The Ring of Fire and the rebirth of Ontario mining

FNX CEO and Chairman Terry McGibbon had a big smile on his face as he was giving Laurentian University’s new President, Dominic Giroux a personal tour of the PDAC convention.

By: Stan Sudol

The mood at the annual Prospectors and Developers Association of Canada convention in Toronto was definitely more upbeat and promising. As the world’s major economies start to recover from last year’s market crash and the collapse of commodity prices, most observers agree that China’s insatiable appetite for metals will continue.

The recent announcement of China’s Jinchuan Group Ltd.’s $150 million offer to buy Canadian nickel junior Crowflight Minerals and the announced merger between Quadra Mining Ltd. and FNX Mining Company Ltd. confirms the metallic meltdown is over.

Interestingly enough, if Jinchuan’s takeover succeeds, it will give the Chinese government a small foothold in the Sudbury Basin. Crowflight owns or has under option about 800 square km of advanced-stage base metal exploration properties in this region, the Thompson Nickel Belt as well as the Bucko Lake Nickel Mine, both in Manitoba.

Without a doubt, Ontario’s mining sector was one of the top discussions at this year’s PDAC, held March 7-10. The Ring of Fire mining camp, located in the muskeg swamps of the James Bay lowlands, 500 km northeast of Thunder Bay, has almost single handedly heralded the rebirth of Ontario mining industry.

“For the 21st century, the discovery of chromite in the Ring of Fire could be as big as the discovery of nickel was in Sudbury in the 19th century,” the recent Ontario Budget speech boldly claimed. “We are fully committed to working with Aboriginal Peoples and northern Ontarians to build on the Ring of Fire’s potential.”

Tentative plans by Cleveland-based iron ore producer, Cliffs Natural Resource, call for a $1.3 billion investment, including a concentrator, ferrochrome processing facility and a $600 million, 350 kilometre rail line in the north.

Chromite, when smelted into ferrochromium alloys, is used in the production of stainless steel. There are no chromite mines in North America.
Thousands of construction jobs and promise of full-time employment for many Aboriginal communities in the north are welcome news to a region and province facing high unemployment and record budget deficits.

Not since the heady gold-rush days of the Hemlo discoveries in the early 1980s, has a mining development so influenced Ontario economics and politics.

At a luxurious mining gala held at the Fairmont Royal York Hotel – the mining sector’s version of the Academy Awards — the five men responsible for the Ring of Fire were given the prestigious PDAC Prospectors of the Year Award.

John D. Harvey, mining consultant, Donald Hoy, former Freewest’s VP Exploration, Richard Nemis, previous president and CEO Noront Resources, Neil D. Novak, president and CEO Spider Resources and Mac Watson, former Freewest president and CEO were recognized for the significant base-metals and chromite discoveries in northern Ontario’s Ring of Fire.

Sudbury-born Richard Nemis said, “My heart will always belong to northern Ontario. It gives me great pleasure to see the potentially enormous economic boost the Ring of Fire discovery will have on the north, on Aboriginal communities and hopefully, on Sudbury’s world-class mining supply and service industry.”

Nemis is an ardent Johnny Cash fan and he was the promotional genius who nicknamed the discovery “Ring of Fire.”

The area has the unique shape of a broken circle or crescent while the original deposits were the result of magma or molten rock from huge volcanic action.

He continued, “In fact, I think the Ring of Fire will rival the Sudbury basin and the economic impact of this discovery on the Ontario economy will probably run into the hundreds of billions of dollars over time.”

Next day at the PDAC Aboriginal Forum, Assembly of First Nations Yukon Regional Chief Eric Morris said, “In my territory, the Yukon First Nations are involved with the mineral resource industry in many capacities, ranging from partnership in mining operations to the creation of new companies that service the industry.”

At the same forum, Michael Gravelle, Ontario minister for Northern Development, Mines and Forestry said, “I’m glad to see so many of you here today because the PDAC is an excellent venue for fostering collaboration. …I think we all understand that there is a huge opportunity here. The industry can be a catalyst for an economic revival in many of our Aboriginal communities while developing superb mineral deposits.”

Gravelle mentioned that more that 60 agreements between mining companies and First Nations and Metis have been signed and more are in the works. There was a sense at this year’s PDAC that the tide is turning in the relationships between Aboriginal communities and the mining sector.

The conflict between Platinex Inc. and the Kitchenuhmaykoosib Inninuwug First Nation (KI) over the Big Trout Lake Property was the exception, not the rule. The province recently settled outstanding lawsuits. Of course the southern media highlighted the conflict, which allowed environmentalists to infer that Aboriginal communities were anti-mining.

For more than a century, the federal government has not kept promises with First Nations and has not been able to alleviate the third-world poverty in most Aboriginal communities. Over the past two decades, success stories like De Beers Canada’s Attawapiskat diamond mine and Goldcorp Canada’s Musselwhite gold mine, both in the same region as the Ring of Fire, have proved that the mining companies do what they say and keep their promises.

However there is still much work and negotiating to be done, and the mining sector cannot single-handedly wipe out all poverty, but the industry is working hard to ensure that Aboriginal communities gain enormous benefits from these developments.

The announcement of a new nickel/copper/PGM deposit by FNX at its Victoria Property, on the western side of the Sudbury Basin, was much needed good news for a community in the middle of its longest labour strike ever. The Victoria deposit has the potential for 10-20 million tons, would take four to five years to build and employ about 250 workers. FNX will continue with it exploration drilling for another 12 to 18 months before deciding to develop the deposit.

This new discovery is an offset dyke, part of the larger Worthington offset dyke which is also seeing the development of the Vale-Inco Totten offset deposit that contains about 7.5 million tones. The Xstrata Nickel’s Nickel Rim South mine has about 15 million tons of contact and footwall ore. The Copper Cliff offset dyke hosts four or five mines including the new Vale Inco Kelly Lake development. Since the Worthington dyke has not been as well explored as the Copper Cliff offset there is exciting potential for more discoveries.

So FNX CEO and Chairman Terry McGibbon had a big smile on his face as he was giving Laurentian University’s new president, Dominic Giroux, a personal tour of the PDAC convention.

MacGibbon said, “The Sudbury Basin is a unique geological feature, which has produced or has mineral reserves worth more than a trillion dollars at today’s metal prices. Touring the PDAC today with Dominic, I wanted to highlight the size of global mining industry.”

MacGibbon continued, “Our discussions focused on the potential role that Laurentian University can play in bridging the well documented shortages of geologists, engineers, environmental professionals and other staff for the mining industry.”

At age 34, Dominic Giroux is reportedly the youngest university president in Canada and has publicly committed to making Laurentian and Sudbury a high profile destination for students from Ontario and the world.

Giroux said, “Touring the PDAC conference with Terry provided me with a unique opportunity to learn more about the emerging trends in mineral exploration and mining, but also to ask industry representatives how could Laurentian add even more value in meeting their education and research needs. … I would envision an eventual International Faculty of Mining at Laurentian.”

On the last day of the convention, Don Coxe, the well-respected, strategic advisor for BMO Financial Group and an ardent believer in the commodity super-cycle, gave a lunch speech on the incredible potential and need for Canada’s junior mining sector.

Coxe said, “I can’t think of a better career in the next 25 years than geology. To anyone coming in, what you will be tying yourself into is the hinge of history itself, where two billion people move from the outside to the inside and they can’t do it without you.”

He was referring to the industrialization and urbanization of China and India that will impact billions and the insatiable demand for mineral products to meet their growth.

The “hinge of history” could just as well refer to the rebirth of mining in northern Ontario and the enormous opportunities for Laurentian University to train the next generation of skilled mining professionals and for Aboriginal communities to fully participate with the mineral sector in the environmentally sustainable development of their traditional lands.

Stan Sudol is a Toronto-based communications consultant who writes extensively on mining issues. www.republicofmining.com