A Canadian region once touted as Ontario’s answer to the oil sands will not be developed anytime soon- according to the CEO of a major stakeholder.
Lourenco Goncalves, head of U.S.-based Cliffs Natural Resources (NYSE:CLF), made the comment during an interview with the Financial Post last week.
“I don’t believe under my watch, and I plan to stay [alive] for the next 50 years… that the Ring of Fire will be developed,” the 55-year-old told the newspaper.
The 4,000-square-kilometre Ring of Fire, located 540 km northeast of Thunder Bay, is home to an estimated $60 billion worth of mineral deposits, and lawmakers say it could bring prosperity to northern Ontario much like the oil sands industry have to northern Alberta. But the region lacks highways, rail lines or reliable power.
Last year Cliffs had to suspend most work on its $3.3 billion Black Thor chromite deposit, citing stalled talks with the province and other political and regulatory problems. The miner had also struggled to win over aboriginal communities. The stoppage came despite Cliffs spending some $500 million building its land position in the region.
Goncalves doesn’t hold much hope of finding a buyer for its asset, either. While several junior mining companies exploring in the Ring of Fire, including KWG Resources (TSXV:KWG) and Noront Resources (TSXV:NOT), have expressed interest in purchasing Black Thor, “They do not have any money,” the FP quoted him as saying. “The Ring of Fire is a remote land with no railroad, no road, nothing,” he added. “Without the infrastructure, there’s nothing we can do.”
The negative comments came as a shock to the Ontario government, which said in April it is ready to allocate up to CAD$1 billion to develop an all-season transportation corridor to the Ring of Fire and it is asking the federal government to match the funds.
“The comments from the CEO of Cliffs were somewhat startling,” Minister of Northern Development and Mines Michael Gravelle told CBC News on Friday. Gravelle countered by saying that 20 other mining companies have interests in the Ring of Fire and that many in the mining industry disagree with Goncalves.