Baffinland blockade cost estimated to be $14 million
Court documents describe details from weeklong blockade
Baffinland Iron Mines Corp. has put a price tag on the recent weeklong blockade that brought work to a standstill at its Mary River mine. The blockade could have cost the company more than $2 million per day, for a total exceeding $14 million, based on information in documents the company filed in court.
The company provided this information in an affidavit from its CEO, Brian Penney, last week during Baffinland’s efforts to secure a court order to have protesters vacate its airstrip.
The protesters oppose a proposed expansion of the Mary River mine that would double its output. The proposal is making its way through a Nunavut Impact Review Board public hearing, which is adjourned until April.
Legal wrangling continues over whether to extend an injunction Baffinland had secured, now that the protesters have decamped.
Baffinland asserts that it needs assurance its operations won’t become paralyzed by another blockade. The protesters, meanwhile, maintain that an injunction is unnecessary, because those involved have returned home.
In the meantime, court documents provide the company’s account of its interactions with the protesters, and of the blockade’s impact on its bottom line.
Baffinland hauls approximately 20,000 tonnes of iron ore every day along the road connecting its mine to its port at Milne Inlet, Penney said in his affidavit. The company receives advance payments for the ore delivered to port, at market rates of above $100 per tonne, he said.
This lost revenue — which works out to approximately $2 million per day — “is significant and our only source of immediate cash,” Penney’s affidavit states.
The company has “very limited, if any, ability to make up the shortfall once the road blockade is cleared,” Penney wrote. “This is because our truck transportation operations are running at capacity with very little room, if any, to increase daily trucking volumes to catch up for lost days of trucking.”
The cost of paying the mine’s employees and providing accommodations on site, meanwhile, is “hundreds of thousands of dollars per day,” Penney wrote.
A lengthy roadblock would have led to “a large number of layoffs for our employees and for the employees of contractors who work for us,” he said.
Fresh food dwindling after a week
The mine was also running low on fresh food by the end of the weeklong blockade, although it had enough non-perishable food to last a month, according to an affidavit by Shawn Stevens, the mine’s manager of health and safety.
The mine usually receives twice-weekly flights to supply fresh food.
If the blockade had lasted a month, “the supply of food would likely be near depleted,” Stevens said.
Company provided protesters with food and fuel
Stevens also described the company’s interactions with the protesters.
He said that seven hunters first arrived at the mine site Jan. 30. They stopped at the mine’s visitor communication centre and said they were staying at the nearby Milne Inlet hunters and trappers organization cabin, with plans to travel to the Mary River hunters and trappers cabin when the weather improved. They asked for and received hot meals and coffee, he said.
Over the following three days, Stevens said, Baffinland staff helped the hunters in a variety of ways: “providing numerous meals, repair of a snowmachine, providing use of a satellite phone … and the provision of more than 50 gallons of diesel fuel,” his affidavit states.
During this time, Stevens said the hunters caught seven caribou in the area.
On Feb. 4, one of the hunters contacted Baffinland staff and, according to Stevens, said, “Just to let you know that this is a peaceful protest. We will be blocking the KM97 Bridge and the airport runway. This is not a joke, this is a peaceful protest to protect our land, please do not retaliate.”
The airstrip blockade comprised two snowmobiles, two qamutiks, or sleds, and a campfire in the middle of the airstrip, Stevens said. The road was similarly blocked with a tent, a snowmobile, a qamutik and a campfire, he said.
Stevens said that he approached one protester and asked what the protest’s purpose was, and “he responded saying we were on his land and had no right to be there.”
Stevens said he asked the protesters to move the fire to the side of the runway to avoid damaging the airstrip. “His repeated response was he was on Inuit land and could do whatever he wished.”
“He mentioned it was a peaceful demonstration and they had no ill intent towards [Baffinland] employees. I told him their actions were scaring our employees, to which he responded that was not their goal.”
Stevens said he later asked protesters to move so that the airstrip could be graded to allow aircraft to land but they refused.
But the protesters did allow a bus carrying medical supplies to pass, he said. And he said that protesters told him they would be willing to move the blockade to allow a medevac flight to leave.
The protesters asked if they would continue to receive food and fuel from the company, Stevens said. He said they responded that they would receive more supplies if they cleared the airstrip.
“I did observe the protestors to be in possession of firearms, though they were not used in a threatening manner at all,” he wrote.
Protesters ‘contest the tenor and accuracy’ of Baffinland’s statements
Bruce Uviluq, an articling student working with the protesters’ lawyer, also submitted an affidavit, disputing some of Baffinland’s assertions.
He said the protesters offered to let flights leave, but the company wanted to make sure they had stopped blockading the airstrip first.
Uviluq also said the protesters were willing to allow airstrip maintenance to occur once a week, and to allow flights to take off and land during that time.
And Uviluq disputes that the protesters damaged the runway by setting a fire on it.
The protesters’ lawyer, Lori Idlout, said in a legal brief that her clients “contest the tenor and accuracy of the facts” in the affidavits of the Baffinland employees. She is set to cross-examine both Penney and Stevens on Thursday and Friday.
An earlier version of this article stated that the protesters offered to pay for runway repairs. Their lawyers have since clarified that the protesters instead offered to move so that repairs could take place.
I feel like I can hear the tears and sweat squirting from the corners of Penny’s eyes, lol
Wonder if Penny’s diet Coke supply got interrupted??
Wait $2 million a day, quick math $2 million x 365 days= $730 million/year. But in the article “Mary River mine needs a railway to survive, new economic report says” on Feb 8 they said in 2019 they only made $454 million. That is a big difference. and if they can make $2million a day then they would not have a short fall of $10.5 million over the year.
What am I missing?
November to April is prime time to be hauling ore because the road is hard and smoothest, spring thaw they close the roads because it gets too hard on the machines then pick up again after the snow from the hill finally all Melts and roads dry up is what I’m guessing.
Wait some more 20,000 tonnes a day everyday X 365 =7,300,000 tonnes they have an approval for 6,000,000 tonnes tell me my math is wrong.
It’s prime time to haul ore, spring is not, they don’t haul as much because of muddy roads, and road washouts, winter is the best time to haul, ergo 20,000 T a day during the”prime time” to haul
In Baffinlands terrestrial monitoring report from 2020 it says the average ore hauls were 238 per day. also they have a graph of the number of trips each day, there is about a week in mid May and a week in Mid June that have a decrease to about only 100 trips a day. so if right now is peak time (max last year was around 300 perday, look at the report and you see that right now is not there best time but they hit over 300 in Feb, June, Aug, Oct-Dec) then with each day worth $2 million that is each load is worth $6,700/load. in 2019 they had a total of 86,860 which means total income of $582 million. that is an extra $100 million then they claim they hauled. It is all in the reports they provide on their website.
I dont have time to ready every document they have put out but i feel they do that on purpose but I do not believe they are being honest.
You have to account for contingencies
you gotta taken in consideration for weather days, days when the stockpile at the crusher is low so not very many trucks are hauling & not hauling as much, days when there is only 15 trucks out of 75 working, days where there is not enough people to drive the trucks so trucks gotta be parked
Though i would not put it past them when i looked at the number of trips per day in 2019 the max they did this time of year was just over thee hundred. so if right now is the best hauling time then that means for the 20,000Ton in 310 trips is 64.5 tons a load. and in the report it says in 2019 the did 86,860 loads. so that brings it to 5.6 million tons. and even in their own doc they say they did 5.8 million tons in 2019. but where i really dont believe them is them saying they dont impact tuktu or marine wildlife and that they are not making any money.
Here’s what you’re missing, dust. big wheels, running 24/7 year in year out. dust and more dust. let’s be realistic; the region needs employment and it has many skilled workers that needs work, young families that need cash to live. steel rails; less dust but ppl in the region would still be employed; few lay-offs or dust? the choice is north Baffin’s. I have a feeling not all of Baffin Island is against mining.
Because they don’t haul ore 365 days a year. Because the total calculation by Baffinland provided at the hearing factors in debt associated with buying and moving equipment to the mine site (sealift), paying employees and contractors and pay outs to investors and banks on their loans. Somebody needs to go back to school and take Economics 101.
Its fairly obvious that nearly no one commenting on this knows anything about mining, iron ore or economics for that matter.
– trucks do no haul 365 days of the year
– trucks do not consistently haul 20000 tons a day even of good days.
– baffinland is paid for the ore once it hits milne at “Market Price” at that time.
– baffinland gets deducted for moisture and other impureties like sulfur that blast furnaces need to remove.
– baffinland does not get the same money based on class of iron being hauled.
There are many variables. What Baffinland posted as earnings and losses is accurate. Whether you like the answer or not.
Prices are a lot higher now than they were in 2019. It doesn’t get more complicated than that. One week by 20,000 tonnes per day is 140,000 tonnes. At $100/tonne this is $14M, at $75/tonne this is $10.5M.
any fire on winter operations of any road is damaging, let alone a critical one such as a Runway! peaceful protest is one thing, but to knowingly deceive Mine Employees upon arrival and accept food, fuel and repairs, then break out “oh yeah, this is a protest, get off my land” is pretty senseless and asinine.
and to have the balls to ask after the protest has started to continue to be fed. yeah, let me go fart and more into the food I will gladly give you. have you seen the movie “Waiting” (spoiler, pre deadpool Ryan Reynolds was awesome in it”
but I digress. seriously Guys. erm, Guardians. the kid gloves are off and I think you are all in for a rude awakening now.
You really dont sound like your from N.Baffin
Doesn’t really matter, does it?
Of course it does, who are you kidding? You think people from anywhere else that work at the mine give a rat’s behind about the welfare of the communities? What a joke!
I am from the North.
I do care about the welfare of our Community and our Territory. We cannot let any Company, Mining or anyone else run rampant and endanger our land and animals which we depend on. I do not agree with anyone taking advantage of our pristine land and especially when they ignore remediation and laws and critical Boards like NIRB which are there to protect us. the pictures of the damage done of iron dust must be investigated.
what I do not agree with was the guerilla tactics in which this protest had transpired. it seems the protest would have better been suited on the front steps of the Q.I.A Building since the major issue was the Royalties and being a recognized Designated Inuit Organization to receive monies. to shut down operations on a runway, impede traffic, food and medication supplies to the Mine and Trucking Operations during peak transfer operations should not have happened.
It was a good strategy to protest and stop the mine. It got us world attention. Outside QIA , maybe CBC would have picked it or maybe not. Protests happens in iqaluit about anything so it would have just been one of those protests on news one day and gone the next.
If I was Baffinland I’d be suing NTI and QIA for the lost income since they did not do anything to remove the protestors. They never had any business being there. They were trespassing.
Time to close the mine.. Can some one make petition, rest of all nunavut inuit should all decide now for all mining to stop untill there is better way with the stand of all it benefisherie
I don’t think Welfare Office can sustain additional ppl on welfare in Nunavut. trucks, boats, mortgages, ATVs and other human luxuries can’t be had by ppl on welfare. Economy would just stall without support from the private sector. We know Nunavut is not a place to be for the hungry, the poor and ill educated, government assistance barely keeps ppl alive and from chronic hunger.
How many millions of dollars can a band of militia burn before the supposed institutions of justice can make a very simple decision? The courts in BC gave injunctions against the Westwetsen very quickly. Our court has no ability to deal with anything but domestic assaults. Nunavut is prone to erratic decisions on the most basic expectations on the rule of law. Who will do business here when literally anyone can blockade your business without a single shred of right or entitlement with weeks of delay from the courts? Think of it: I don’t like the gas station in Iqaluit. I’m going to go stand in front of the pumps and camp. Will take weeks for any judge to decide on an injunction.
Typical get off my land attitude. The amount of dollars this mine provides the local community is substantial. And yet, many communities lose out because of a few who want to watch weeds grow on the lands they claim they own. Sorry protesters, it’s not your land. The land is owned and used by the Inuit people together. If you hate the spin off jobs that much why not protest before the mine opens. Oh then again you don’t have much pull then do you. My opinion, close the mine, don’t consider this area for any future mining or business. Allow them to continue to watch the weeds grow on government handouts. Unfortunately there is always a few that think they know what the entire community wants.
They lost their social license. Whatever happens with the NIRB decision, they can’t feel good knowing how drastic the costs could be and how many uncertainities they face given local opposition which seems ready to take action into their own hands.
Why didn’t the company call in the RCMP to arrest and charge the protesters?
Whatever you think of resource development Canada is supposed to be a country where both citizens and corporations live under the rule of law.
Who would ever know that Inuit want jobs instead of living off the taxpayers (read Baffinland) teat?
Following similar harassment, de Beers simply vacated the proposed expansion and closed he Victor diamond mine near Attawapiskat in norther Ontario, removing both jobs and cash flow from the community.
I’m sure that the bean counters have considered this option’s cost/benefit and that it is one someone’s contingency planning list somewhere.
Sometimes it is just better to cut losses and walk away.
Baffinland’s highlighting loss of revenue during the six day protest is a message to protesters as a form of deterrence or a scare tactic to ensure protests don’t happen again. But it has revealed to me how disproportionate the benefits are to Inuit to the level of revenue Baffinland is making. Only $5 million dollar a year on a global wildlife compensation. Baffinland is saving alot of money than other mines because it doesn’t have to pay for additional costs like processing and and shipping costs as its closer to the European market than Australia or Brazil. But its corporate responsibility needs to improve. We are where we are today because three years ago, Baffinland convinced the government to increase the production limit even though NIRB recommended not to, which made Inuit lose faith in the review and approval process, and made it more difficult to have trust in Baffinland. There is a real possibility that if NIRB doesn’t recommend approval, it can go to the government again and try to convince reversal of NIRBs recommendation. Baffinland needs significant buy-in from Inuit if this will be a long term project, and should learn from its mistakes. Work with Inuit, not create any more animousity than it already has.
And you are confusing revenue with profit. You need to spend money to make revenue but the profit is the difference between revenue and cost. You can make a million dollars revenue selling a million widgets for $1 each but if it costs you 99 cents to make each widget then your profit is only ten thousand dollars. This is what they have said during the hearings and why they want to build a rail. Currently, their cost for each unit of production at low production rates is very high. By going to a higher rate, you then divide the total cost by more units and your cost per unit versus your revenue per unit gives you a higher margin and more profit and thus more sustainable when prices drop.
The article stated ‘revenue’, so no I’m not confused. I already understand the economics of revenue versus profits, and the cost deductions related to investment returns, loans for infrastructure development, construction costs, operating costs etc, and profit loss during initial start-up that will eventually turn into stabilized profit revenues in the long term. The point is, in order for Baffinland to succeed in the long term, at this point in time of precarious boom and bust stage of start-up, it should improve its corporate responsibility beyond minimum standards to engage with Inuit more meaningfully. Right now, its acting like a bully kid that qivik’d and became retaliative with its $14 million ‘loss of revenue’ hype.
Acer is trying to sell all its Canadian mines ,on Bloomberg news yesterday.
There are no tags for caribou, right? Are people here subject to the wildlife act or is that just a joke? Can people just kill all the caribou they want without consequences?
Baffinland has enough food to last years in its sea cans, you just aren’t going to have salad greens and non frozen vegetables, I feel Baffinland should have crafted their statement a bit better on that front and the article should have as well.