Dr. James Mungall is a professor of economic geology at Carleton University. He was Noront’s Chief Geologist during the discovery phase of exploration, but has no financial conflict of interest related to the Ring of Fire. He is considered the top specialist in magmatic ore deposits in Canada and is well-respected globally. Both the Ring of Fire and the Sudbury Basin are magmatic ore deposits.
How much is the Ring of Fire really worth?
Why has mining still not begun in Ontario’s Ring of Fire mineral deposit belt a decade after its discovery? Are the deposits worthless, or are there factors beyond the control of the mining industry that are blocking progress?
The value of recoverable contained metal “in the ground” represents the sum of wealth that can be generated through the eventual sale of the commodity to the marketplace. This wealth is distributed over costs of labour, energy, equipment, taxes, profits and interest payments, adding to economic activity by many actors.
Alternatively, the value of the deposit to investors is represented by the profit they hope to make after paying all costs. The need to apply a discount to future earnings shortens the time window on a company’s investment decision to just a few years and may forbid large initial capital expenditures even if the potential for long-term wealth generation is very great.
A third consideration is the intangible value of the deposit to society at large, such as the desire to secure a local supply of a strategic metal or to increase long-term economic activity in an underdeveloped region. Continue Reading →