June 3 (Bloomberg) -- Canadian police arrested 12 men and five youths, most of them Canadian citizens, saying they were members of a terrorist ring that plotted to build bombs to set off in southern Ontario.

The group acquired three metric tons (6,614 pounds) of ammonium nitrate, triple the amount of the substance used in the 1995 Oklahoma City bombing that killed 168 people, the Royal Canadian Mounted Police said in a statement today from Toronto. No bombs were ever assembled, police said.

The group adopted an ideology that was ``inspired by al- Qaeda,'' said Luc Portelance, a member of Canada's spy agency, the Canadian Security Intelligence Service, during a televised press conference today.

Canada was criticized in November 2002 in an audiotape released purporting to be a message from Osama bin Laden, saying Canada was ``allying themselves with America in attacking us in Afghanistan.'' Al-Qaeda listed five countries for attack, including Canada, and has attacked the other four -- the U.S., the U.K., Spain and Australia.

``We are targeted because of who we are and because of the way we live, because of our society, our diversity and our values,'' Canadian Prime Minister Stephen Harper said in a speech today from Ottawa. Today's arrests show Canada's steps to increase security ``have borne fruit,'' he said.

Spy Agency, Parliament

Canada sent troops to Afghanistan to support a U.S.-led invasion after the Sept. 11, 2001, attacks on New York and Washington. Parliament last month voted to extend the mission of the 2,300 troops there until at least February 2009.

``They have made us a target with or without us being there'' in Afghanistan, General Rick Hillier, Canada's chief of defense staff, told reporters in Ottawa after Harper's speech. The two were attending an event scheduled earlier to welcome new army recruits.

Toronto's subway system wasn't a target of the group, police said, and they declined to identify the intended targets. Ten of the 12 adults arrested yesterday were from Toronto or its suburbs, and the remaining two were from Kingston, Ontario.

The group's targets included the downtown Toronto office of Canada's spy agency, and the country's Parliament in Ottawa, the Toronto Star newspaper reported today, citing unidentified people.

Court Appearance

Police declined to give any details on the youths arrested. Canadian law protects the identities of youths charged with crimes.

Russ Knocke, a spokesman for U.S. Department of Homeland Security, said there ``is no indication'' the plot spilled over into the U.S.

The Canadians, however, may have had ``limited contact'' with two Georgia men arrested in April, FBI Special Agent Richard Kolko said in an e-mail. Syed Haris Ahmed, a George Tech student who is a naturalized American born in Pakistan, and Ehsanul Islam Sadequee, an American of Bangladeshi descent, allegedly traveled to Canada in March 2005 to meet Islamic extremists to discuss terrorist targets in the U.S., according to court documents.

The suspects appeared in a Toronto-area court at about 3:30 p.m. today, the Star said on its Web site, where a judge ordered them to return on June 6.

More than 400 law enforcement agents handled the investigation, which police said was the biggest since terrorism laws were updated after the 2001 U.S. terrorist attacks.

Disrupt Trade

The charges include training for the purposes of terrorism, handling illegal weapons and explosives and using other property for terrorism, said Royal Canadian Mounted Police Assistant Commissioner Mike McDonell.

``It was their intent to use it for a terrorist attack,'' McDonell said.

Terrorism in Canada could disrupt trade with U.S., the world's largest trading relationship with $1.4 billion of goods a day crossing a little-defended land border stretching over 5,527 miles (8,893 kilometers). U.S. President George W. Bush has pushed Canada to help secure North America from terrorism.

Canada's exports to the U.S. make up a third of its C$1.1 trillion ($1 trillion) economy, the world's eighth largest. Eighty-five percent of Canada's exports go to the U.S. More products cross the Ambassador Bridge between Detroit and Windsor, Ontario, than move between Germany and France.

More Groups in Canada

Canada has budgeted more than C$9 billion ($8.17 billion) to improve public security since the 2001 terrorist attacks on New York and Washington.

``Canada has had a fair number of terrorist attacks over time,'' said Gary LaFree, director of the Study of Terrorism and Responses to Terrorism, a Homeland Security Department-funded center. ``In some ways this is for Canadians and Europeans a situation that is even scarier. It's their citizens attacking from the inside who are disgruntled.''

Canada's spy agency has warned that al-Qaeda and other terrorist groups may attack. More terrorist groups probably operate in Canada than any other country except the U.S., because of its proximity to the U.S. and a large immigrant population, the Canadian Security Intelligence Service said in a 2002 report.

Montreal resident Ahmed Ressam was arrested on Dec. 14, 1999, while attempting to cross from Canada into Washington state carrying bomb-making material he intended to use at Los Angeles airport. Ressam was convicted in the U.S. in 2001.

Laporte, Air India

Canada hasn't had a terrorist killing on home soil since 1970, when Front de liberation du Quebec kidnapped a British diplomat and killed Pierre Laporte, a provincial Cabinet minister. In 1985, an Air India jet was bombed on a flight between Montreal and London that exploded off the Irish coast, where most of the 329 people killed were Canadian, according to Canada's spy agency.

``This is a deeply disturbing trend we have seen in the West, not excluding in Canada,'' said Dave Harris, former head of strategic planning at Canada's spy agency, in an interview with the CTV television network today.

Police statements about what evidence they had gathered show the group was ``at a fairly advanced stage in whatever they were doing,'' Harris said.

Police said they arrested these adults: Fahim Admad, 21, of Toronto; Zakaria Amara, 20, of Mississauga, Ontario; Asad Ansari, 21, of Mississauga; Shareef Abdelhaleen, 30, of Mississauga; Qayyum Abdul Jamal, 43, of Mississauga; Mohammed Dirie, 22, of Kingston, Ontario; Yasim Abdi Mohamed, 24, of Kingston; Jahmaal James, 23, of Toronto; Amin Mohamed Durrani, 19, of Toronto; Steven Vikash Chand alias Abdul Shakur, 25, of Toronto; Ahmad Mustafa Ghany, 21, of Mississauga; Saad Khalid, 19, of Mississauga.

To contact the reporter on this story:
Greg Quinn in Ottawa at  gquinn1@bloomberg.net.