You can mine chromium by going to a waste dump in South Africa

With the Ontario elections behind us, we saw quite a bit of interest from various parties involving the ring of fire and it’s development. We saw many arguments for the development, but not many of these statements are verified. Let’s look beyond the statement and dive into the real facts.

What we know, is that there is an abundance of Chromium in the ring of fire. I don’t think anyone really cares much about this even though has been referred to as ‘Ontario’s Oil Sands’, it’s the other minerals found there that are of interest. The copper, zinc, nickel, platinum, vanadium, and gold. The only way to get ferrochrome out to buyers to is to subsidize the entire process.


Noront, the primary claim holder in the Ring of Fire does not have the money to develop the infrastructure required without public money. The company, which is deeply in debt to Resource Capital Fund, a debt that has been due and extended\restructured three times now (~$15 million). An additional ~$25 million is due in 2020 to Franco-Nevada through its subsidiaries. Noront, as it stands, requires government subsidies to operate using flow-through shares which allow investors to claim costs of exploration and development as tax write-offs. Most of the first nations consulting has been paid by the federal government who pays salaries for lawyers, consultants, and advisors, including the Ring of Fire Secretariat (Bob Rae and Frank Iacobucci)

More money flows in through the Strategic Partnership Initiative and the Comprehensive Community Planning Initiative.

While community planning only represents a part of the Strategic Planning Initiative’s total budget, other spending is exclusively focused on subsidizing natural resource development.

Another note, is that former federal Natural Resources Minister Greg Rickford is on the Noront Board.

No Feasibility Study for Ring of Fire Chromite

[1] No feasibility study has been completed on the chromite deposits. Cliffs Resources walked away from the project just as the feasibility study they commissioned was to be finished and sold the project to Noront for $22-million. The only feasibility study undertaken to completion was for Noront’s Eagle’s Nest project; a carrot-shaped deposits of nickel, copper and PGM metals. It made it clear that the project needed the province to put up the road/rail costs or Eagle’s Nest could not be built.

The other question hanging over the Ring of Fire is the need for a ferrochrome smelter to process the ore. The location of the project is again in question, with Sault Ste Marie, Timmins and Sudbury all in competition for it. That smelter cannot be economic without serious electricity subsidies, in a province where electricity costs a great deal to produce.

Noront, which now holds 75% of the Ring of Fire claims, is getting desperate for the road to be built. From the beginning of their investment in the Ring of Fire, the company has said the road (which will cost a minimum of $1-billion, and likely much more) has to be paid for by the province.

The company is deeply in debt to Resource Capital Fund ($15-million due at the end of the year), and has already had one extension of the loan. Through one of their subsidiaries, they also owe $25-million to Franco-Nevada, due in 2020.[1]

The Real Value of Chromium

[2] From the Ontario Chamber of Commerce 2014 report ‘Uncovering the economic potenital of Ontario’s Ring of Fire : “The most promising discovery [in the Ring of Fire] is the first commercial quantities of chromite in North America. Based on current projections, the deposit is significant enough to sustain activity for a century.”

This statement may be true if, and when, the price for chromite (or chromium) is high. Right now it is not.

“There’s really an oversupply of chromium,” Northern Miner newspaper editor John Cumming told CBC. “You can mine chromium by going to a waste dump in South Africa, so there’s not a great need for a new source.”

Cumming said dropping chromium prices have far more to do with stalling the project than the oft-cited relations with First Nations.

Noront’s plan for a nickel mine north of Pickle Lake may be the most viable project currently in the Ring of Fire, but it still has to get over some regulatory hurdles.

Cumming said he never bought the province’s claim that the area is the “most promising mineral development opportunity in a century.”

“It was never true and it was very irresponsible of [former] Premier Dalton McGuinty to say that. Likening it to the oil sands is just ridiculous,” Cumming said. “It could never be that big. It’s as big as any other mine in the north, which people never talk about.” [2]

Mining Revenues in the North

Let’s see if, and when Doug Ford makes true with his promise to share mining revenues with the North. A statement which was never backed up with any factual information of how this can be achieved, similar to the ‘buck a beer’ campaign.

[3] Mining profits above $500,000 are taxed at a rate of 10 per cent. Taxes are even lower for “remote mines” where the rate is only 5 per cent. And as the KPMG Guide to Mining Taxation in Canada shows, Ontario’s tax code offers no shortage of deductible expenses to reduce book profit, and thereby lower taxes.

As a result, Ontario’s revenue generation from mining is extraordinarily low. In 2014, Ontario produced a record $11-billion worth of minerals, roughly 25 per cent of all Canadian production value. Yet government revenues from minerals were at a twenty-year low and the provincial mining tax only generated $18.6-million. To put that into perspective, that means the provincial treasury received only 1.6 per cent of the total mineral wealth produced in the province. What’s more, in 2014 the Ministry of Northern Development and Mines’ expenditures amounted to $41-million. Without even considering mining’s massive environmental and social costs, that’s a net loss of $22.4-million.

This paltry sum is by no means unusual. In fact, the Auditor General’s report indicates that “the amount of mining taxes and royalties that the province has collected from mining companies over the last 20 years has averaged less than 2 per cent of the value of minerals extracted.”

To make matters worse, Ontario’s tax code bars mining municipalities from taxing underground operations. Phil Vinet, the mayor of Red Lake – a gold mining town – equated “the perpetual fight to squeeze more money and basic information from the mining companies and the provincial government” to “farting against thunder,” a hopeless – and seemingly painful – pursuit.

“The $33-million per year subsidy to Vale and Glencore alone is almost twice the amount Ontario generated from the mining tax in 2014.”

If tax breaks weren’t enough, the industry receives any number of government subsidies to help lower costs. For example, last year Glenn Thibault, Sudbury MPP and current Minister of Energy, announced the extension of the province’s Northern Industrial Electricity Rate Program, initially slated to expire in 2016. Under the program, Vale will receive $20-million annually, Glencore $13-million. The $33-million per year subsidy to Vale and Glencore alone is almost twice the amount Ontario generated from the mining tax in 2014. Meanwhile, countless low-income Ontarians, faced with some of the highest energy costs of any jurisdiction in North America, often must choose between keeping the hydro running or putting food on the table. [3]

Leave a Reply