POLITICS
11/22/2013 02:10 EST | Updated 01/25/2014 04:01 EST

Ontario urged to get act together to save Ring of Fire development

TORONTO - The finger-pointing has begun as governments and critics look to assign blame over a big mining company's pullout from the Ring of Fire in northern Ontario, a massive mineral-rich area believed to have the economic potential of Alberta's oilsands.

Cliffs Natural Resources Inc. is suspending its operations indefinitely, saying it couldn't keep spending money while the question of whether it would be able to build an all-weather road to the remote site remained in doubt.

It's a major setback for cash-strapped Ontario, which may not see the economic windfall the governing Liberals had promised anytime soon.

Greg Rickford, the federal Conservatives' lead minister for the Ring of Fire, said he was surprised with the Cliffs decision, because the company was "very satisfied" with the federal government's involvement in the project.

But in some ways, it wasn't that surprising, said the minister of state for FedNor, the economic development organization for northern Ontario.

"I think that the announcement Cliffs made reflects uncertainty in a broader business sense," Rickford said in Timmins, Ont.

"The commodity market hasn't been that great for them, and in this case, they're waiting on some things the province ought to have responded to a little bit sooner."

Ontario's governing Liberals need to deal with the dispute over access to the site, because big companies looking to develop the massive chromite deposit can't proceed until they know "what direction they're going to go."

"This challenge, I think, sits squarely in the premier's office," Rickford said. "The world is watching, this is a legacy resource project and we want to get it right for the multi-generations of northern Ontarians that can benefit from this."

Ontario seems to understand the challenges that lie ahead and is willing to work more collaboratively, he added.

But the province should have collaborated more with the federal government, First Nations and the companies involved before announcing a development corporation to move the project along.

"We would have appreciated a little bit more collaboration and notice in that since what it considers is fairly large in scope, from what I can gather, although it's not been shared with me at this point," he said.

"And I think the First Nations and the private sector companies implicated feel the same way."

Cliffs wanted to build a road to the site, but junior mining company KWG (TSXV:KWG) had already staked the most viable corridor through very difficult wetland terrain for a potential railroad.

Cliffs suspended its environmental assessment activities in June and asked Ontario's Mining and Lands Commission for an easement over KWG's mining claims. The application was dismissed in September. Cliffs has appealed.

But the company isn't selling its Ring of Fire assets and appears to be biding its time until the provincial government intervenes on the road issue.

Miners like Noront Resources, which is developing the Eagle's Nest nickel-copper project, aren't going anywhere. Noront is looking at a longer east-west route, rather than the north-south road that Cliffs had proposed.

"Noront is still very much in play here, and we hope that with the province's extra efforts focusing on the, the land commissioner's decision and facilitating a strong business relationship with Noront and Cliffs, moving forward, that Cliffs will come back to the table and will get, will get back to work," Rickford said.

The Liberals have been touting the Ring of Fire for years as a major mining project that will help boost the struggling province's economic fortunes, create jobs and bring in revenue to struggling First Nations.

They insist the project isn't dead and there are many other companies interested in the project.

The Liberals called on the federal government to "come to the table with matching funds for infrastructure development in the Ring of Fire, the same way they have funded similar projects across Canada."

Total capital investment for industrial infrastructure could cost up to $1 billion and connecting local communities to all-season access roads could be $1.25 billion, they said.

"Our government is committed to realizing this unprecedented opportunity that will bring long-term prosperity to communities in the North and indeed, across the entire province," Ontario Northern Development and Mines Minister Michael Gravelle said Friday in a statement.

"While I am disappointed with Cliffs' decision, our commitment remains clear and the province is prepared to invest in vital infrastructure and create the right climate to support development in the region and move development forward."

But the Liberals are also taking hits from the opposition parties, who say the government needs to get its act together soon if they want to save the project.

Those tens of thousands of jobs the Liberals bragged about may never materialize if Cliffs doesn't come back, the Progressive Conservatives warned.

"What I worry about is this is a chilling signal to investment for resource projects in Ontario," said Opposition Leader Tim Hudak.

"If the government is going to be an absentee landlord, not drive these processes, the dollars will move elsewhere."

The Liberals dithered while Cliffs — which was going to pour $3 billion into the Ring of Fire — warned for months that it might pull out over the road dispute, said the NDP.

Hundreds of millions of investment dollars has been put aside — and won't come back for a long time — because the Liberals failed to act, said New Democrat Gilles Bisson, who represents Timmins-James Bay.

It's a loss for the entire province, he said.

"This is not about a mining job in the Ring of Fire," Bisson said. "This is about a production job in Hamilton, this is about a service job in Windsor, this is about a job in the finance district of downtown Toronto."

The Ring of Fire is believed to contain the largest deposit of chromite — a key ingredient in the making of stainless steel — to be discovered in North America.

The federal government has compared it to the oilsands in terms of its potential to create wealth and development.