Ring of Fire funding held up by Ottawa, Ontario battle

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Plans to spend billions of federal and provincial dollars on infrastructure in Ontario are being held up by a behind-the-scenes battle over the Ring of Fire, as the province wants Ottawa to match $1-billion in new money to develop the ambitious mining project.

Nearly two years have passed since Ottawa announced a 10-year, $14-billion Building Canada Fund for infrastructure, but the Conservative government is expressing its strong frustration that Ontario has yet to submit a list of projects. Ottawa has said Ontario qualifies for $2.7-billion from the fund, but the province argues that using that money for the Ring of Fire would leave very little for other provincial needs such as transit and new roads.

As a result, the two governments appear to be at loggerheads, though ministers and officials are attempting to break the impasse. The waiting, combined with falling chromite prices, has proved to be too much for Cleveland's Cliffs Natural Resources – the region's leading mining firm is now looking to sell its Ring of Fire assets.

Federal Natural Resources Minister Greg Rickford, who represents the Northwestern Ontario riding of Kenora, insisted Tuesday that there is momentum around the Ring of Fire and that he expects the two governments to make progress shortly.

"Our expectations and our very early indication is that that discussion is going to take place very soon," Mr. Rickford said Tuesday. "It's going to include the private sector – companies actually involved in this who are very positive about it – and First Nations communities as well."

Mr. Rickford made the comments Tuesday after delivering a speech to the Canadian Mining Association in which he expressed Ottawa's hope that the province will soon provide a list of infrastructure projects that includes the Ring of Fire.

The Ring of Fire is located about 500 kilometres northeast of Thunder Bay in the James Bay Lowlands. It has an estimated value of about $60-billion, but cannot be reached by road or rail. It has the first commercial quantities of chromite in North America. Chromite can be turned into ferrochrome, which is a component of stainless steel. Other minerals have also been discovered in the region, including copper, nickel, gold and zinc. Industry has said development is viable provided governments help pay for road or rail access and power lines.

In an interview, Ontario Infrastructure Minister Brad Duguid said a list of projects will come from the province, but that it is "unlikely" to include the Ring of Fire.

"They're trying to play fast and loose," Mr. Duguid said. "With the pittance they provide right now in terms of their share of infrastructure, [the Building Canada Fund is] simply not enough. So we'd be looking to the federal government to simply match our billion-dollar contribution to infrastructure to the Ring of Fire outside of this program."

The Ontario Minister said the province has repeatedly asked several technical questions about the application process that have yet to be answered by Ottawa, causing delays. Ontario's hands are also tied by the fact that it is taking the lead in trying to secure support from area First Nations for a long-term plan.

Submitting specific Ring of Fire projects to Ottawa without their final approval would likely derail efforts to consult First Nations and reach an agreement on how they would benefit from development in terms of jobs and infrastructure.

Attention is now focused on smaller firms. Noront Resources is proposing a mining operation that would be serviced by a new road running from a community that currently services the region's aboriginal communities that can only receive supplies by air or winter road.

Noront CEO Alan Coutts said the project could be a lower-cost, first-step option.

"Let's get one project up and running," he said. "Let's let the First Nations see that these benefits are going to actually accrue to them, and then once we've all got a good taste in our mouth about mining in the Ring of Fire, let's take on one of these more challenging, big-scale projects together."