Will the sun set on the Ring of Fire due to debt, liabilities and indigenous action?

Norant Resources Limited – the company at the heart of Ontario’s Ring of Fire mining development – is once again making headlines as the subject of competitive corporate takeover bids by mining giant BHP Billiton and Australian private investment firm Wyloo Metals.

The bidding war has caused Norant’s share price to jump 235 percent to its highest level since 2011.

As well as share prices, indigenous protests have also intensified, raising important questions about the viability of the proposed mining operations and the value of Norant’s assets.

Ring of Fire area map.
(Noront Resources Ltd.)

The Nescantaga First Nation and the Mushkegouk Council, representing the seven affected First Nations, are openly fighting over the scale and speed of mine development in their regions. They are in the company of other First Nations throughout the region who have over the years asserted their political and territorial authority in the face of Norant’s proposed plans.



Read more: Nescantaga First Nation and Ontario’s Ring of Fire continue mining despite water crisis


declare jurisdiction

Indigenous jurisdiction and its refusal by the authorities had a great impact on the fate of Norant. Development of the company’s major mine has been stalled since 2011, because of the 300-kilometre all-season industrial road – called the “Road to Know” due to its dubious economic prospects – that is needed to access the remote mining area. .

This is because the First Nations in the region have consistently demanded that Ontario recognize its jurisdiction over its lands and territories. The Matawa nations, including Nescantaga, initially forced the province to negotiate a shared regional approach to decision-making.

A woman carries an empty water jug.
A woman carries a jug of water at the Neskantaga First Nation in northern Ontario in September 2021. Residents have not had clean drinking water for more than 25 years.
Canadian Press/Jonathan Hayward

That so-called Regional Framework Agreement barred the province from unilaterally granting approvals on indigenous lands, but was eventually dissolved by the province in 2019.

Indigenous authorities have continued to assert their jurisdiction in the region since then. Recently, a coalition of three First Nations (Atawapiscutt, Fort Albany and Nescantaga) has been insisting that a newly established regional assessment of the cumulative impacts of proposed mine and road development be indigenous-led.



Read more: Ottawa moves into ‘Ring of Fire’ debate with Doug Ford


During this period, Norant’s shares have fallen from about $2 in early 2010 to less than 20 cents since 2019. The company’s debt has increased to $299 million as of December 31, 2020, from at least $100 million in 2013, and its outstanding debt is $51.4 million.

Despite mounting evidence that indigenous consent is required to value the company and its assets, federal and provincial governments continue to pour hundreds of millions of dollars into mining development in the Ring of Fire in the form of exploration financing and infrastructure support.

millions to explore

As approval processes have dragged on and then stalled, Norant – backed by federal and provincial treasuries – has attempted to create value by growing its assets and expanding its exploration program.

Since December 2008, the company’s regulatory filings show that the federal and Ontario governments have subsidized Norant’s Ring of Fire exploration programs by approximately $45 million through a tax-based mechanism known as flow-through financing. .

This mechanism allows firms to raise exploration funds from investors and return tax credits to them.

Additional federal and provincial refundable tax credit flow-throughs are also available to investors, resulting in the transfer of millions of dollars—money that would otherwise have been tax revenue—to the discovery of Norant’s Ring of Fire. According to the company’s aforementioned regulatory filings, Norant has raised more than $75 million in flow-through financing for Ring of Fire assets since 2008.

This influx of government funds revealed a system of economic ties, described by the Yellowhead Institute, a First Nations-led research center, as colonial and predatory.

Amid indigenous demands to set and control the pace of development in their regions and create the necessary institutions to do so, this influx of funds also raises serious concerns about the financial realities of the Ring of Fire project.

bypassing indigenous jurisdiction

While the province once estimated the cost of implementing the framework agreement to be a little over $20 million, the cost of bypassing indigenous jurisdiction is much higher.

Since breaking the deal in 2019 in an effort to accelerate growth, Ontario has entered into bilateral funding agreements worth $20 million with two First Nations that are currently acting as proponents of the all-season road .

Doug Ford shakes hands with two First Nations chiefs.
Ontario Premier Doug Ford shakes hands with Chief Cornelius, Wabase Webequi First Nation, left, and Chief Bruce Achnipineskam, Marton Falls First Nation, center, in March 2020.
Canadian Press/Nathan Dennett

It is also currently negotiating a $38 million planning agreement with another First Nation, according to documents accessed by the request for access to information.

These same documents show that the federal government has spent nearly $11 million annually since 2016 to fund so-called community welfare projects in five Matawa communities. These programs are reportedly aimed at improving “community readiness” for mining operations in the Ring of Fire.

Screenshot of internal government documents.
A screenshot of internal documents obtained via a Freedom of Information request shows the extent of provincial and federal investment in the proposed Ring of Fire development.
(provided by author)

If Ontario has its way, this funding will be renewed for a total of $55 million over five years. Between 2010 and 2015, Indigenous and Northern Affairs Canada contributed approximately $16 million through a strategic partnership initiative to “support First Nations mining readiness activities” in the region, an investment up from a few million in 2016. .

It contributed $255 million over two years to a partially earmarked First Nations fund intended to support regional infrastructure in the Ring of Fire and encourage compliance with mining projects.

A 2019 intergovernmental memorandum – also obtained via a Freedom of Information request – shows the federal government offered to “explore options to advance Ring of Fire projects” using funds designated for welfare projects in Indigenous communities Of.

There’s also talk of a $1.6 billion all-season road. Ontario has recently pledged to fund the road through several First Nations homes, through a proposed cost-share arrangement with Ottawa.

A screenshot of the Freedom of Information documents
Internal documents obtained through a Freedom of Information request detail Ontario’s proposal for a cost-share arrangement with Ottawa on an all-season road to the Ring of Fire.
(provided by author)handjob author provided

Debt, debt and more debt

Norant has consistently under-represented investors, and now for corporate suitors, the legal and financial liabilities associated with indigenous jurisdictions – and many more.

Regardless of who successfully bids for the company, opposition to the Ring of Fire project is only likely to escalate until First Nations have de facto control over the decisions that will affect them. This increases the risk of litigation, indigenous land defense actions – and more debt.

According to internal documents, the federal and provincial governments are expected to generate $4.4 billion in combined tax revenue during the first 10 years of operation of the proposed mine. But if they add to the amount already paid for disregarding and bypassing indigenous jurisdiction, and the financial costs associated with continuing to do so, the $4.4 billion will soon be exhausted.

It is entirely possible that any profit related to this venture has already been spent. Now the question is, who will survive the burden of debt?

This article is republished from – The Conversation – Read the – original article.

Subscribe

Get the best of Newspaper delivered to your inbox daily

Most Viewed

Related Stories