Ring of Fire rail investment could be 'real prize' for China, business expert says

A group of engineers from a Chinese rail company have wrapped up a visit to Ontario to explore the possibility of building a rail line to the Ring of Fire mineral deposit, in the province's far north.

• China Rail engineers, KWG resources cew surveys for Ring of Fire railroad

The visit included a survey of northern terrain by helicopter, and a meeting with MPs in Ottawa.

"The impression they left us is that this is a very good project and they're very interested in pursuing it," said Moe Lavigne, the vice-president of KWG Resources, a junior mining company with a stake in the Ring of Fire.

China's interest in the Ring of Fire mineral deposit stems from its need for chromite for the production of stainless steel, Lavigne said, but a secondary motivation is China's desire to export its capacity to build rail lines.

Rail and resources the perfect combination

It's the combination of those two factors that makes this potential investment a "real prize" for China, said Walid Hejazi, a University of Toronto professor and expert in global competitiveness, with a focus on China.

Walid Hejazi, a professor in the University of Toronto's Rotman School of Management, says foreign investment can benefit Canada, as long as government regulations ensure that foreign companies play by Canadian rules. (www.rotman.utoronto.ca)

"I would argue that one without the other, this deal may not go through," he said.

Filling infrastructure gaps in other countries is one way China secures access to desired resources, Hejazi said.

And when the needed infrastructure is rail, the investment becomes all the more tempting for China.

"They're really trying to develop a niche in terms of having the world look at China as sort of an exporter of rail or high speed rail technology," Hejazi said. "So I think that this completely fits into China's plans going forward."

The Ring of Fire is a large, mineral resource-rich area located in the James Bay Lowlands region of Northern Ontario. (CBC)

Hejabi said while the deal could be a "win win" for China, and Canada, the foreign company would have work to do to learn more about the cultural landscape of Ontario, and in particular, relationships with First Nations communities.

KWG vice president Moe Lavigne said the visiting engineers left with a better understanding of the development process in Canada, including the need for an environmental assessment, and partnerships with First Nations.

The rail company will now work on a feasibility plan for potential investors, he said.