Governments should fund railroad to Ontario’s Ring of Fire mining camp – by Stan Sudol

Temiskaming & Northern Ontario Railway at the turn of the last century

This column was published in the March 17, 2011 issue of Northern Life.

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

For an extensive list of articles on this mineral discovery, please go to: Ontario’s Ring of Fire Mineral Discovery

“In the next 25 years, demand for metals could meet or exceed what we have used
since the beginning of the industrial revolution. By way of illustration, China needs to
build three cities larger than Sydney or Toronto every year until 2030 to accommodate
rural to urban growth.” (John McGagh, Rio Tinto – Head of Innovation)

Commodity Super Cycle is Back

The commodity super cycle is back, and with a vengeance. China, India, Brazil, Indonesia and many other developing economies are continuing their rapid pace of industrialization and urbanization. In 2010, China overtook Japan to become the world’s second largest economy and surpassed the United States to become the biggest producer of cars.

During a recent speech in Calgary, Mark Carney, the Governor of the Bank of Canada remarked, “Commodity markets are in the midst of a supercycle. …Rapid urbanization underpins this growth. Since 1990, the number of people living in cities in China and India has risen by nearly 500 million, the equivalent of housing the entire population of Canada 15 times over. …Even though history teaches that all booms are finite, this one could go on for some time.”

At the annual economics conference in Davos, Switzerland, held last January – where the most respected world leaders in politics, economics and academia gather – the consensus was one of enormous global prosperity predicting that, “For only the third time since the Industrial Revolution, the world may be entering a long-term growth cycle that will lift all economies simultaneously…”

John McGagh, head of innovation, at Rio Tinto – the world’s third largest mining company – has said, “In the next 25 years, demand for metals could meet or exceed what we have used since the beginning of the industrial revolution. By way of illustration, China needs to build three cities larger than Sydney or Toronto every year until 2030 to accommodate rural to urban growth. This equates to the largest migration of population from rural to urban living in the history of mankind.”

The isolated Ring of Fire mining camp, located in the James Bay lowlands of Ontario’s far north, is one of the most exciting and possibly the richest new Canadian mineral discovery made in over a generation. It has been compared to both the Sudbury Basin and the Abitibi Greenstone belt, which includes Timmins, Kirkland Lake, Noranda and Val d’Or.

Strategic Chromite

The first mineral deposits that will be developed are chromite, a metal that helps make steel harder and more corrosion resistant. It is a vital ingredient in a wide variety of stainless and heat resistant steels, as well as many super alloys that have strategic military uses, including the manufacturing of jet engines. The United States includes the metal in its National Defense Stockpile.

Map Courtsey KWG Resources

The chromite mines by themselves will be a multi-generational operation providing employment opportunities and business ventures for the surrounding First Nations communities. Other mineral discoveries have included nickel, copper, zinc, platinum, palladium, vanadium and titanium. However, without the necessary rail or road infrastructure, none of these mining ventures can be developed.

While Cliffs Natural Resources — the only major player in the Ring of Fire with the financial clout to develop its chromite deposits — has recently published a preliminary study calling for a road, a solid case can be made for rail transport instead, that should be financed by both levels of government.

While the building costs of a road or railroad are not that far apart, it is the maintenance and operating expenses which may dictate the economic efficiency of one mode of transport over the other. Most evidence indicates that when you are transporting bulk commodity products, the most economic, cost-effective way is by rail.

Railroads Responsible For Enormous Mineral Riches

And northern Ontario’s history has many examples of resource development being made possible by government funding of railroads. It was the federal government who paid for the construction of the Canadian Pacific Railroad that led to the discovery of the Sudbury nickel mines. Trillions of dollars worth of economic development over the past 128 years and predictions of another century of mining in the Sudbury Basin confirms that original investment worked out very well.

At the turn of the last century, the province of Ontario wanted to open up the isolated but fertile clay-belt soils of the Temiskaming region in the northeast. Construction of the Temiskaming and northern Ontario railway began in 1903. At a site 103 miles north of North Bay, lumber contractors working on the railroad made the initial discovery that heralded the Cobalt silver boom. The silver mines, which made headlines around the world, finally ran out by the 1990s, but this globally significant discovery yielded a phenomenal 460-million ounces of the precious metal.

Cobalt has often been called “the cradle of Canada’s mining industry.” It trained the prospecting and mining capabilities of Canadians, provided enormous capital financing and set the stage for many other important discoveries in the region as the railroad progressed northward.

In 1909, 100 kilometres north of Cobalt, near Porcupine Lake, gold was discovered. The Porcupine Gold Rush was a transformative event in Canadian history, with three gold mines discovered by separate prospecting parties a few miles from each other. These rich discoveries produced the legendary Hollinger, MacIntryre and Dome Mines, led to the development of one of Canada’s premier mining camps, and the founding of the City of Timmins.

The Timmins discovery drew prospectors from around the world that led to the discovery of gold at Kirkland Lake in 1911. Other prospectors crossed the nearby Quebec border and discovered the Noranda and Val d’Or mining camps in the early 1920s. The last official gold rush in North America occurred when gold was discovered in 1925 a few hundred feet from the shores of Red Lake, an isolated spot 110 miles northwest of Sioux Lookout, by prospectors from the Cobalt camp.

Ontario Benefited Enormously From Northern Mineral Wealth

Over the past century, the Porcupine Camp has produced 72-million ounces and counting, once again booming Kirkland Lake had produced 38-million ounces to date and Red Lake, also prosperous, has produced 26-million up to 2010. By comparison, the Klondike produced only 12.5 million ounces during its decade-long short-lived rush. The vast wealth of northern Ontario’s and northwestern Quebec’s hardrock mines was funneled into Toronto’s financial district making the city the mine financing capital of the world.

Northern Ontario has become the hardrock mining heartland of the Americas. Only the gold mines of the Witwatersrand and the platinum deposits of the Bushveld – both in South Africa – can equal the number of underground mines in Ontario’s north. Ontario’s internationally recognized mining supply and service industries – the two most important clusters are located in the Greater Toronto Area and Sudbury – export their technical hard-rock mining expertise, knowledge and products around the world.

By any economic measurement, the Ontario government has received an extraordinary return on their original investment in funding the Temiskaming and northern Ontario railway. However, there was a dark side to those 130 years of mineral development. Thousands of men were killed or maimed in unsafe working conditions, there were no environmental controls, landscapes were destroyed, waterways polluted, unions were brutally suppressed and aboriginal communities did not share in the economic prosperity. But we must remember the context of the times. What was acceptable fifty or hundred years ago is intolerable today.

But, over the past 25 years, the mining sector has made enormous strides in cleaner, environmentally sustainable mining practices, workplace safety and the implementation of corporate socially responsible initiatives that extensively involve aboriginal participation.

During the past twelve years, the social impact of the Northwest Territories three diamond mines have included $600 million in Aboriginal business revenues, increased First Nations secondary school enrolment – from 36 to 56 percent – and a 50 percent reduction of Aboriginal recipients on social assistance.

The Ring of Fire transportation infrastructure should be subsidized by governments as the economic and employment returns will be benefiting Ontario’s economy for generations to come as well as being the best opportunity of alleviating Aboriginal poverty in the Far North since the original treaties were signed at the turn of the last century.