Officials at top U.S. iron ore producer Cliffs Natural Resources have announced they will suspend their $3.3 billion chromite project in Canada’s “Ring of Fire” by the end of Q4 2013, citing infrastructure risk development amid slackening demand in a highly mineralized, remote part of northern Ontario.
All technical project work, including a feasibility survey and exploration, has been halted with no restart date planned, as Thunder Bay, Ontario, and Toronto offices will be shuttered, according to a statement by the Cleveland-based miner. Cliffs had already suspended project environmental-impact activities alongside its affiliate, Cliffs Chromite Ontario Inc.
Cliffs was among the most advanced projects in the Ring of Fire, an area 740 miles north of Chicago and home to nickel and copper deposits with an estimated value of between $29 billion and $50 billion, Canadian government officials said in Q1 2013.
Company plans were set back after Ontario’s Mining and Lands Commission ruled against a proposal to build an all-weather road transporting ore crossing claims of other companies in the area. The $3.3 billion project estimate, company officials reported in Q1 2012, included mine development, a processing facility and transportation infrastructure.
Consequently, Cliffs “will not allocate additional capital given the uncertain timeline and risks associated with the development of necessary infrastructure,” the company said in a statement quoted by Bloomberg News. “Cliffs will continue with the Government of Ontario, First Nation communities and other parties to explore solutions to the issue of infrastructure for the region.”
Ontario’s minister of northern development and mines voiced disappointment with Cliffs’ decision, but said added development in the province will continue. “Our government is committed to collaborative development in the Ring of Fire and this is about more than one company,” Michael Gravelle said in a release. “It is a multi-generational opportunity and represents one of the largest known deposits in the world.”
Ontario Premier Kathleen Wynne has similarly called on Canadian federal officials to help develop the Ring of Fire, including infrastructure investment planned up to $1 billion, plus $1.25 billion more to construct all-season road.
Provincial authorities, meanwhile, announced they will create a new development corporation for the Ring of Fire, uniting private and public partners, including First Nations, mining companies and both levels of government.
But with a slump in worldwide demand, coupled with difficult negotiations between the Ontario and representatives of the nine First Nations tribal groups surrounding the deposit, have delayed developments for months.
