Fraser Forum

Wynne government strikes ‘Ring of Fire’ deal with First Nations bands

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As we’ve written before, development of the Ring of Fire chromite deposits in northern Ontario represents a massive economic opportunity for the province and the First Nations people who live in Ontario’s northern expanses, 500 miles northeast of Thunder Bay.

It’s estimated that the deposits of chromite—a mineral used in making steel—are valued somewhere between $30 billion and $60 billion. The same area also has deposits of copper, nickel and platinum.

And finally, more than 10 years after the deposits were discovered, there’s evidence that development of the resource may actually happen.

This week, the Wynne government announced it has reached agreements with three First Nations bands (the Webequie, Marten Falls and Nibinamik) to build a highway connecting the Webequie and Nibinamik communities to the provincial highway system, allowing for the development of a proposed mine site proposed by Noront Resources Ltd., which paid $20 million to buy claims in the area that were formerly held by Cliffs Natural Resources Inc. (which pulled out in 2013).

The Ontario government has pledged $1 billion to the project, and seeks a matching $1 billion from the federal government. But as we pointed out, rather than relying only on government funding, a better approach to paying for the highway would be to form a public-private partnership or P3:

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.

There’s still a long way to go before the Ring of Fire is a done deal. Environmental assessments only begin in January, and we’ve seen how protracted such assessments can be. The Trans Mountain expansion pipeline assessment took almost 30 months.

Construction is slated to begin on the new highway in 2019. For the well-being of Ontario’s northern populations, let’s hope Ontario can avoid the kind of delays seen in the assessment and review of other major infrastructure projects in Canada.


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