Could China be the answer to Ring of Fire infrastructure woes? – by Jax Jacobsen (SNL.com – December 9, 2015)

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China is making a grab for chromite in Ontario’s Ring of Fire, with a state-owned enterprise preparing to launch a feasibility study on a railway that would link the remote region with other transport infrastructure and enable the export of resources.

Beijing has been aggressive in securing access to resources worldwide, pursuing deals of this sort from developing nations such as the Democratic Republic of Congo and Peru to construct railways, roads and ports in return for access to minerals the country needs to fuel its continuing growth.

Latin American exports to China increased from US$11 billion in 2003 to nearly US$106 billion in 2013, the bulk of those exports being minerals. In turn, China lent Latin American countries approximately US$98 billion in loans from 2005 to 2018, according to research from BBVA, a multinational Spanish banking conglomerate.

In Africa, China contributes the lion’s share of funding for the continent’s infrastructure, according to the “Spanning Africa’s Infrastructure Gap” report by Baker & McKenzie released in December.

Chinese development finance institutions are found to be the largest source of funding for infrastructure projects on the continent, amounting to over US$13.4 billion in 2013 and many of which are tied to mining projects. The bulk of African exports to China remain minerals and other natural resources such as oil and gas, amounting to 59% of all exports in 2013, according to the World Bank.

China looks to be adapting this model for access to Canadian mineral resources.
The proposed Ring of Fire deal will have many implications, not just for mining companies looking to develop deposits in the mineral-rich region, but will also set a precedent for foreign firms and state-owned enterprises interested in investing in Canadian infrastructure.

Late in November, Canadian junior mining firm KWG Resources Inc. announced that its subsidiary Canada Chrome Corp. had inked an agreement with Chinese state-owned enterprise China Railway First Survey & Design Institute Group Co. Ltd. (FSDI) , a subsidiary of China’s Ministry of Railways. The two companies will explore the possibility of FSDI conducting a feasibility study on a railroad, which would transport chromite produced by Canada Chrome in Ontario’s Ring of Fire region.

Chinese state-owned enterprise Golden Share Mining Corp. is representing Canada Chrome’s interests in China and will receive a cash finder’s fee equal to 1% of all CapEx made by FSDI to improve any of Canada Chrome’s transport assets.

FSDI is moving quickly to advance the project.

The Chinese firm might have a proposal for KWG Resources by the end of the year, KWG Resources VP of Exploration Mo Lavigne told SNL Metals & Mining on Dec. 2.

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