil sands have transformed Alberta. But developing the deposit is fraught with challenges, given concerns with access, infrastructure, land rights and environmental issues.
The region will also need huge investments in power and transportation infrastructure to develop the deposit, and Clement insisted that business, rather than the cash-strapped federal government would have to take the lead.
The Ring of Fire is part of a vast resource-rich region of the James Bay Lowlands spanning 5,000 sq. kms (1,900 sq. miles) with significant deposits of nickel, copper and chromite - an ingredient used in stainless steel.
But turning the region into Canada’s newest mining district will be no easy task, given the lack of roads, rail lines or reliable sources of power in the region.
Some 30 companies are exploring the region, which experts say could house billions of dollars worth of minerals. They include Cliffs Natural Resources Inc (CLF.N), the largest North American producer of iron ore pellets; as well as Canadian-based juniors such as KWG Resources Inc KWG.V, Noront Resources Ltd (NOT.V), and Probe Mines Ltd (PRB.V).
Despite the onerous challenges, Clement said the sheer size of the Ring of Fire meant development would have a ripple effect that will be felt far beyond the region.
Clement, who heads the federal cabinet’s Treasury Board, however, said it is too early to say what financial support, if any, Canada might put behind developing the infrastructure needed for the projects to take flight.
He said the government is also not too concerned by the fact that many miners are not racing to develop projects in the region, due to spiraling capital costs, coupled with cooling metal prices and a dearth of financing.
“The companies are making business decisions and I respect those. If it’s going to be 2016, rather than 2014 that’s because of the business environment and I respect that,” said Clement.
“The mining community knows full well that there are cycles in the industry, sometimes commodity prices go up, sometimes they are sideways. That of course is of immediate concern,” he added. “But when you’re talking about a 100-year project, yes there are going to be zigs and zags and bumps along the way, but ultimately the project will stand or fall based on the economic activity and potential for wealth creation that it represents.”
The government, which recently clamped down on foreign state-owned enterprises taking control of additional companies in the Albertan oilsands, is not in any way opposed to foreign investment in the Ring of Fire, he said.
“Canada’s capital markets are going to be part of the solution, but it’s not the entire solution,” said Clement. “What this is about is Canadian jobs and Canadian business activity.”
Clement says his main role is to help coordinate and streamline the process for developing the region, given there are some 15-odd government agencies involved in the process, and he said he was talking with ministers from Ontario, as well as with business and aboriginal leaders to facilitate matters.
“It dawned on us that there has to be a whole government approach and a political lead, who can herd the cats, and get us through the process for some development to occur,” he said, adding that companies working in the area were pleased with the government’s move to make him the point man on the Ring of Fire.
“They see this as a good signal. A sign to the international financial and mining community that Canada is serious about this project and that the Canadian government wants it to succeed and move forward.”
Reporting by Euan Rocha and Janet Guttsman; Editing by Leslie Gevirtz