Noront Resources Ltd. NOSOF

Wyloo Metals hopes to have Ring of Fire nickel mine, access

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Australia’s Wyloo Metals hopes to have Ring of Fire nickel mine, access road by 2026

Niall McGee

Alan Coutts, CEO of Noront Resources, at the company's Toronto offices on Oct. 24, 2019.Christopher Katsarov/The Globe and Mail

Wyloo Metals Pty Ltd., the winner of a fierce bidding war for Noront Resources Ltd. 

 

 

, hopes to have a large nickel mine in operation in the Ring of Fire, and an access road built into the remote minerals district in northern Ontario, within five years.

 

Earlier this week, BHP Group Ltd. said it was not willing to improve upon Wyloo’s offer of $617-million ($1.10 a share) for Noront, ending a seven-month battle. Wyloo, a private equity firm based in Perth, Australia, that specializes in investing in large resource projects, is backed by billionaire Andrew Forrest, founder of iron ore giant Fortescue Metals Group.

The scramble for Noront was about securing long-term supplies of critical minerals such as nickel.

Luca Giacovazzi, head of Wyloo Metals, said in an interview that Noront’s high-grade Eagle’s Nest project has the potential to produce large amounts of the nickel needed for electric vehicles.

“Eagle’s Nest is a high-grade nickel sulphides deposit, which are not only very scarce, but are particularly well-suited to producing Class 1 battery-grade nickel,” Mr. Giacovazzi said. “There is an incredible opportunity for Canada, and Ontario in particular, to reclaim its position as a key jurisdiction to global vehicle manufacturing through the supply of critical minerals to support the further growth of EV production.”

Mr. Giacovazzi said a “rough” estimate of when an access road into the region, and a mine, could begin construction is 2024, and both could be completed in 2026.

But getting over the finish line in the Ring of Fire will require Wyloo to overcome steep hurdles. Cut off from both the provincial highway network and the electricity grid, the region in the James Bay Lowlands in Ontario’s Far North requires billions in investment from Wyloo, and the provincial and federal governments, and consultation with nine First Nations stakeholders, several of which have expressed serious concern about whether the district should be developed. The Ring of Fire is home to one of the last untouched boreal forests in North America, and is in one of the world’s biggest expanses of peatlands, making it a major carbon sink.

“We are under no misconceptions that this will be an overnight success,” Mr. Forrest said in a statement. “The journey to realize the full potential of the Ring of Fire will require patience, determination and working hand-in-hand with First Nations, federal and provincial governments, and regional stakeholders.”

Ontario renews push to develop stalled Ring of Fire, but Indigenous opposition mounts

Wyloo poised to acquire Ring of Fire operator Noront for $617-million, as BHP refuses to top earlier bid

In the short term, Wyloo plans to redesign Noront’s out-of-date mine plan for Eagle’s Nest. Wyloo envisages an operation significantly bigger in scale, based on better metallurgy, and taking advantage of significant efficiencies and technological advances in the years since.

“Noront’s feasibility study isn’t really a true reflection of the actual value of Eagle’s Nest,” Mr. Giacovazzi said. “It is a great, world-class orebody. If it was sitting in Western Australia, it would be a billion-dollar-plus mining operation.”

But unlike Western Australia, which is one of the world’s most prolific and advanced mining districts, the Ring of Fire is undeveloped, and situated in swampy terrain that presents a huge engineering challenge. James Franklin, former chief scientist for the Geological Survey of Canada, told The Globe and Mail in 2019 that the Ring is “about the worst place” anyone could think of to build a mine.

Wyloo must also persuade the federal government to invest at least $800-millon to build the access road, alongside Ontario, which has already committed that amount. Mr. Giacovazzi said that given Wyloo’s huge balance sheet, and the growing importance of critical minerals for Canada’s economic security, the case for Ottawa to invest has never been stronger.

Internal government documentation recently obtained by The Globe shows that after almost a decade of showing little interest in investing in the Ring of Fire, Ottawa’s tone has shifted. In April, Jeff Labont, an assistant deputy minister with Natural Resources Canada (NRCan), wrote in a memo that Ottawa would consider sharing the cost of the road, and make a decision after Ontario puts in a formal request for funding under Infrastructure Canada.

If Wyloo succeeds in developing the Ring of Fire, it will be after close to two decades of unfulfilled promises, false starts, and the torching of huge amounts of money from several large mining companies. When U.S. iron ore major Cliffs Natural Resources sold its Ring of Fire projects to Noront at a 95-per-cent discount in 2014, its then chief executive officer Lourenco Goncalves told The Globe he had no hope the region would be developed in the next 50 years, calling it “beyond the point of no return.” Seven years on, Wyloo is convinced it has cracked the code, and with nickel prices on a tear owing to the electric-car boom, it believes this time truly will be different.

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Internal government documentation recently obtained by The Globe shows that after almost a decade of showing little interest in investing in the Ring of Fire, Ottawa’s tone has shifted. In April, Jeff Labont, an assistant deputy minister with Natural Resources Canada (NRCan), wrote in a memo that Ottawa would consider sharing the cost of the road, and make a decision after Ontario puts in a formal