If Canadians were unfamiliar with the Ring of Fire before Game One of the World Series between the Toronto Blue Jays and the Los Angeles Dodgers, they were well-versed by the end of Game Seven, thanks to Ontario Premier Doug Ford’s relentless television campaign.
“Canada faces economic uncertainty, we have a plan to secure our future, and it starts in the Ring of Fire,” the government-sponsored ad declared during every commercial break.
The Ring of Fire is one of the most valuable untapped mineral regions in the world, the narrator boasted, with vast quantities of critical metals. But the remote area 540 km northeast of Thunder Bay is accessible only by plane. Plans to build all-season roads have been discussed for years and are winding through provincial and federal environmental assessments steered by local Indigenous communities.
Now, just as Prime Minister Mark Carney gets set to name more mining ventures to the federal Major Projects Office fast track on Thursday, at least one policy expert is calling the hyped Ring of Fire a “failure”.
“They were talking about the Ring of Fire 30 years ago and talk about a road started 10 years ago,” says Jay Khosla, executive director of economic and energy policy at the Public Policy Forum in Ottawa. “What are they doing about it? Where is the provincial and federal government lining up with mining companies to make it happen?”
Shorter-term
While the Ring of Fire represents long-term potential, there are smaller projects that are ready to be built today. One of them is Generation Mining’s (TSX: GENM) Marathon copper-palladium project in northwestern Ontario, which is projected to produce 2.16 million oz. palladium, 532 million lb. copper, 488,000 oz. platinum, 160,000 oz. gold, and 3.05 million oz. silver over 13 years. The project benefits from robust infrastructure, established partnerships with First Nations, and strong support from both federal and provincial governments.
“Our strategic metal project represents an immediate opportunity for the province and indigenous communities and would serve as an example for the development of larger projects like the Ring of Fire,” CEO Jamie Levy says.
But it took three years for the government to approve Marathon’s Environmental Impact Assessment and another three years for the junior to secure its final construction permit in May.
“It was pretty painful,” Levy says of the process. “There are so many permits you need to get and often you needed to get one before you could apply for the next one. The lengthy permitting processes significantly delay the development and production of the critical metals essential for the energy transition.”
Major Projects Office
In August Carney launched the Major Projects Office to simplify and accelerate federal decision making for projects essential to Canada’s economic growth. The office aims to transform the regulatory process to ensure that projects of national interest are reviewed within two years, from start to finish.
Pierre Gratton, President and CEO of the Mining Association of Canada, is enthusiastic that the government is sending a positive signal with the Major Projects Office. The edict about getting things done in two years means government departments are feeling the pressure, he says.
“Since Carney was elected the attitude within government has changed and there’s a greater responsiveness from departments now to get projects built,” Gratton says. “U.S. President Trump has shifted the attitude in Canada to ‘We need to build things, and we need to find ways of being better at this,’ which is all good. Can they do it in two years? It’s really ambitious. But I do think timelines are getting better and will improve.”
Still, Gratton doesn’t anticipate the Major Projects Office initiative will have much of an impact on his membership.
“They are looking for projects that are already blessed by First Nations, and if you know mining, that usually comes towards the end or after an Environmental Impact Assessment. So, we don’t actually think that that model is going to be all that relevant for us.”
For starters there will not be many mining projects that meet the threshold that the Major Projects Office is looking for in terms of First Nations support. But there will be some MPO-designated infrastructure-related projects that could make certain mining projects more economic, he argues.
“That’s where I can see maybe some opportunities to make this fast-track work, but we struggle to see how an individual mine would go on.”
Rare earths
If Gratton had to guess, the MPO may put a rare earth project on the list, given the geo-political imperative and to demonstrate to the U.S. and Europe that Canada is serious about building rare earth capacity. But it’s not without risk, he says, because “they’d want to have a pretty good idea that First Nations nearby don’t have objections.”
At the end of the day, mining companies will continue to do federal and provincial level assessments, meet Fisheries Act authorizations, and Transportation Canada requirements, and all of the other approvals required to get a project to the finish line, he says. “What our focus continues to be is let’s make the existing Acts more efficient.”
The Major Projects Office declined an interview request. In September, Prime Minister Carney announced the first series of projects being referred to the MPO for consideration, which included two copper mines: Foran Mining’s (TSX: FOM; US-OTC: FMCXF) McIlvenna Bay copper mine project in Saskatchewan and the Red Chris copper and gold mine expansion in B.C. Red Chris owned by Newmont (NYSE: NEM; TSX: NGT)and Imperial Metals (TSX: III).
Clear timelines
Pierre Lassonde, a founder of Franco-Nevada (TSX: FNV; NYSE: FNV) and a former president of Newmont, argues that what companies really need are assured timelines.
“Capex and time are the two most value-destructive things in the mining industry. If the time keeps going up and the capex keeps going up, you kill any project,” the Canadian Mining Hall of Fame member says.
“Mr. Carney has not addressed the key issue, which is the permitting timeline,” he says. “They say they’re going to cut through the time but the easiest way to cut through it is to change the regulations and put in place a timeline where, yes, you do everything you need to do, consult with First Nations, but you don’t need five years to do it. Otherwise, the projects migrate elsewhere.”
Moreover, timelines that are supposed to be on the books are stretched by government all the time, he says. “They are supposed to give you an answer in nine months, and it takes them a year and a half. And there’s nothing you can do about it.”
Khosla of the Public Policy Forum agrees. “Have clear timelines and give companies certainty,” he says. “Is it two years? Make it clear, make it happen, and build in efficiencies.”
“There has been no other issue studied more in depth than our regulatory process,” he adds. “It’s a big mystique that we can’t do it in a timely way. Why do we have environmental assessments that take years and then need permits under so many departments and a lot of it requires the same information?”
Project comparison
Canada Nickel (TSXV: CNC; US-OTC: CNIKF) CEO Mark Selby says permitting has improved dramatically since he last permitted a project in Canada 10 years ago.
The former CEO of RNC Minerals took the Dumont nickel-cobalt project in Quebec from initial resource to a fully permitted construction-ready project in 2015. RNC received multiple rounds of more than 100 questions for Dumont, while so far Canada Nickel has received just one round of 35 questions on its Crawford nickel project.
“Interaction with the Impact Assessment Agency of Canada has been much, much better with Crawford than Dumont,” he says. “The process is still as rigorous, but if we get our permit for Crawford next year it will be less than four years from start to finish for one of the biggest base metal projects in Canada.”
The Crawford nickel sulphide deposit, 42 km north of Timmins, is the world’s second-largest nickel reserve and resource and is rumoured to be among the projects that might be deemed of national interest.
Still, there’s always room for improvement, Selby says. First, some projects are higher risk than others, so is it really necessary to do the same amount of work on every project, he asks. Second, is it possible for regulators to rely more on the work of reputable engineering firms to minimize any rework?
“Good mining companies hire leading engineering firms that have engineers who have to personally sign off on these projects.”
Effective leadership
Selby and others are also encouraged by the team at Natural Resources Canada, which has been put in charge to implement the government’s directives for nation-building under its Build Canada Act.
In May, Carney appointed Tim Hodgson as Minister of Energy and Natural Resources and in June Michael Sabia as Clerk of the Privy Council. Both men have had successful careers in business and finance.
Hodgson spent two decades at Goldman Sachs and later served as a special advisor at the Bank of Canada, while Sabia spent three decades in the public and private sectors, including as President and CEO of Quebec’s pension fund La Caisse and as Canada’s Deputy Minister of Finance.
New era
The federal budget released on Nov. 4 underscores just how serious the prime minister is about kicking mining into high gear. The blueprint, which has yet to be approved in Parliament, promises a $2-billion sovereign fund that will make equity investments, offer loan guarantees and negotiate offtake agreements for critical minerals projects. It also earmarks hundreds of millions in additional spending for the mining industry.
Highlights include a new investment vehicle called the First and Last Mile Fund focused on getting near-term critical minerals into production, which will be run by NRCAN, and the expansion of eligibility for the Critical Mineral Exploration Tax Credit to include 12 new minerals necessary for defence, semiconductors, energy and clean technologies. The credit works in tandem with Canada’s flow-through share structure, which channels funds from high-net-worth investors to junior miners.
“I have never seen a budget like this that had so much for mining,” says MAC’s Gratton. “Budgets have been supportive the last few years, but this blows them out of the water.”
Fast-track processing
If Canada wants to have a critical minerals industry, however, it must build sufficient downstream processing capabilities, Lassonde argues.
“When I look at the government unveiling billions and billions of dollars for the industry for producing critical minerals that’s all well and good,” he says. “But if you don’t process them here you’re missing out on 90% of the value added. In all the declarations I’ve read there is no mention at all of processing facilities.”
Jon Wojnicki, partner and co-leader at management consultants EY Parthenon, suggests that in the short- to medium-term, Canada might do well to provide loans, incentives and permit pathways to getting some of the past-producing processing, metallurgical and smelting facilities up and running again.
“There are lots of closed processing plants across Canada—more than we know,” Wojnicki says. “We can fast-track these companies to restart these facilities with some environmental stopgaps.”
Floor prices
Building domestic supply chains for critical minerals can also be accelerated by establishing floor prices for selling product strategic-use cases, Wojnicki argues. He points to the U.S. Department of Defense’s 10-year deal with rare earths producer MP Materials (NYSE: MP) in July, which sets a price floor of US$110 per kilogram for neodymium-praseodymium and a 10-year offtake agreement. The company will use the long-term commitments to build its second magnet manufacturing facility to serve defence and commercial customers.
“One of the reasons why past-producing countries of critical minerals like Canada are no longer producing at the same level is that a non-capitalist system—China—has been manipulating prices,” he says. “One of the things we could do is take the price manipulation off the table by providing a reasonable floor price.”
Flow-through shares
In addition, development stage projects owned by Canadian companies outside the country should be eligible for flow-through share financings to help them get to a bankable feasibility study, Wojnicki says. This would also benefit Canada’s world-class mining services industry.
Flow-through shares could even be extended to funding starter mines and demonstration plants, he adds.
“Especially if it’s a novel technology or now well known, you could extend flow-through share financings for all the studies that go into a bankable feasibility study – from bulk sample mining to demonstration plants.”
