Northern Ontario Ring of Fire – A Resource Ruler’s Primer

What and where is the Ring of Fire?

The Ring of Fire is a gigantic flat slab of limestone bedrock covered by a thin layer of impenetrable muskeg situated in the central lowlands of northern Ontario. Until mineralization was discovered a decade ago, this region was largely the exclusive preserve of native hunters and trappers living in nine scattered fly-in communities who remained largely dependent on a traditional subsistence lifestyle. Today these native communities still comprise the entire population – with Marten Falls and Webequie closest to the mining action.

Discoveries came in rapid succession: 2002 KWG’s McFaulds Lake (copper / zinc);

2007 Noront’s Eagles Nest (nickel / copper); 2008 Freewest’s Black Thor (chromite) set the region ablaze as a prospector’s bonanza. Chromite being the common denominator to all three discoveries; then the commodities market crashed in 2008. The exploration effort rapidly dwindled and it can be argued (today) that the Ring of Fire has been drilled up and has failed to live-up to expectations; making these three discoveries the only show in town. By themselves, as stand-alone projects, they are notionally on the other side of the moon; with no infrastructure, no roads, no power, no synergies. Tellingly, litigation has now become the defining feature driving a host of corporate moves and press releases all designed to shore-up investor confidence.

 

What is Chromite?

Chromite (Iron Chromium Oxide)

Chromite (Iron Chromium Oxide)

Nobody was drilling for or expecting to find chromite – because there was a diamond rush on. Chromite consists of chrome iron oxide and is a key ingredient in stainless steel production. Only a few companies even mined chromite in the world, and one of them gained entry; Cliffs Natural Resources Inc. acquired the Freewest discovery and overnight found itself the center of attention as the Province of Ontario and the Industry touted the Ring of Fire as the next Sudbury basin. It was mainly hype and all it accomplished was to inflate local expectations.

 

Who’s doing what?

In 2009 Cliffs also became a major shareholder in KWG. In turn KWG controls mining leases along the only north/south access route that follows an elevated bench (esker) up into the Ring of Fire, upon which a KWG subsidiary proposes to build a rail line. However, Cliffs proposes to build an all season road along the same right of way. The two proposals are mired in litigation over who controls that critical corridor. For its part, Noront prefers an east / west corridor alignment. The Province of Ontario has since said that it is not going to spend on infrastructure, leaving the three projects to find synergies amongst themselves. Yet no such synergies have been found, and if anything, the only dialogue that is occurring is taking place in court where any goodwill has long since dissipated.

 

Explain the native rights assertions?

A century ago, in order to get the natives to agree to a treaty, Canada and Ontario first agreed between themselves as to how they would go about doing this. In 1905 the two governments agreed to a number of conditions that in effect put Ontario in the driver’s seat when it came to what treaty conditions would be proffered. Those conditions ensured that the location of native reserves would not impede hydro development and that the native communities would not impede surveying and prospecting. Like the days of yore, Hudson Bay Company Factors and Jesuits aided and assisted the treaty agents. They were in a rush and their field notes saw them encountering railway construction and surveying parties at every turn. They reported back to headquarters with assurances that the natives: “will not in any way interfere with railway development or the future commercial interests of the country”  (Duncan Campbell Scott, treaty commissioner). That prediction was accurate as far as the next 100 years unfolded.

Treaty # 9 was signed in 1905 and remains in living memory to present day Ring of Fire inhabitants; indeed some of the names on the treaty are namesakes of today’s native leaders (eg. Moonias).  Needless to say, native leaders have since figured out just how the treaty terms were proffered to their forebearers and they clearly intend to hold any and all parties accountable for freezing them out of “the future commercial interests of the country”.  Matawa First Nations Council was launched in February 2008 for this very purpose (author in attendance).

 

Litigation Update

Ontario Superior Court of Justice

Arms of the Superior Court of Justice

The rival access proposals along the north/south route (rail vs road) are still enmeshed in intense legal wrangling; recently summed up by the mining tribunal as follows: “To say that the competition between these two entities is keen is an understatement.”

For their part, Matawa First Nations are suing both Canada and Cliffs to force an upgrade to the environmental review process. They want to see a Joint Panel Review (like Enbridge’s Northern Gateway); but so far they’ve had to accept a comprehensive review process that consists mainly of written submissions. They will not be dissuaded from this legal challenge and it is highly unlikely that they will leave court entirely empty-handed. But even that outcome is likely over a year away given preliminary motions.

This is one of the key parallels to the Voisey’s Bay experience: another project that faced zero infrastructure and was met with complex environmental and native litigation (some of it quite similar in scope to that in the Ring of Fire). Like the Labrador experience, it does not bode well for project timelines when litigation rules the roost. Already litigation has slowed everything down – with delays now measured in years – as per Cliff’s recent two postponements.

Litigation also tends to foster large monetary valuations as to what’s in the ground. Proponents will come to rue the day; since those valuations also whet revenue sharing appetites and inflate impact and benefit agreement expectations. Because it’s these two issues that will ultimately become the main event once the legal skirmishing is resolved. Native strategists of course have long figured this out. The Ring of Fire will only gain synergies once natives come on board; but as of now those synergies are still mired in the muskeg and attitudes of a century ago. The Province of Ontario meanwhile is leaderless with the legislature prorogued.