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Ring of Fire’s chromite cache remains stranded as Canada, U.S. mull ‘strategic mineral security’ plan

Critical for stainless steel production, China currently dominates the chromite marketplace but a possible U.S./Canada agreement could be a game changer.
Jason Unrau Montreal, QC

Without rail or smelting infrastructure, massive chromite deposits known as Ring of Fire that lay beneath Ontario’s James Bay lowlands – minerals that Ontario Premier Doug Ford called “critical for (his) administration” – will remain stranded underground.

“It’s inaccessible for all practical purposes, except by air and to sell chrome you’ve got to get it to its steel mills of the world,” said Frank Smeenk, CEO of KWG Resources and one of six mining execs and geologists who located the original cache.

It’s not the first time the chromite rich molybdenum seams with names like Thunderbird, Big Daddy and Black Thor have piqued the interest of politicos, First Nations and more recently the U.S. state department.

At the beginning of October, Cynthia Kierscht, Assistant Secretary of State for Western Hemisphere Affairs, hosted Canadian officials for the first U.S.-Canada Critical Minerals Working Group meeting in Washington, D.C.

According to Smeenk, the two countries are attempting to hash out a “joint action plan to improve critical mineral security and ensure future competitiveness of U.S. and Canadian minerals industries.”

Critical for the production of stainless steel, China currently dominates the marketplace via Indonesian smelters refining chromite mined from Africa and Turkey; dominance Smeenk said could be repatriated to North America under a U.S./Canada deal.

Discovered in 2007 and 2008, word of this chromite motherlode fuelled investment in Ring of Fire, which reached a crescendo about a decade ago after US steel giant Cliffs accepted Smeenk’s invitation to buy a 20 percent stake in KWG.

Following protests and protracted negotiations between nine disaffected Matawa First Nations in the vicinity, and an eventual falling out between Smeenk and KWG, Cliffs shelved plans for a $3.3 billion mine in 2013.

Since then, chromite’s value has flattened while Ford replaced the Liberals at Queen’s Park, then scrapped the deal former provincial premier Bob Rae had sorted with Matawa First Nations Management Tribal Council. Herein, the Ontario government would deal directly with individual First Nations.

Rae did not respond to an interview request, but Cornelius Wabasse did. Wabasse’s the chief for Webequie First Nation, a member of the tribal council.

“We still have a lot of work to do before any major development happens in that area,” said Wabasse, whose hamlet of 900 is closest to Ring of Fire.

“Because of the landscape and also how we’re going to work with the other surrounding communities…so if development starts, we’d have to know how we’re going to prosper, we have to have something in place.”

Webequie has already proposed building a supply road to connect the community with Noront Resources’ existing Ring of Fire property, for which Smeenk and KWG also have a stake.

According to the proposal, Wabasse’s First Nation presented to the Canadian Environmental Assessment Agency for review, the route could evolve beyond basic mine access, into “a future all-season road network connecting…the provincial highway system in Nakina and/or Pickle Lake.”

Apart from six weeks during the winter, Webequie is a fly-in community nearly two hours north by plane from Thunder Bay. Wabasse said driving the winter road 220km southwest to Pickle Lake can take anywhere from eight or nine hours.

DeBeers’ quest for new diamond sources after the Second World War saw the first such mine built in this corner of Ontario, but it was Asia’s insatiable economy, emerging fast and furious in the opening decade of the 21st Century that turned investor sights on the region’s metal potential.

Ring of Fire is about halfway between Webequie and DeBeers’ Victor Mine that’s approximately 95km further to the east. But producing diamonds and mining metal are not analogous, said Smeenk because, “you can put diamonds in your pocket and walk on a plane.”

“Chrome is a little bit like iron. The rock is valuable, but to get that to where it has to be, you need something that can carry a lot of tonnes,” Smeenk explained. “You’ve got to start looking at rail.”

Between boom and bust cycles over the last 10 years in Ring of Fire and more than $30 million invested by KWG Resources, Smeenk knows something about rail.

During the investment frenzy and Cliffs partnership, KWG staked out the railroad right-of-way; what would ultimately estrange the firms as Cliffs lost its bid before Ontario’s Mining and Lands Commissioner to override KWG claims on the corridor.

Since then, Smeenk hired China Rail to do a “complete construction feasibility study…but how the railroad gets built and who operates it is still up in the air.”

“It could well be a federal transportation authority that maybe starts with a partnership with the Sault Ste. Marie Bridge Authority,” he said.

“Indigenous groups are very much interested in becoming partners on something like this but they’re the masters of their domain.”

As witnessed in Canada over the last several years, pipeline projects like Northern Gateway have been shelved and the Trans Mountain pipeline expansion remains in relative limbo, because doing business in the frontier means making deals with Indigenous landowners.

“Because the First Nations communities are basically taking a cost-benefit analysis…one of the things we’ve argued for, is encouraging indigenous ownership,” said Joseph Quesnel, Macdonald Laurier Institute’s lead researcher on where indigenous rights and resource interests intersect.

“If a First Nation has that kind of a stake, with mining or other projects, especially with profits, that’s good for buy-in for them and the more you could offer the more eager they would be to come to the table.”

Beyond jobs and other economic benefits, Wabasse is cagey on what Webequie wants apart from the Noront service road proposal already before federal regulators with the environmental assessment agency.

Both Wabasse and Smeenk agree that it’s early days; the soonest an operating mine could materialize through the politics, logistics and regulatory bureaucracy is in five years.

Smeenk said KWG is willing to partner with any First Nation, if and when the conditions are right.

“They could be the operators, they could be the contractors. They could be everything. They can have all the economic benefits, but they can’t have the equity ownership or the equity profits,” said Smeenk, putting everything on the table except for the original penny stock equity.

“But if we formed a 50/50 joint venture…and if they do the mining at say cost plus five percent, now they’re in business.”

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Jason Unrau
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