By Karan Kumar – Exclusive to Chromium Investing News

Ring of fire chromiteA major mining project that could create thousands of jobs in Ontario’s Ring of Fire region is facing hurdles from First Nations communities in the area and it seems the situation will become worse before it gets better. As environmental groups and First Nations chiefs told ministers on November 7 they want greater environmental assessments for a proposed chromite mega-mine by Cleveland-based Cliff Natural Resources Inc. (NYSE:CLF), the future of this project seems headed back to its highly politicized past.

James Trusler, the chief executive of Platinex Inc. (TSXV:PTX), which along with other companies has worked in the Ring of Fire area since 1973, told Chromium Investing News in an interview “that participation of First Nations Communities in decision making is important.”

Trusler knows. In late 2009, Ontario had to pay $5 million to settle a lawsuit from Platinex over a failed project at Big Trout Lake, the Toronto Star reported last year. Platinex sued the province and the Kitchenuhmaykoosib Inninuwug (KI) First Nation because the community allegedly prevented Platinex from accessing its claims on the land. The Toronto Star reported that Platinex said Ontario failed to properly consult the players, and the development collapsed.

“The original Big Trout Lake property was subject to a highly politicized dispute involving the Ontario government and the KI,” Trusler told Chromium Investing News. “Platinex was clearly a victim or pawn of the dispute being unable to explore and develop its PGE deposits although it eventually settled with the Ontario government for money and a royalty.”

For Platinex, “it has been difficult finding the money to do a large program at this time. Once the area is developed with a road and railroad, many aspects will change,” Trusler added. “The costs of access to do work will go down. It will become feasible to develop some of the smaller known deposits in the area.”

But Cleveland-based Cliffs wants to start processing chromite, used to make stainless steel, at its Black Thor deposit  in the Ring of Fire – a 5,120-square-kilometre chromite, nickel, copper, platinum and palladium deposit in the James Bay lowlands – by 2015. Toronto’s Noront Resources (TSXV:NOT), which has spent $100 million on exploration in the area, wants to start mining along the same timeline.

Wes Hanson, CEO of Noront, said earlier this month that drilling at its Blackbird operation in the Ring of Fire is finished and results from 47 holes show that the “limits of the high grade chromite deposit have expanded to the north-northeast along strike as well as down dip. The company believes that this will translate into a material increase in the chromite resource relative to the December 2009 estimate. ”

Among Platinex’s properties with potential for nickel, copper, PGEs and chromium are the two major holdings in the Ring of Fire area. Platinex said in an August statement that since staking of these properties, a major chromium discovery has been
made in the area which is believed to be the largest known deposit in the world. While Cliffs has acquired a controlling interest in two of the companies and plans are in the early stages to develop the properties, Platinex believes its holdings are also well positioned in the area and it intends ensure that exploration is pursued in an orderly manner.

When last month the Canadian Environmental Assessment Agency announced it would initiate a comprehensive study on Cliffs’ project, an open pit and underground operation and an ore processing facility, the Matawa First Nations said they wanted a joint-panel process.

According to the Matawa chiefs, the method in which the Canadian government is proceeding with will slowly destroy their traditional way of life, extinguish their treaty rights and destroy their homelands and their children’s futures.

“I stand with the Matawa leadership in this assertion of their jurisdiction,” Ontario Regional Chief Angus Toulouse said in an article published last month. “The health of our people and all people, and the health of the environment are too important to be ignored. A respectful dialogue amongst First Nations, and Canada is the best way forward. We, First Nations and settler peoples alike, have duties and responsibilities to future generations, to the land, and to the waters – these considerations must inform our decisions and conduct.”

As emotions run high and companies that have invested millions try their best to start mining the land in which they have put their money, Trusler said  “it is essential to involve the local communities.” He added that the communities “in the area are severely impoverished. There is high unemployment.”

Trusler said the communities “will become an integral part of the project. The manpower and services will be anchored in the communities. So the participation of First Nations Communities in decision making is important. Platinex also believes that the governments should be involved at an early stage in helping boost the capacity and infrastructure of small communities. In addition, the Ontario government should consider sharing revenues received from provincial mining royalties among rural communities.”

Patricia Persico, Cliffs’ senior manager of global communications, said in an article published in the Wawatay News last month, that her company will engage with First Nations and Metis communities and other interested parties to get feedback on the project in coming months. Persico said Cliffs expects to complete and submit its report by late 2012.

In the meantime, frustrations among First Nations communities are rising. Marten Falls Chief Eli Moonias, in an article in Watawy News last month, called for the prime minister to intervene.

“Visits from junior ministerial representatives telling us what is happening instead of asking us how we want to participate is not consultation or accommodation,” he was quoted as saying. Moonias said that a map of northern Ontario used by the Canadian Environmental Assessment Agency (CEAA) made it appear like no one lives near the Ring of Fire projects.

“The map didn’t have a single First Nation community on it,” he said. “We aren’t even on their radar. That is offensive to our people. That is exactly the way government views the people who live where these developments are happening, like we don’t exist.”