http://www.thesudburystar.com/2016/02/17/sudbury-column-province-doesnt-get-it

Sudbury column: Province doesn't 'get it'

Camp Esker, in the Ring of Fire, is pictured in this file photo.

Mark Carbonelli, Guest Columnist

This is an open letter to Michael Gravelle, Ontario's minister of Northern Development and Mines:

I have been a follower, investor and researcher of the Ring of Fire ("ROF") for almost a decade. It is difficult to find any knowledgeable person on the topic that does not agree on the ROF's once-in-a-generation opportunity for First Nations, Ontario and indeed our broader nation and economy. The value of the ROF has been estimated to be in excess of $60 billion.

According to a recent report from the Ontario Chamber of Commerce, the ROF could generate $9.4-billion in gross domestic product over the next decade and support 5,500 jobs a year. Further, the report also projects $6.2 billion for Ontario's mining industry, providing the federal, Ontario and municipal governments with almost $2-billion in revenue over that decade.

In particular, the vast multi-generational supply of chromite in the ROF is a global manufacturing staple and indeed plentifully resides in our province, offering economic, social and political stability. From a more strategic standpoint, we also have a unique opportunity to put Ontario back on the worldwide steelmaking map through the production of ferrochrome right here in our province using cheap and plentiful natural gas as proposed by one ROF company.

As you may be aware, the price of ferrochrome has resisted the recent slide in commodity prices and indeed has remained stable over the last five years. Beyond the economic benefits of this initiative, it is a lifetime opportunity to open Ontario's north while providing jobs, infrastructure and a deserving quality of life to our First Nations.

I am writing to express both my frustration and concern for the apparent lack of progress made on the ROF development by your office:

1. Recently, the provincial auditor general singled out your ministry for its ineffectiveness and inaction in making any progress in the Ring of Fire and in promoting Ontario's mineral resources.

2. As you are aware, Ontario's mining industry comprises almost a quarter of Canada's total mineral production, worth almost $11 billion in 2014. Under your leadership of Northern Development and Mines, exploration spending has dropped from more than $1 billion in 2011 to $507 million in 2014. Similarly, the number of active mining claims last year was 235,000 units, a decline from 363,000 units in 2008.

3. Your government included $1 billion in the 2015 budget for investment in mining related ROF infrastructure. It is now 2016 and not a single dollar of that money has been spent.

4. The auditor general questioned the performance of the Ring of Fire Secretariat, the government entity created in 2010 to work with industry and prepare local Aboriginal communities for mining with training, education and capacity-building support dollars. The auditor general noted that -¦the Secretariat has continuously missed milestones established by the government for the development of the Ring of Fire" -- this despite Secretariat offices in Sudbury, Toronto and Thunder Bay, with a staff of 19 and total spending of $13.2 million over the last five years.

5. The Infrastructure Development Corporation you formed has been in business for well over a year and remains an organization consisting of five part-time bureaucrats without any involvement from industry or First Nations. They are yet to make an announcement of any kind, present a business plan or even give any indication of progress made. The auditor general notes that this corporation is not even operational.

6. It will be two years next month since Deloitte was retained for infrastructure development consulting and yet Ontarians remain without a report or any clear direction regarding options as they relate to infrastructure development for the ROF.

7. Northern Superior Resources is suing your government for $110 million for losses incurred from stalled operations resulting from your government's inability to provide a framework for mining in the region. They are apparently one of approximately half a dozen who are following suit or considering legal action for similar reasons.

8. Cliffs Natural Resources has abandoned Ontario by divesting their ROF assets to Noront Resources. Cliffs sold to Noront for $20 million what they paid $550 million to acquire -- a mere 3 per cent of original acquisition value, which I believe to have been completely eroded by your government's inaction on this file.

9. One of the few remaining ROF companies, Macdonald Mines Exploration, announced last year a share consolidation (see press release Toronto, Ontario, May 19, 2015 - MacDonald Mines Exploration Ltd., TSXV: BMK), effectively destroying shareholder value, investor confidence and moving another ROF company closer to insolvency. The press release states that "The development of the Company's projects has stalled as the Ontario's Ministry of Northern Development and Mines has not issued the required permits to explore on its properties in Ontario's Ring of Fire ("ROF") since March 2013. As such, the company has not been able to raise funds to advance its properties and is actively looking at other opportunities outside the ROF."

10. It has been almost 18 months since the province of Ontario and First Nations retained respectively negotiators for the assembly of a development and social framework, yet again Ontarians are left without any report of results, recommendations or plan.

11. At PDAC (Prospectors and Developers Association of Canada) in March 2015, you and (former federal Natural Resources minister Greg) Rickford announced the funding of a report to study the viability of an east-west road. To date, nothing further has come of this announcement and there is absolutely no evidence to suggest that any work on this study ever commenced.

12. While Ontarians await any indication of progress from your office on ROF infrastructure, a large Chinese railway conglomerate in partnership with a company with ties to a Chinese-state owned enterprise is quickly advancing a partnership with one of the remaining ROF companies. KWG Resources Inc. and China Railway First Survey & Design Institute Group Co., Ltd. (Jan. 19) have signed a memorandum of understanding setting out the terms for mutually proceeding with a feasibility study for the design and financing of a railroad. This review may very soon result in a negotiated transaction involving the construction of a north-south railway and related off-take agreements concerning Ontario's resources and impacting our First Nations' communities. This raises some serious concerns for me as an Ontarian:

- On your watch as minister of Northern Development and Mines, has it now become the role of the private sector and foreign state-owned enterprises to build the necessary infrastructure and to facilitate international trade in a nationally strategic resource?

- Assuming your government supports infrastructure to enable the development of the ROF, what is your ministry doing to facilitate this partnership?

- Without government support, encouragement and active involvement, could China Railway First Survey & Design Institute Group suffer the same fate as Cliffs Natural Resources and abandon Ontario when they realize that Ontario is not open for business?

Your recent explanation for your ministry's obvious lack of progress is that commodity and metal prices are in a trough, implying that investment in the ROF by your ministry would therefore be imprudent. Accessing the vast deposits of chromite and investing in processing and value-add technology that uses cheap and plentiful natural gas could allow Ontario to develop and indeed dominate in the production of ferrochrome - a material that has not experienced the same fall in value as other materials and metals yet remains in worldwide demand.

Further, your explanation also cites that Ontario's mining sector continues to slide as a result of the difficulty in securing exploration financing. This is a circular response given that much of the difficulty, especially as it pertains to the ROF, arises from the lack of support from your office. See point number 7 above, wherein Northern Superior is unable to advance their interests given stalled relations with First Nations.

Moreover, see point number 8 above with respect to Cliffs retreating from Ontario given the value of ROF assets has diminished without accessibility derived from infrastructure.

Lastly, see point number 9 above where Macdonald Mines cannot raise financing due to delays of almost two years from your office for permits. Under your leadership, you cannot state with any degree of seriousness that Ontario is open for business. It is the role of government to create the conditions and environment for which business and therefore jobs and wealth can prosper.

I do not believe that I am making an unreasonable request to see this file significantly and immediately advanced and made a priority for this government, but rather see this as merely holding this government accountable to their mandate and election platform.

To date I have only seen what I would deem as willful neglect of this file with a lack of transparency as to the reasons behind the foot dragging, talk and seemingly endless delay. I have grown pessimistic of this office's mantra that "with a project this size, we need to get it right."

From the lack of progress concerning the ROF detailed above I often wonder if this government 'gets it' at all.