Fraser Forum

Ontario’s Ring of Fire could spawn thousands of jobs for several decades

Printer-friendly version

Ten years ago, one of the largest mineral deposits was discovered about 400 kilometres north of Thunder Bay in northwestern Ontario. The so-called “Ring of Fire” was supposed to be a game-changer in the Ontario and Canadian economy. The deposit had the potential for thousands of jobs for several decades of mining.

The large deposit of mainly chromite—the mineral used in the production of stainless steel—was called by then-Treasury Board president Tony Clement the economic equivalent of the Alberta oilsands.

So why is there no mine in production to show for it?

Yes, deteriorating relations between the resource companies and the region’s First Nation communities did not help increase confidence in the project. However, that certainly does not fully explain the lack of progress. In the end, the main issue was the lack of infrastructure in getting the mineral to market. Many of the indigenous communities were only connected by seasonal winter roads. The mineral would have to traverse hundreds of kilometres of muskeg. At one point, a Chinese company investigated the possibility of building a rail line through the region.

The problem was it was believed taxpayers would not want to pay for roads they would likely never use and would be used mainly by select companies. Before yet another year passes, the issue of who will bear the burden of risk associated with the massive infrastructure should be resolved.

David Kaplan of Global Public Affairs, a public affairs firm, made the persuasive argument in 2014 that policymakers must strongly consider a public-private partnership (P3) model for the necessary infrastructure. Most P3 models involve the federal and provincial governments, along with private equity partners, paying for the infrastructure, while a private-sector partner builds and maintains the infrastructure.

Government has a legitimate responsibility to build public infrastructure, as long as it’s really necessary and done correctly.

A P3 option is very attractive because the governmental partner bears all the policy risk, while the financial risk is offloaded onto to the private sector. The revenues derived from the mine, including possible truck tolls, go back into paying for the infrastructure so it would pay for itself over time.

Crucially, the Ring of Fire project would open up the North region to development. The addition of an all-season road network would increase economic activity for the mainly isolated indigenous communities in that region. Increasing mining activity will bring more people and investment to remote First Nation communities that really need it.

A P3 model for Ontario's Ring of Fire deposit is a win-win for all involved.