Ontario Premier Doug Ford has talking points he’s fond of repeating – over and over again – and one of his favourites is a pledge to build a billion-dollar road to a boggy, remote region of Northern Ontario known as the Ring of Fire.
When asked about the promise by a reporter at a plowing match in September, Mr. Ford repeated almost verbatim an infamous tweet from last year’s provincial election campaign: "If I have to hop on a bulldozer myself, we’re going to start building roads to the Ring of Fire.”
“You’re going to see me on that bulldozer,” Mr. Ford declared, with a confident chuckle.
The declaration by the Ontario premier is just one example of the big talk over the past decade by politicians of all stripes about the Ring of Fire.
RING OF FIRE detail
10
0
KM
Noront Resources sites
Chromite
Nickel/copper
Gold
Select mines, Nov. 2018
Attawapiskat
100
0
Webequie
KM
DeBeers Victor
diamond mine
Existing winter road
Moosonee
CN mainline
Aroland
ONTARIO
Lake
Nipigon
11
Timmins
Thunder
Bay
17
Lake Superior
JOHN SOPINSKI/THE GLOBE AND MAIL
SOURCE: noront resources; geology.com
RING OF FIRE
100
0
Attawapiskat
Existing
winter road
KM
Webequie
DeBeers Victor
diamond mine
James
Bay
Moosonee
ONTARIO
RING OF FIRE detail
10
0
KM
CN mainline
Noront
Resources sites
Aroland
Chromite
Lake
Nipigon
Nickel/copper
11
Gold
Thunder
Bay
17
Lake Superior
Select mines, Nov. 2018
JOHN SOPINSKI/THE GLOBE AND MAIL
SOURCE: noront resources; geology.com
RING OF FIRE
100
0
Attawapiskat
KM
Existing
winter road
Webequie
DeBeers Victor
diamond mine
James
Bay
Moosonee
ONTARIO
RING OF FIRE detail
10
0
CN mainline
KM
Aroland
Noront Resources sites
Chromite
Nickel/copper
Lake
Nipigon
Gold
11
Thunderbird
Eagle’s Nest
17
Thunder
Bay
Select mines, Nov. 2018
Lake Superior
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: noront resources; geology.com
The Ontario government has repeatedly played up the prospects for the region with breathless assertions about the supposedly stratospheric value of minerals in the ground, and an apparent bonanza of jobs and economic benefits that lie in wait for locals.
In a throne speech nine years ago, then-premier Dalton McGuinty’s Liberal government zeroed in on the Ring of Fire as one of the keys to reviving Ontario’s sputtering economy.
In 2013, his successor, Kathleen Wynne, started claiming the mineral deposits were worth upwards of $60-billion.
That same year, Tony Clement, then federal minister responsible for northern Ontario’s economic development, likened the financial impact of the Ring of Fire to Alberta’s oil sands. In an interview with Huffington Post Canada, Mr. Clement claimed the riches could generate as much as $120-billion for the economy.
During the 2018 provincial election campaign, Mr. Ford’s Progressive Conservatives promised to "finally, open up the incredible resources of our North, starting by cutting through the special-interest and bureaucratic delays blocking us from developing the Ring of Fire.”
There’s only one problem with all these grand pronouncements about this crescent-shaped mineral discovery about 550 kilometres northeast of Thunder Bay: It’s mostly aspirational hogwash.
The financial case for heavily indebted Ontario to invest in the Ring of Fire has always been questionable.
In 2014, the Wynne government pledged to spend $1-billion of taxpayers’ money to build an access road connecting the deposits to a provincial highway 300 kilometres to the south. But at least another $1-billion is needed for added industrial infrastructure such as bridges and electrical power. At the moment, nobody is willing to pick up that tab.
More importantly, there is no evidence that minerals in the Ring of Fire – mostly chromite, which is used to make stainless steel, but also nickel, copper, palladium and platinum – are worth anything near $60-billion. In fact, there may not be much of anything worth mining, for that matter, beyond one moderately promising nickel project.
No comprehensive study has ever been done that analyzes the costs of extracting minerals from the Ring of Fire and, ultimately, whether there is an investment case to do so. Despite years of boosterism from politicians and regional business leaders, industry experts say it’s highly unlikely it will ever live up to even a fraction of the hype.
Global demand for new sources of chromite, experts say, ranks between low and non-existent. And the company that holds more than three-quarters of the mining concessions in the Ring of Fire, tiny Noront Resources Ltd., has raised concerns about its ability to continue as a going concern.
CHROMITE WORLD MINE PRODUCTION AND RESERVES
In thousands of tonnes
MINE PRODUCTION
2017
2018
S. AFRICA
TURKEY
WORLD TOTAL
PRODUCTION
KAZAKH.
INDIA
OTHER
0
5,000
10,000
15,000
20,000
RESERVES (SHIPPING GRADE)
In thousands of tonnes
560,000
620
200,000
26,000
230,000
100,000
TURKEY
KAZAK.
WORLD
TOTAL
RESERVES
U.S.
S. AFRICA
INDIA
Noront Resources Ltd
Share price TSX-V
$6
4
2
0
2005
2019
THE GLOBE AND MAIL, SOURCE:BARCHART;
U.S. GEOLOGICAL SURVEY
WORLD MINE PRODUCTION AND RESERVES
In thousands of tonnes
MINE PRODUCTION
2017
2018
S. AFRICA
TURKEY
WORLD TOTAL
PRODUCTION
KAZAKH.
INDIA
OTHER
0
5,000
10,000
15,000
20,000
RESERVES (SHIPPING GRADE)
In thousands of tonnes
560,000
620
200,000
26,000
230,000
100,000
TURKEY
KAZAK.
WORLD TOTAL
RESERVES
U.S.
S. AFRICA
INDIA
Noront Resources Ltd
Share price TSX-V
$6
4
2
0
2005
2019
THE GLOBE AND MAIL, SOURCE:BARCHART;
U.S. GEOLOGICAL SURVEY
CHROMITE WORLD MINE PRODUCTION AND RESERVES
In thousands of tonnes
MINE PRODUCTION
2017
2018
S. AFRICA
TURKEY
WORLD TOTAL
PRODUCTION
KAZAKH.
INDIA
OTHER
COUNTRIES
0
5,000
10,000
15,000
20,000
RESERVES (SHIPPING GRADE)
In thousands of tonnes
560,000
620
200,000
26,000
230,000
100,000
TURKEY
KAZAKHSTAN
WORLD TOTAL
RESERVES
U.S.
S. AFRICA
INDIA
Noront Resources Ltd
Share price TSX-V
$6
4
2
0
2005
2019
THE GLOBE AND MAIL, SOURCE:BARCHART; U.S. GEOLOGICAL SURVEY
Patrick Ryan, a mining consultant with Mining For Facts, who has followed the chromite market for four decades, says the world is awash in the commodity, with no need for any new product from the Ring of Fire, or anywhere else.
“It’s incomprehensible that this was ever a viable project, “ says Mr. Ryan. “No one in their right mind would put a dime into it.”
This past summer, it became clear that neither Premier Ford, nor anyone else, will be jumping on any bulldozers any time soon. In August, the Ontario government announced that a five-year effort to reach a framework agreement with a large group of First Nations on the sharing of economic benefits and the construction of a road to the Ring of Fire had failed. The province will instead try to reach accords on a piecemeal basis with nine individual First Nations, a process that will likely bog down the project for years to come.
Prime Minister Justin Trudeau’s government hasn’t shown much enthusiasm for investing in the Ring of Fire, either.
But at Queen’s Park, Mr. Ford’s government insist that all systems are still go. Even more committed to the cause is teetering Noront, with CEO Alan Coutts vowing in an interview with The Globe and Mail that “100 years of prosperity” lie ahead for Ontarians.
“The key to unlocking everything is a gravel road that is about 300 kilometres long,” he says.
Alan Coutts, CEO of Noront Resources, seen here on Oct. 24, 2019, vows that '100 years of prosperity' lie ahead for Ontarians.Christopher Katsarov
It’s hard to think of a more hostile place in the country to operate a mine than the dense boreal forest and vast swampland around the James Bay Lowlands in Ontario’s Far North. There are no access roads to the Ring of Fire and no power, and the tiny First Nations communities in the vicinity rely on airstrips for access to the outside world.
Due to the extremely remote terrain, the area had been largely unexplored for much of its history. In the early 2000s, geologists looking for diamonds accidentally stumbled upon a kind of rock that typically houses base metals. In 2007, Noront discovered a rich nickel deposit, and the following year found what appeared to be a vast chromite deposit.
The company christened the region the “Ring of Fire” because it vaguely resembled a ring, and Noront employees had an affinity for the hit song of the same name by Johnny Cash. The discoveries prompted a kind of hysteria, as scores of prospectors engulfed the area. In 2009, about 100 junior mining companies had staked more than 8,000 claims. It was the biggest staking frenzy in Canada since the diamond rush of the early 1990s in the Northwest Territories.
Mohan Srivastava, a Toronto-based geostatistician, remembers the hype in the late-2000s as a kind of “breathless excitement about how Ontario was destined to become a world hub for a rare and strategically important commodity."
In 2009, a large U.S. mining company took a big swing. Cleveland-based Cliffs Natural Resources Inc. (now Cleveland Cliffs Inc.) outmanoeuvred Noront and paid $350-million to win a takeover battle for a junior producer with the three most promising chromite finds in the region.
Over the next few years, Cliffs invested a further $200-million on the development, and vowed to spend about $3-billion to build a giant chromite mine and a smelter to process the ore. The company planned to use the chromite in its core stainless steel business. But it was soon under pressure from all sides: escalating costs, falling commodity prices, a failure to score a cheap electricity deal and the inability to get environmental permits amid opposition from First Nations.
Cliffs had also hoped both the Ontario government and the federal government would participate in a public-private partnership to help fund the more than $2-billion needed to build the critical road link and infrastructure, but the funds never materialized.
Five years in, Cliffs threw up its hands, and sold its Ring of Fire assets at a 95-per-cent discount to Noront in 2014. Cliff’s CEO, Lourenco Goncalves, told The Globe and Mail he had no hope the Ring of Fire would be developed in the next 50 years, calling it “beyond the point of no return.”
Around the time Cliffs was giving up, the Ring of Fire got an unexpected boost from an unlikely source: James Franklin, a respected geologist. The former chief scientist for the Geological Survey of Canada (GSC) mused that the Ring of Fire could contain $60-billion worth of minerals. He mentioned the figure in a talk at the 2013 Prospectors & Developers Association of Canada (PDAC) convention, a popular international mining conference held every year in Toronto.
Geologist Jim Franklin, seen here on Oct. 25, 2019, mused that the Ring of Fire could contain $60-billion worth of minerals.Justin Tang
Mr. Franklin said he came up with this astronomical number by looking at all the public companies that had published resource estimates of their Ring of Fire discoveries. He simply added up the total projections for minerals in the ground from these reports, and calculated the value if the metals were sold at market prices.
But Mr. Franklin also readily admits the figure contained no analysis of costs or potential return, and no insight on whether any project should be developed.
"There might well be $60-billion worth of metal sitting in the ground, but it might cost you $80-billion to get it out,” he said.
Even the most promotional of mining companies wouldn’t dare print such a figure in a regulatory document, because it would be misleading to investors.
“If any company did the same kind of thing, they would have gotten slapped down by regulators," said Mr. Srivastava.
In the mining industry, geologists categorize deposits based on how sure they are that the metals found underground can be mined economically. “Proven and probable” is the highest bar, meaning metal that can be mined for a profit.
The vast majority of mines around the world are built off of a proven and probable resource. One notch below proven and probable is “measured and indicated,” a far less certain category in which economics have not been proved. “Inferred” is the lowest tier, essentially an educated guess.
No one “sober” would build a mine off an inferred resource, said Mr. Srivastava.
Mr. Franklin says about 70 per cent of his Ring of Fire estimate came from the inferred category, with the rest coming from measured and indicated. Now, he has second thoughts about including any of the inferred in his calculation.
“I [did something] that you’re not supposed to,” he said.
Despite its shaky foundation, that $60-billion figure had a big impact on the public imagination. The number has been cited in scores of news articles and other media (including The Globe and Mail), rarely explaining how it was calculated or attributing its source.
The Ontario Chamber of Commerce in 2014 released studies predicting Ring of Fire would create 5,000 new jobs and a $9-billion boost to GDP, and said over its first 32 years of its development, it would generate “more than $25-billion in economic activity across numerous sectors in Ontario.”
Mr. Franklin says he has tried to stop the rampant use of the $60-billion figure, and raised concerns with a senior official in Ontario’s Ministry of Northern Development, Mines and Forestry.
“I contacted [them and said], ‘You guys should do your own evaluation of this. You should not be using some number that I came up with at PDAC because we all know the unreliability of my number,' ” Mr. Franklin said. “It’s just not proper.”
The $60-billion number does appear to have been dropped from most Ontario government statements in the past year or two, but officials haven’t pulled back their estimates or added context.
Mr. Franklin says if he could do his PDAC talk over again, he would have made it much clearer what the potential downsides and risks are of trying to develop the Ring of Fire. As someone who has worked as a consultant for Noront, and been to its mining camp, he has no illusions about the harsh realities of operating there.
“It’s an area that’s just terrible to work in because it’s the world’s largest swamp,” he said.
“When you’re [working on the ground] you’re just gradually sinking into the swamp. It’s hard to know where the lake stops and the land begins,” Mr. Franklin said. “It’s about the worst place you can think of to try to work.”
Noront’s CEO, Mr. Coutts, isn’t interested in talking about any potential downsides. He’s adamant the company will eventually have three mines in production, build a smelter in Sault Ste. Marie and employ hundreds of people -- all told, an investment of several billion dollars.
The reality is Noront doesn’t have the money to do any of this. In fact, the company is in dire financial shape. It has US$47.8-million in debt, but is holding only US$4.1-million in cash. A US$32.8-million loan from Franco Nevada Corp. is coming due in April of next year. While Noront has held talks with Franco about an extension, in August it warned investors there is no assurance it will be able to repay or refinance the loan.
“They need huge amounts of money, and they can’t attract any money," said Mr. Ryan.
“They’re walking around talking about this stuff as if it’s real. I mean, it’s a penny stock. Why does anyone take them seriously?"
Here’s another harsh reality Noront must face: Even if an access road into the Ring of Fire appeared tomorrow, it isn’t in a position to move forward on any of its projects, because it hasn’t proved they are viable. In its marketing materials, Noront flaunts a feasibility study conducted in 2012 on a nickel-copper-palladium project called Eagle’s Nest, which Mr. Coutts says will be its first mine.
Yet in the same breath, Mr. Coutts acknowledges that feasibility study is no longer valid. A lot has changed since 2012, including copper and nickel prices. The company assumed materially higher prices for both.
Mr. Coutts is optimistic that Eagle’s Nest could still be profitable, especially in light of significantly higher palladium prices, used in the manufacture of catalytic converters for autos. But the company has to conduct a new study to prove the investment case.
As for the much-hyped chromite deposits, while Cliffs once planned to build a massive chromite mine, called Black Thor, Noront has drastically scaled back its ambitions. Instead, it hopes to eventually develop a much smaller one, called Blackbird, and then possibly Black Thor. But the timeline for all of this is uncertain, and Noront has no proof that any of it is feasible.
Lost in all the hullabaloo is the harsh reality that there doesn’t appear to be a broader economic case for building a chromite mine in the region, or any other place in the world, for that matter.
According to a May report by the U.S. Geological Survey, there are already enough proven chromite reserves in the world to last for centuries. South Africa and Kazakhstan dominate the production side of the market, and they provide China, which controls much of the world’s stainless steel market, a steady supply of cheap raw ore.
Mr. Coutts says the company’s plan is to sell ferrochrome -- smelted chromite ore -- to the much smaller U.S. market. But even he admits that breaking into that market will be tough for an untested and unknown producer.
“You’ve got to establish yourself in the chrome world. You got to understand it. You got to prove yourself as a consistent high-quality producer,” he said.
"[The Americans] are getting product right now from other suppliers that they’ve taken for 20 or 30 years. They’re comfortable with that. So they’re going to all of a sudden turn around, and the South African product that they’ve been getting for the last 20 years from a consistent supplier, and go, ‘Oh yeah, I’ll buy it from Noront, who I’ve never heard of, up in the Ring of Fire.’”
Another point of contention is whether building the much-vaunted road into the Ring of Fire would even suffice. Mr. Franklin says that trucks carrying heavy chromite would quickly wreck a gravel road. Only a railroad could support the weight, but a railroad would likely cost orders of magnitude more.
“The all-season road will work just fine for nickel and base metals but it will not work for chromite,” said Mr. Franklin. “You just wouldn’t do it by truck.”
Mr. Coutts dismisses this as nonsense, and says that the road can “easily” handle the transportation of the chromite.
Doug Ford’s point man on the Ring of Fire is Greg Rickford. The Kenora-Rainy River MPP is Ontario’s Minister of Energy, Northern Development and Mines. He’s also Minister of Indigenous Affairs. By all accounts, he should know the project well. He succeeded Mr. Clement as the minister who oversaw economic development in northern Ontario in Stephen Harper’s government, and then served as Minister of Natural Resources.
While out of office from 2015 to 2018, Mr. Rickford served on Noront’s board. (He says he has since sold his shares in the company.) He has also worked as a nurse and lawyer in the remote First Nations communities near the Ring of Fire, something he says gives him a window on the region’s need for hope and jobs.
Mr. Rickford acknowledges the wild claims over the past decade – including the promise of tens of billions of dollars in riches – have raised expectations to dizzying heights.
“The whole problem with this thing, between the regional framework and the macroeconomic labels and the amount of money that have been thrown on this … have been too big for anybody to believe,” Mr. Rickford said. Still, he stopped short of admitting that politicians themselves have fuelled much of that hype.
While Mr. Rickford insists the Ring of Fire’s resource potential is “world class and compelling,” he is unable to provide an updated government estimate for the total bounty under the ground. Despite the lack of a firm investment case, he remains determined to push forward on the building of a road.
But listen to Mr. Rickford long enough and it’s clear he’s attempting a slight pivot in the government’s stance. He’s eager to shift the narrative away from the big and the bold, to smaller and more realistic goals, such as establishing better relationships with individual First Nations, and helping Noront move forward in its quest to develop that first nickel mine.
He also argues that regardless of any mines that may be built, access roads in the region would help connect a handful of tiny, impoverished First Nations communities to the rest of the province, and allow more goods to be trucked in, rather than flown in. It would also mean better access to medical treatment, and perhaps eventually to jobs if any of Noront’s projects ever get off the ground.
Of all of the various stakeholders in the Ring of Fire, the First Nations communities are arguably the least committed to moving the project forward. Some First Nations leaders have protested the Ford government’s new approach to negotiate on a one-on-one basis, preferring the previous all-for-one and one-for-all approach. Even the chief of the community considered the most in favour of mining development seems lukewarm.
Marten Falls First Nation has signed a co-operating agreement with Noront and received shares in the company. It is also spearheading the environmental assessment process for one piece of the proposed road. Chief Bruce Achneepineskum says his residents have wanted new roads for decades – regardless of whether any mining takes place. With a population of only about 200 people, Marten Falls is 250 kilometres from the nearest all-season road and a 40-minute plane ride from the nearest town of Nakina, Ont.
But Chief Achneepineskum also dismissed the notion that the Ontario government could do business with some First Nations while leaving others out of a future deal.
“That’s not what our First Nation is about. No, we’re not about leaving anybody behind, especially when large-scaled development happens in our region and also affects them,” Chief Achneepineskum said. “They have to be involved. They have to be at the table also.”
Among the Ring of Fire’s biggest boosters over the past five years has been the Ontario Chamber of Commerce, which has issued reports proclaiming the project a “multigenerational resource” and a “national priority.”
Rocco Rossi, the organization’s president and CEO, remains an optimist, but he now acknowledges its short-term prospects are shakier.
“Those [minerals] have to be mined somewhere. And would you rather have them mined in the Congo, or Northern Ontario with strict environmental protections, human rights protections and levels of pay and worker conditions that we can all be proud of?” he said. “Long-term, it is an incredible resource.”
But such pronouncements by Mr. Rossi, and many politicians through the years, ignore a central tenet of the mining industry – and every other industry. For any project to go ahead, it must be economic. The “build it and they will come” mentality does not pass muster, especially after about a decade of terrible returns in the mining industry that saw many large producers pursue ruinous projects that destroyed tens of billions in shareholder money.
Remoteness and lack of access to infrastructure can be overcome if the riches in the earth justify the cost of extracting them. Over the past decade, Toronto-based Agnico Eagle Mines Ltd., for example, has built two gold mines in the Arctic, one of the most unforgiving places to operate.
Agnico had no need to ask for a government handout to build the more than 200 kilometres of access roads into the Nunavut mines. Through years of study, the company proved the mines could be profitable ahead of time – even after the building of all of the infrastructure. Unless the Ring of Fire’s supporters can prove likewise, the project is likely to sit fallow, and reside as no more than a promoter’s pipe dream.
On Friday, Noront’s thinly traded shares traded at about 21 cents apiece on the TSX Venture Exchange. The company’s market valuation is a mere $86-million, down 96 per cent from its peak in early 2008.
At one point, Cliffs had a few hundred people buzzing around its mining camp in the Ring of Fire. Depending on the time of year, Noront only has between 16 and 41 people on the ground. More than a decade after the initial discoveries, the site is now little more than a mining ghost town.
Editor’s note: An earlier version of this article attributed the Eagles Nest feasibility study to Cleveland Cliffs Inc. In fact, the study was conducted by Noront Resources.
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Niall McGee
Jeff Gray