Nunavut’s biggest IIBA to date: what’s in it?
QIA-Baffinland deal on the Mary River iron mine would pour millions of dollars into QIA’s coffers
The Qikiqtani Inuit Association dubbed it a “historic” moment when Tom Paddon, president and chief executive office of Baffinland Iron Mines Corp., and QIA president Okalik Eegeesiak finally signed the deals which will pave the way for the Mary River iron mine in northern Baffin Island Sept. 6.
Just before Eegeesiak put her right hand down to sign the first document, she looked behind her and asked a group of QIA negotiators: “Are we sure?”
After a chuckle and some nods, she signed the Inuit impact and benefit agreement and commercial production lease, which has been in negotiation for seven years.
The signing of the IIBA, which will likely be worth millions to the QIA and Inuit in Baffin Island when the mine moves into commercial production, also came with a signing bonus.
But the amount and most other financial information contained in the IIBA was not revealed Sept. 6.
Paddon said, however, that the IIBA will make the Mary River mine a successful project.
“It’s very much in our best interest for this to be a success for the Inuit,” Paddon told the packed room at the Discovery Lodge in Iqaluit. “The stronger and healthier communities [are] in the North, the better project for us.”
“We don’t want to have to recruit people from the South and fly everybody up and bring all of our services from the South — it’s not an efficient a way to do business,” he said.
“There’s a lot of work to get there. But that’s what the document is for,” Paddon said.
Eegeesiak, speaking mostly in Inuktitut, said that there are bound to be mistakes throughout the span of the project, which would produce 3.5 million tonnes of iron ore a year, until 2020, when 20 million tonnes of ore would start flowing for at least 20 years if Baffinland expands the project.
But Eegeesiak said the entire Baffin region will benefit from the mine.
She also said QIA representatives will visit the entire Baffin region to explain the agreement to communities.
The IIBA contains twenty-four articles in the initial draft of the summary of the agreement handed out at the meeting, which spells out how Inuit will benefit from the Mary River Project.
As part of the deal, an executive committee will be created that will comprise three representatives from each of QIA and Baffinland, called “BIMC” in the document.
The executive committee “makes sure BIMC and QIA are accountable to their respective commitments to maximize Inuit participation.”
To make any important decisions in relation to the IIBA, five of six representatives from the executive committee will have to agree.
The agreement does not set a minimum Inuit employment target, called “MIEG” in the summary.
But it does say the executive committee will set annual minimum Inuit employment targets, review contract award issues and respond to communities affected directly by the project.
As part of the IIBA, an implementation budget will be created with several funds, which includes:
• business capacity and start-up fund — $250,000 per year paid by BIMC until commercial production begins;
• Ilagiiktunut Nunalinnullu Pivalliajutisait Kiinaujat Fund (a fund to offset negative social or cultural impacts created by the project and to help distribute benefits) — $750,000 per year paid by BIMC and QIA equally for the first six years;
• education and training fund — $1 million for the first two years the IIBA is in effect, paid by BIMC;
• scholarship fund — $25,000 each year paid by BIMC;
• workplace orientation programs; and,
• money to pay the costs associated with implementation of any rights, obligation or requirements of the IIBA.
Royalty payments paid by Baffinland to QIA during commercial operations will be reported yearly in an annual general meeting.
But the royalty rate and the estimated size of royalty payments were not revealed Sept. 6.
In a footnote, the royalty payment is defined as “the net sales revenue for a period multiplied by a factor agreed to by the Parties in the IIBA.”
These payments can be re-negotiated after 30 years, or once $1 billion tonnes of iron ore has been mined.
QIA can also expect advance payments from Baffinland. These include:
• a payment upon the date the IIBA is signed;
• a payment upon the date the Nunavut Water Board type A water licence is approved;
• a payment upon a positive construction decision by Baffinland; and,
• a payment each quarter starting one-year after the construction decision is made and continuing until commercial production begins.
For employment, Baffinland will create an Inuit-specific human resources strategy.
Its goal: to “identify barriers to the employment and advancement of Inuit, particularly Inuit women, and BIMC will try to reduce them over the course of the project. “
A number of cultural articles are included in the IIBA as well.
The IIBA says Inuktitut in the workplace will be supported and its use will be increased over the life of the project, and that a lack of English “will not be a barrier to employment.”
And according to the IIBA, Baffinland says they will “make available” country food to Inuit employees, and to non-Inuit employees “from time to time” to promote Inuit culture.
Baffinland will also provide funding for environmental monitors to ensure management of monitoring plans “specific to environmental concerns.”
A wildlife compensation fund worth $750,000 will be established by Baffinland for the first three years the IIBA is in effect.
The fund will be administered by QIA and will compensate Inuit “for any loss or damage related to wildlife that they have suffered” as a result of the project.
Baffinland have to make an annual IIBA implementation report each year to the executive committee.
Some articles will still come up for review every three years.