Baffinland secures $660M federal loan

After a months-long litigation, Baffinland has secured a federal loan to continue operations at its Mary River iron mine through 2027.

The company announced it had received the loan Tuesday in a news release.

The Oakville, Ont.,-based Baffinland Iron Mines Corp., which operates the mine on northern Baffin Island, announced in May it had filed for creditor protection.

The $660-million loan from Export Development Canada, a Crown corporation, is intended to provide “liquidity” to keep the mine operational, said Celeste van Tonder, the company’s chief financial officer, in a sworn affidavit.

At the time, van Tonder said if Baffinland didn’t get the loan, the mine would be “forced to curtail or cease operations entirely and a significant number of employees may need to be placed on leave.”

Baffinland is Nunavut’s largest private-sector employer with approximately 1,200 people, including 300 Inuit employees.

The company will use the money for “operating costs, exploration and expansion,” said Ashley Glen, director at Export Development Canada, in a sworn affidavit on June 19.

There are limitations on how the company can spend the money.

The new agreement doesn’t allow Baffinland “excessive” spending on mining exploration or expansion, Glen said, defining these amounts as more than $14 million on exploration or over $28 million on expansion.

Baffinland remains under creditor protection, which could still lead to “recapitalization or potential sale” of the company, spokesperson Peter Akman said Tuesday in a news release.

The company’s financial troubles are linked to its failed railway expansion proposal for Milne Inlet. It spent more than $1.5 billion on the proposed expansion, which was ultimately rejected by the federal government after years of hearings and opposition from some north Baffin communities.

As of May 14, Baffinland owes a total of $2.6 billion to 231 creditors, according to a list the company compiled for the court.

A dozen of those creditors are northern businesses and entities who are owed at least $27 million.

Nunatsiaq News requested an interview with a Baffinland representative to explain how the company hopes to secure future financial stability with the $660-million loan.

That interview was not granted.

Instead, Akman provided a statement that the company remains in “active dialogue” with employees, suppliers, government and communities, and that the company is encouraged by support from the federal and territorial governments.