Like moths to a flame, Ontario's political leaders have been circling the potential mining developments known as the Ring of Fire during the 2014 election campaign. Advancing development in the area received ink in the Liberal, NDP, and PC platforms and was a focal point of the northern leaders debate.
The Liberal platform continues their budget promise of $1-billion for infrastructure but removes the condition of federal support. Under the Liberals' watch a "Framework Agreement" has been signed between Ontario and the Matawa First Nations beginning a process for dialogue on environmental monitoring, infrastructure, economic development and revenue sharing.
The NDP platform also commits to investing in the region. Though no amount was specified in the platform, at yesterday’s leaders debate Andrea Horwath committed to $1-billion and "more if necessary." The NDP platform also references working with First Nations regarding training and revenue sharing.
The PC platform makes no commitment to investing but promises to eliminate the Far North Act, which they see as an impediment to the area being developed. There are no other specific commitments from the PCs and no reference to working with First Nations.
In our view, the political emphasis on the project is premature and out of sync with current economic realities. While the "get-it-done" approach may have appeal to voters who have bought into the hype, the current market conditions for chromite, nickel, and copper are not what they were in 2011, and companies around the world are backing off from ambitious new builds such as the Ring of Fire.
Given it's unlikely that the billions more needed to develop the mining infrastructure in the Ring of Fire will be imminently available, Ontario, under whatever political party gets elected on the 12th, should take a moment and focus on a planning process to address some fundamental gaps in the current election rhetoric.
Here are some questions such a planning process should address before Ontario signs away $1 billion for Ring of Fire infrastructure….
What are the likely benefits of a $1-billion investment in a transportation corridor to the Ring of Fire compared to other equivalent investments in northern Ontario?
Because of the high capital costs of a mine, and in particular the proposed Ring of Fire mines, mining does not create a lot of jobs per dollar invested. Rather than being drawn to the flame we'd like to see a more sober comparative analysis and justification for such a major public investment.
What infrastructure? What route and to service what projects?
There are currently at least three competing visions for accessing the region with year-round infrastructure and there has yet to be an independent assessment of these options. Importantly, Cliffs claimed that the "east-west" route was not economically viable for chromite mining, yet this is the route currently proposed by the only proponent with an advanced stage mining project (Noront Resources). Cliffs' claims may not bear up to scrutiny -- but the fact that substantial money is being committed without a plan of how it is going to be spent or a thorough review of options and cost/benefit, environmental, and socio-economic analyses is troubling.
How will mining infrastructure benefit First Nations?
In practical terms from routing to construction to access and use of the corridor -- how will the First Nations be able to take advantage of the new infrastructure? This is an especially important question given that the Federal government hasn't committed to providing resources to incorporate extensions of the road or rail line to reach First Nations. There are also questions about the practicality of having a shared-use road that need to be addressed.
What are the companies willing to invest for infrastructure and what conditions will the government put on its financial investment?
It should be asked: what are the companies with interests in the Ring of Fire willing to invest in the infrastructure so that their projects become viable. Are they going to pay us back in tolls or fees or are we assuming the spin off benefits of the project will adequately compensate Ontarians for our investment? Will Ontario make the investment conditional on added benefits for the province -- like Danny Williams did when he insisted that Inco (now Vale) commit to building a nickel processing facility in Newfoundland and Labrador prior to authorising the development of the Voisey's Bay mine?
Where are the environmental safeguards First Nations and many other Ontarians want to see in place?
The Framework Agreement signed by the Matawa Chiefs and Ontario reference a plan for environmental monitoring -- but what about prevention, and establishing regional objectives for water quality, wildlife etc.? Monitoring in and of itself will only tell us when things have gone wrong and when impacts will have already occureed. While environmental assessment processes for Noront's project are on-going, government endorsement and commitment of such substantial funding raises serious doubts about the seriousness of the review process.
How much public or First Nations revenue will really be generated?
For two budgets in a row (2012 and 2013) the Liberal government committed to reviewing the Ontario Mining Tax -- and never did. The tax is the worst in Canada at returning value from extracted minerals to the public coffers. Will these new mines enjoy the 10 year tax holiday and then pay half of the regular rate of mining tax as other remote mines in Ontario do?
How can the development be leveraged to leave a lasting positive legacy for the First Nations communities and Ontario as a whole?
Last but certainly not least, is the question of "legacy," which is seldom well answered for mining projects in Canada. Non-renewable resource extraction is by definition unsustainable. While claims of using extractive projects to leverage sustainable development are common, concrete examples of how this can be done are rare. Given the scale of promised public investment, proponents should be held to a higher standard in justifying that their project will be in the public interest, not just during the operating life of the mine, but also for future generations.
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