Earlier this week, federal Treasury Board President Tony Clement left many in the business community scratching their heads when he said that the Ring of Fire will not be developed “before economic conditions improve.”

Until then, he said, it is not realistic to expect his government to step in and “boost” the Ring of Fire.

Minister Clement’s comments are perplexing. To which economic conditions is he referring?

The downturn in the global commodity cycle has had little impact on the economics of the Ring of Fire, which hinges on the forecast price of nickel and demand for stainless steel. The outlook for these indicators is positive: nickel prices are projected to increase by up to 40% over the next four years and demand for stainless steel remains strong, driven upward by robust consumer demand in developing countries for stainless steel appliances.

It would appear that Minister Clement’s comments are informed by a false narrative that has caught on in the discourse about the Ring of Fire: that the downturn in iron ore prices is impacting the economics of the Ring of Fire.

While it is true that the downturn in the commodity cycle has negatively impacted some global mining firms (for example, Cliffs Natural Resources), the price of iron ore has little to do with the Ring of Fire, which contains no iron ore deposits. The economics of the development have changed very little since Clement himself dubbed it “Ontario’s oil sands” just a few years ago.

It would seem that Minister Clement is actually referring to a weakened business case for investing in the Ring of Fire. On this point, he is right--over the last several years, development in the region has all but stalled.

The provincial government is dragging its feet on removing the regulatory hurdles that will allow mining operations to proceed, and has failed to produce a detailed infrastructure plan for the region, a prerequisite for landing a federal funding commitment. Mining companies in the Ring of Fire are largely in abeyance because exploration permits are not being issued. The federal government has yet to commit its portion of infrastructure to the project.

These factors, not the economics of the Ring of Fire, are weakening the business case for its development. This is unfortunate given the tremendous economic potential of the region.

A recent Ontario Chamber of Commerce report estimates that over the first 10 years of its development, the Ring of Fire will sustain 5,500 jobs a year, boost economic activity in Ontario by $9.4 billion, and provide $2 billion in revenue to government.

While development has not progressed at a rate that is satisfactory to business, not all the news is bad. For example, there are signs that the federal and provincial governments are working cooperatively to move development forward. A few weeks ago, ministers responsible for the Ring of Fire from both levels of government announced a joint funding commitment that will support a First Nations-led study of an east-west road. This essential artery will service mines, open up further exploration activities, and connect many First Nations communities to the rest of Ontario. It’s a step in the right direction, and an excellent example of what can happen when governments collaborate.

Businesses want to see more of this kind of intergovernmental cooperation. After all, it is government’s role to champion economic development opportunities, not downplay them as Mr. Clement has done.

Allan O’Dette

President & CEO

Ontario Chamber of Commerce

Toronto