The Ontario government appealed to Ottawa this summer to split a $1.6-billion construction bill for roads into the Ring of Fire region, despite mounting evidence the minerals project in the province’s North isn’t economically viable.
Documents reviewed by The Globe and Mail show that Greg Rickford, Ontario’s Minister of Energy, Northern Development and Mines, sent an e-mail in July to a number of federal ministers asking for Ottawa to kick in as much as $779-million to roughly match Ontario’s contribution.
As part of his business case for investing in the Ring of Fire, Mr. Rickford referenced a number of often-cited huge financial projections about the project that have no supporting evidence.
Last month, a Globe investigation uncovered serious cracks in the investment case for any branch of the government to invest in the Ring of Fire, an area that contains an undeveloped nickel and chromite discovery in a giant swamp in Northern Ontario about 550 kilometres northeast of Thunder Bay.
“The combined gross value of known nickel and chromite deposits has been estimated at over $60-billion,” wrote Mr. Rickford in the e-mail that went to federal ministers responsible for infrastructure, environment and Indigenous services.
James Franklin, a well-known geologist who came up with the $60-billion estimate in 2013 in reference to the value of minerals in the ground at the site, has backed away from the figure. He told The Globe it was no more than an educated guess, didn’t account for mineral extraction costs and should not be used by Ontario to pitch the project.
In a September interview, Mr. Rickford said some of the estimates around the Ring of Fire’s potential “have been too big for anybody to believe.” But his recent correspondence to Ottawa also contains statements that appear to hype the project.
The Ring of Fire, he wrote, has the potential to be “one of the most significant mineral developments in Ontario in over a century,” represents “an unparalleled opportunity” for Canada’s mining sector, and is a project that could support mining in the region “for upward of 200 years.”
When asked both about the $60-billion valuation and the pronouncements about the Ring’s prospects, Sydney Stonier, a spokesperson for Mr. Rickford, wrote in an e-mail that “mining opportunities in the Ring of Fire region represent unprecedented opportunities of national significance.”
Discovered in 2007 and 2008, the Ring of Fire contains mostly early stage deposits of chromite – a mineral used in the production of stainless steel. The area also contains small amounts of nickel, platinum and palladium. While it was once the epicentre of a prospecting rush, the Ring’s fortunes have faded in the past five years.
The investment case has become increasingly shaky in the face of multibillion-dollar cost hurdles, a worldwide supply glut in the chromite market, and environmental concerns from First Nations in Ontario.
The engineering challenge alone to build access roads and bridges connecting the swampy, boggy region of Ontario to the provincial highway network, some 300 kilometres south, is considered immense.
In his e-mail to federal ministers, Mr. Rickford said the latest cost projections on roads are based on a “preliminary estimate,” prepared by engineering consultants Hatch Ltd. and Morrison Hershfield. Their work builds on a previous early stage study done by Cleveland-Cliffs Inc., formerly Cliffs Natural Resources, a senior mining company that gave up on the Ring about five years ago.
While Ontario has been a long-term champion of the Ring of Fire, the federal government has so far refused to kick in major funds. MORE