03/01/2015 01:31 EST | Updated 05/01/2015 05:59 EDT

Ring of Fire road proposal to get $785,000 government study

The Ring of Fire mining development area in northern Ontario is getting a $785,000 boost as the federal and provincial governments announce a joint study of an all-weather road for the isolated region.

Federal Natural Resources Minister Greg Rickford made the announcement Sunday at the Prospectors and Developers Association of Canada annual convention in Toronto. Ottawa and Queen's Park will each pay for half the cost.

The study will look at a "transportation corridor" that would connect the area of mineral deposits and four remote First Nations (Webequie, Eabametoong, Neskantaga and Nibinamik) to Pickle Lake, Ontario, about 500 kilometres northwest of Thunder Bay.

"We ought not to be looking at the Ring of Fire as a mine in the middle of nowhere," Rickford said. "It's the opportunity to hook First Nations communities up, to be anchored by other towns and cities in the region and be physically connected."

Federal, provincial finger-pointing

The jointly-funded study comes after months of finger pointing about which level of government is responsible for the Ring of Fire not living up to its potential as an economic driver for Ontario.

Premier Kathleen Wynne has been vocal about her desire to see Ottawa match the province's $1 billion commitment to the mining development. Rickford responded to that request in December by saying that Ontario's plan in the Ring of Fire "has serious structural problems."

The tone for Sunday's announcement was more conciliatory with Rickford saying the study "represents our federal government's latest meaningful contribution to helping the province enhance the economic potential of the Ring of Fire."

Ontario Mining Minister Michael Gravelle said "the study supports Ontario's plan to drive development in the Ring of Fire and ensure the tremendous potential of the Ring of Fire can be realized for First Nations, Ontario and for Canada."

Stalled potential

A study of a road is a long way from where many investors hoped the mining development would be in 2015. The area is rich in chromite, the main ingredient in stainless steel and was once dubbed Canada's 'next' oil sands.

Noront Resources, a junior mining company with plans for a relatively small nickel operation in the Ring of Fire, stands to benefit most if a road to Pickle Lake is built. 

"The east-west corridor is as viable an option as any other corridor," Rickford said. "But that's not to suggest there aren't other options."

Cliffs Natural Resources, the biggest player in the Ring of Fire, backed away from it's $500 million investment in the project in 2013. The American iron-ore company had once planned to extract up to 12,000 tonnes of chromite ore per day, beginning as early as 2017, from a proposed open-pit and underground mine with a 30-year lifespan.

A north-south road was key to Cliffs' plans. It would have started at the mine site, about 540 kilometres north of Thunder Bay and travelled south to the CN Rail line, near Nakina, Ontario. Cliffs plans for a road got mired in a court battle with KWG, a junior mining company. KWG has staked mining claims along most of the high ground on the north-south route in hopes of building a 300-kilometre rail line to the mineral deposits.

Rickford said the benefits of the route currently being studied is that it would provide road access to four First Nations to the south, rather than just access for mining companies to the north. The route could be travelled by transmission lines that would provide an alternative to the diesel generators that the First Nations currently rely on for power.

Asked whether the study would be followed by federal funding to build a road, Rickford said, "you can't just throw millions and millions at something and start building a road. Studies are a big part of that."