Ontario has pledged $1 billion for infrastructure development in the province’s Ring of Fire, pressuring Ottawa to cough up matching cash and daring the provincial opposition to reject the upcoming budget and deny funding to the long-stalled mining project.
The funding would go toward an all-season route to transport an estimated $60 billion in resources in the ground beneath a swampy 5,000 square kilometre crescent more than 500 kilometres north of Thunder Bay, Ont.
The Ontario Liberals have repeatedly called on the federal government for concrete help rather than vague promises.
“That is absolutely a commitment we expect will be matched by the federal government. We are coming to the table with our best offer and we need the Prime Minister and his team to join us there,” Ontario’s minister of northern development and mines, Michael Gravelle, told a Thunder Bay audience Monday.
Gravelle and MPPs at the news conference hammered on Ottawa put its money where its mouth is. They stressed their belief that it’s unfair the federal government has allocated funding to hydro in British Columbia, the “tar sands” in Alberta and offshore drilling in Newfoundland — but have kept their coffers closed when it comes to Ontario’s Ring of Fire.
Gravelle said he had been in touch with Federal Natural Resources Minister Greg Rickford and let him know about the announcement. Rickford could not immediately be reached for comment Monday.
Ontario wants the feds to pay for half of the projected $2.5 billion it will cost to develop the region, including transportation, hydro and other infrastructure that is crucial to attract the interest of mining companies to the region.
“Today we are announcing that we are very much doing our part on the Ring of Fire and we expect the federal government to do the same,” Gravelle said.
Questions about infrastructure to transport chromium, nickel, copper and other minerals have plagued negotiations between various levels of government, First Nations and industry in the decade since the region’s resource wealth was first discovered.
The infrastructure issue is critical to the nine Matawa First Nations in the surrounding area because a route may connect the five fly-in communities to the rest of Canada for the first time. They have also lobbied the government for tangible benefits in terms of jobs, social assistance and revenue sharing. Some of the Matawa chiefs were in attendance Monday.
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The contentious questions of where the route will go and what type of transportation will be included —road, rail and boat have all been proposed — were left unanswered in Monday’s announcement.
Those decisions will be left up to a development corporation formed earlier this year that includes key stakeholders including industry players, First Nations and government, Gravelle said.
”The first decision is the actual route itself,” he said. Once a decision on the route is made, he said, the next decision is what form of transportation would be best.
“Certainly road seems the most likely in terms of community access but those aren’t decisions that the province is making.”
Mining giant Cliffs Natural Resources pulled funding from its $3-billion chromite project last year, saying that it couldn’t keep spending with so much uncertainty over infrastructure and other issues.
However, the U.S. miner was on hand for Monday’s announcement, a sign that it hasn’t lost interest in the region, Gravelle said.
Noront Resources Ltd., the only miner that is currently going ahead with development in the region, said the money gives the development corporation some gravitas through funding. However, CEO Alan Coutts noted that while the money is promising, it comes just before a potential election.
“We’ll have to wait to see how it plays out but it is a financial commitment,” he said.
“There is commitment from other parties so we’re hoping that even if the Liberals don’t survive there will be a continuation of funding for infrastructure.”
The funding announcement comes ahead of the Liberals’ delivery of the 2014 budget Thursday. Opposition parties have hinted they may trigger an election over the budget.
The Ontario government has pledged funding for the Ring of Fire in previous budgets but the $1 billion for infrastructure is the biggest step forward it has taken.
The project could generate $9.4 billion in new economic activity over the next decade and support 5,500 jobs a year, according to the Ontario Chamber of Commerce.
The news follows closely behind another key milestone for the region, an agreement between First Nations and Ontario on the terms for development, including environmental monitoring, resource revenue-sharing arrangements and regional and community infrastructure and social assistance.
The province has been eager to settle the issues as it eyes billions of dollars in royalties it could receive if and when the project takes off. The initial excitement that followed the discovery of mineral deposits in the area nearly a decade ago has waned amid a lack of regulatory progress and slumping commodity prices in recent years.