Cliffs Natural Resources puts Ring of Fire project on hold, cites unresolved issues

The message from Cliffs Natural Resources Inc. couldn’t be any clearer: until crucial issues involving Queen’s Park and First Nations groups are resolved, development of the Ring of Fire is not going anywhere.

The Cleveland-based miner halted all environmental assessment (EA) work on the mega-project on Wednesday, saying it cannot go any farther because of delays that are outside its control.

“It feels like the only thing we can do,� Bill Boor, Cliffs’ senior vice president of ferroalloys, said in an interview. “The company can only drive the project so far without other people keeping up with us.�

Cliffs wants to build the first of what could be many mines in the Ring of Fire, a vast resource in Ontario’s James Bay Lowlands that could hold as much as $50-billion of minerals. Both the provincial and federal governments have stressed that developing the region is a priority.

But Cliffs cited a number of unresolved issues that forced it to suspend environmental work. They include a delay in provincial approval for the EA process, an ongoing judicial challenge to the process by First Nations groups, unresolved land surface rights covering a proposed road to the project, and the lack of definitive agreements with the Ontario government.

Mr. Boor said he expected decisions on the EA process and the land surface rights well before now, and he is not certain why Ontario regulators are taking so long to address them. He is also disappointed that Cliffs has been unable to get back to “meaningful� discussions with Queen’s Park following the Liberal government’s leadership change.

“Consistent with the whole message today is that these issues have lingered longer than we hoped,� he said.

Michael Gravelle, Ontario’s Minister of Northern Development and Mines, said in an interview that he understands Cliffs’ desire to speed up the path to development. But he also noted that the Ring of Fire is an enormous and complex project, and the province needs to get every detail right to ensure there are no problems in the future.

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“We’re talking about opening up a major development in a part of the province in the remote north that has not seen development before,� he said. “So it’s important to get it right. In that sense, I don’t think it’s unusual to have these challenges along the way. But I’m confident we can work our way through this.�

He also pointed out that First Nations groups near the project have ongoing questions and concerns around the environmental assessment, and speaking with them is a “parallel process.� Cliffs has said it is pleased with how First Nations talks are going, though the judicial challenge is a lingering concern.

The company estimated that the total cost to build a chromite mine in the Ring of Fire, along with associated infrastructure, is US$3.3-billion. However, that estimate is more than a year old and the capital number may be higher today.

While Cliffs has stated it is very eager to move forward with the project, its balance sheet is under pressure because of the ill-timed acquisition of Consolidated Thompson Iron Mines Ltd. in 2011. Cliffs hopes to find a partner to share the financial burden of the Ring of Fire, but most senior mining companies are selling assets right now rather than acquiring new ones.

BMO Capital Markets analyst Tony Robson wrote that the decision to suspend the project is a positive move for Cliffs, as it frees up “needed free cash flow to reduce debt.�

Article source: http://www.canada.com/Cliffs+Natural+Resources+puts+Ring+Fire+project+hold+cites+unresolved+issues/8516671/story.html