Governance Options for the Ring of Fire

July 16, 2014 - Many questions abound when it comes to the issue of mineral development in the Ring of Fire (RoF) region of Northern Ontario. These questions – which are top of mind for many in industry, government, academia – include concerns about who will pay for the necessary infrastructure and how it will be organized, planned, managed and implemented. All big issues. In a paper I recently wrote for the Northern Policy Institute on the topic, I suggest a properly-designed transportation Authority model could be more effective than a traditional Crown corporation to meet the infrastructure needs in the RoF. The Authority model would maintain the same core elements as formulated in federal Airport/Port Authorities, but would obviously need to be tailored to fit the unique challenges of RoF development. An effective model would place the onus and risks on all the stakeholders and not just the provincial government and taxpayers, while maintaining elements of independence, inclusiveness, risk sharing, market-driven, political independence and legislated legally-binding powers.

Let’s step back for a minute. The Ring of Fire consists of an area in the northern part of the province near the Attawapiskat River, where large high-grade deposits of chromite, nickel, copper and other minerals have been discovered, currently valued from $60 to $100 billion dollars that can be mined over many decades. The mineral resources in the area are remote and difficult to access with many conflicting and competing interests and costly infrastructure requirements. Stakeholders include nine First Nations in the region, various mining companies and the provincial and federal governments, making infrastructure needs – such as railway, road, power, pipeline and/or air facilities – a complex arrangement.

The Government of Ontario has announced that it will create a development corporation that would bring together public and private partners. Under such a Crown corporation model, while stakeholders would have a major say and make investments, the provincial government would be expected to make the final decisions, approve all Board Members, review and approve plans and all major projects, fund the largest portions of the costs and accept most of the risks. However, issues such as uncertain mineral markets and prices, a growing provincial deficit and debt, as well as unresolved aboriginal demands and environmental assessments, suggest that there is good reason to transfer more of the responsibilities off the shoulders of the provincial government.

As I’ve intimated above, such an option could involve creating a new independent and arm’s length statutory Ring of Fire Infrastructure Authority. All parties would have formal representation on the Board and it, not government, would select its own Chair and senior management, manage its own activities, etc. The Authority would be given power to plan and procure all or most of the facilities and services for road, rail, power and air, while sharing costs and risks with the private sector – i.e. the investments from mining companies, railways, and hopefully public private partnerships and access to the normal financial markets. The market place, not governments, would bring the discipline needed in terms of the viability, costs, risks and rates of returns. Political direction and decisions would be minimized.

I am a firm believer that governments ought to focus more on steering, less on rowing. Regarding the Ring of Fire, government should set the environmental rules, manage the First Nations and aboriginal issues and decide on the royalty regime and broad resource development plans (the steering). But then, determining whether and where there should be a road, a railroad, a slurry pipeline, airport improvements and associated financing and management why should the government decide that (the rowing) and carry the risks?

When – not if – resource development in the RoF starts to kick up, a strong governance framework to manage investments and financing – as well as oversee the complicated local stakeholder landscape – will be critical. I would argue that in order to keep politically-driven decision-making on this initiative to a minimum, the Authority model – which has worked very well at the federal level for over two decades – is the way to go. I hope that the new Liberal government under Premier Wynne seriously considers this approach as an option, in order to unleash the full potential of the Ring of Fire.

Authored by Nick Mulder

This opinion piece is drawn from a paper recently written by Nick Mulder for the Northern Policy Institute, a leading independent think tank in Northern Ontario. For the full version of the paper, please click here.

Nick Mulder is a former Deputy Minister of Transport Canada and was a principal architect of the development of the federal authority model governing Canada’s ports and airports.