The Ring of Fire continues to divide First Nations and suck up money that should go to healing communities.

September 13, 2017.

The Ontario government decision announced on August 21, 2017 to fund a road to Ring of Fire mining claims over the objections of most of the Mattawa First Nations has the mining and construction industry cheering.

But the road is not going to happen unless there is consensus among the Mattawa First Nations.

The plan is for three of the First Nations (Marten Falls, Webequie and Nibinimik) to be the proponents of the road project, with the province funding it.  However, a condition of the funding is that the road has to service the Noront Ring of Fire claims.

Marten Falls is now a shareholder in Noront. In April, 2017, the First Nation was given over 300,000 shares in Noront, in return for “fulfilling certain obligations and arrangements” [which are of course confidential][i]. With more than 327 million Noront shares outstanding, this is drop in the bucket to Noront, but a serious compromise of Marten Falls’ position. Was one of the “obligations” that they would not publicly oppose the project? What are the restrictions on selling their shares?

Days after the announcement, Neskantaga and Eabametoong First Nations put out a press release stating:

The reality is that all the roads to the Ring of Fire traverse the territory of our Nations, and nothing is happening without the free, prior, and informed consent of our First Nations,” said Neskantaga Chief Wayne Moonias.

Neskantaga and Eabametoong First Nations have been actively working to have their rights recognized by Ontario, along with all 9 Matawa-member First Nations, at the Regional Framework Negotiations and the Jurisdiction Table. Both of these processes are intended by our Nations to be collective, community-driven discussions. “

…Citing a ‘divisive’ approach as being behind the Wynne Government announcement, the two communities of Neskantaga and Eabametoong pledged to honour their respective community processes and to ensure that a concrete agreement over First Nations jurisdiction is actually in place as a pre-condition to road approvals. The Elders and Youth of both communities have stated their support for the positions taken by the leadership.”[ii]

In May, 2017, Wynne had threatened the Matawa Chiefs

My government announced $1-[billion] to support infrastructure into the Ring of Fire three years ago and if we are going to deliver on that we can delay no further,” Ms. Wynne said in the letter, which was obtained by The Globe and Mail. “While I continue to hope progress can be made, I am prepared to continue to advance discussions with those First Nations that would like to pursue transportation infrastructure through our bilateral processes.”[iii]

She and her government have since pursued exactly that divisive strategy. Her government cut a backroom deal with three of the Chiefs.

The Chiefs of Nibinamik and Webequie scrambled to explain their position. On August 25, they held a press conference in Thunder Bay to “clarify Wynne’s announcement”.  Reported APTN:

Webequie First Nation Chief Cornelius Wabasse and Nibinamik First Nation Chief Johnny Yellowhead said they did not agree to construction of the all-season road, but rather a study of the feasibility of a “multi-purpose corridor” that could include a road, transmission lines and other infrastructure needed to underpin expected Ring of Fire development.[iv]

Noront is desperate for the road to be built

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. [v]

Federal and provincial government funding

Noront has raised the capital it needs to exist through many issues of flow-through shares. This is a federal and provincial program that allows the costs of exploration and development expenses to be claimed by investors that need tax write- offs. The foregone taxes, and the credits that go with them, affect all of us.

The province and the federal government have basically paid for most of the First Nations consultation, paying salaries for the lawyers, technical consultants and community mining advisors, including the Ring of Fire Secretariat, Bob Rae and Frank Iacobucci.

The federal government put in $15.98 million from 2010 to 2016 through the Strategic Partnerships Initiative “to support first nations’ mining readiness activities in the Ring of Fire“. In 2016, the government announced it was extending this program for another three years.[vi] The federal government also funds a program called Comprehensive Community Planning (in the amount of approximately $700,000). This appears to be at least part of the $200 million Carolyn Bennett said would be spent on indigenous children.[vii]

What else could have been done in the Mattawa communities if the money were used for supporting kids, housing, water, and sustainable job creation instead? As Bob Rae commented in 2015 to CBC: “This can’t be a process that is driven exclusively on the interests of one project or another,” Rae said. “It has to be seen as responding to a broader concern which is the isolation, the poverty, the real needs of these communities.”[viii]

Former federal Natural Resources Minister Greg Rickford is on the Noront Board.

No Feasibility Study for Ring of Fire Chromite.

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 $22million. 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.

Endnotes:

[i] https://www.northernontariobusiness.com/industry-news/mining/noront-poised-to-make-first-nation-a-ring-of-fire-shareholder-588541

[ii] Eabametoong and Neskantaga  First Nations: Roads not a done deal without jurisdiction agreement – August 24, 2017

[iii] Galloway, Gloria. Wynne pushes Ring of Fire chiefs for decision on regional road. Globe and Mail.

[iv] http://aptnnews.ca/2017/08/25/ontario-premier-wynne-cut-backroom-ring-of-fire-deals-chief/

[v] From Noront Annual Information return April 10, 2017.

[vi] Quoted from a memo to the Minister April 11, 2016. 

 

Auditor-General Slams Mines Ministry

In a report released on December 2, 2015, Ontario Auditor-General Bonnie Lysyk has slammed the Ontario Ministry of Northern Development and Mines for its handling of everything from the Ring of Fire development to protecting Ontarians from the costs and impacts of abandoned mines.

The “value-for-money” audit was intended to see if the Ministry had systems in place to:

  • support sustainable and responsible mineral development
  • ensure compliance with regulation and policies
  • measure its effectiveness in encouraging mine development while minimizing impacts on public health and the environment.

Given that the report was released at the same time as a number of other audits on the province’s energy policy and child protection services, the report on mining has received very little media attention. However, it is a damning indictment of the operations of OMNDM.

Among other matters, the Auditor-General found that:

  • Ontario is the only province that does not require environmental assessment before mines are developed.
  • Mining revenues to the province are less than 2% of the value of the minerals extracted; for diamonds it is less than 1% . Our “Marginal Effective Tax Rate” for mining is the lowest in the country at 5.6%.  Rents for mining leases are often not collected and arrears collection is not enforced.
  • Abandoned mines pose a significant risk to Ontario for contamination, physical hazards and financial risk. There are 4400 of them in Ontario. In the last 5 years, 63 mines have reverted to the province.
  • The Ministry has no estimate of the cost of rehabilitating the  abandoned mines in the province, and no long term plan for doing so. The Ministry estimates it could cost anywhere from $163 million to $782 million to rehabilitate these sites.
  • Ministry inspection of closed mine sites is woefully inadequate. In 2013 and 2014, only 6% of sites had been inspected.
  • Ontario has inadequate protection against footing the bill if operating mines close.  Closure plan implementation is “minimally inspected” and over 40% of financial assurance in the province is nothing but a line on the balance sheet of a subsidiary company. 66% of contaminated sites on Ontario’s books are former mineral extraction sites.
  • The Ministry does not have indicators to assess its effectiveness at meeting its goals.

The report makes 13 recommendations, consisting of 28 actions to address the audit findings. Many of the recommendations are a repeat of those made in their 2005 audit.

This is a shameful situation and speaks to the regulatory capture of the province by the mining industry.

 

Alarming Report from ECO: OJAMS response

News Release, Tuesday, November 10, 2015 –

Ontarians for a Just Accountable Mineral Strategy and Mining Watch Canada

Ontarians on the Hook for Water & Mine Site Clean-Up Costs – Alarming Report from Eco-Commissioner

In response to last week’s alarming report from Ontario’s acting Environmental Commissioner-  Ellen Schwartzel – MiningWatch Canada & Ontarians for a Just Accountable Mineral Strategy (OJAMS) are urging Premier Kathleen Wynne and her government to reform current water-user fees and environmental assurance requirements for mine site clean-up in Ontario.

“Just like the Commissioner, we are alarmed that most heavy industries in Ontario – including mining – continue to get a free ride for the million litres of freshwater they use every day,” says Ugo Lapointe, Canada Program Coordinator for MiningWatch Canada.

“We share the Commissioner’s ‘frustration’ that Ontario’s government has yet to act on the Drummond Commission recommendations and its own commitment to charge all large water users in order to recover the costs that it spends on water quantity permitting programs. Currently, large water users are only paying 1.2% of the 16.2 million dollars it costs to run the programs, leaving individual Ontarians to pay the remaining 98.8%. That’s unacceptable,” explains Joan Kuyek from OJAMS.

Billions potentially needed for mine site clean-up

“The Commissioner’s recent report also highlights the complete lack of transparency when it comes to getting a clear picture of the overall environmental and fiscal liability for contaminated mine site clean-up in Ontario. But when you start adding the bits and pieces of information you can find, the overall picture gets frightening,” asserts Lapointe.

“There are currently hundreds of active and abandoned mine sites in Ontario that pose a threat to the environment, waters, and communities. Some are very polluting, some will be very costly to fix – and some have no financial assurance at all to ensure their complete rehabilitation. We know the problem is big, but just not how big yet,” remarks Joan Kuyek.

The Eco-Commissioner’s report severely critiques the current financial assurance program meant to protect Ontarians and their environment for when mining companies are no longer able to pay for site rehabilitation. It stresses that financial securities are either insufficient, unreliable, or simply not collected by the responsible authorities. It also denounces the fact that Ontario is the only jurisdiction in Canada accepting the “corporate financial test” as a form of financial assurance. “That is the weakest form of assurance, yet it represents 40% ($654 million) of the total financial assurance held by the Ministry of Northern Development and Mines (MNDM) as of March 31 of this year,” states Lapointe.

Joan Kuyek: “The Commissioner is right. The problem is that the MNDM has no formal process for regularly reviewing the adequacy of collected financial assurance. In 2000, the MNDM revoked a regulation that previously required proponents to report annually on site rehabilitation, monitoring and any changes to the project. The government needs to reinstate this regulation and expand the financial assurance program to also address the huge environmental and fiscal problem that abandoned sites represent,” concludes Kuyek.

MiningWatch and OJAMS made a series of submissions earlier this year to both the Auditor General of Ontario and the MNDM in the context of the renewal of Ontario’s Mineral Development Strategy. Ontario’s new strategy should be released any time soon.