Baffinland boss offers reassurances about mine expansion’s risks

“If we can’t protect Inuit culture and conditions, we won’t do it”

“If we can’t do it safely, we won’t do it. If we can’t protect the environment in our development, we won’t do it,” Baffinland’s CEO said last week at the Northern Lights trade show. (Photo by Jim Bell)

By Jim Bell

If the activities of the Mary River iron mine cause damage to people or the environment, then Baffinland Iron Mines Corp. won’t do them, the company’s CEO, Brian Penney, told a business audience at the Northern Lights trade show in Ottawa this past Feb. 6.

“If we can’t do it safely, we won’t do it. If we can’t protect the environment in our development, we won’t do it. If we can’t protect Inuit culture and conditions, we won’t do it,” Penney said.

He also promised that when Mary River becomes North America’s largest iron producer, the mine will employ more Inuit than any other private company—and will lower its greenhouse gas emissions.

“We will be the lowest GHG route to virgin steel. We will improve our environmental footprint,” he said.

In his presentation at the conference, Penney didn’t talk about the Nunavut Impact Review Board’s stalled public hearing on Baffinland’s Mary River expansion plan, which ground to a halt this past November.

That public hearing may resume after a series of gatherings scheduled to start in Iqaluit in March 16, culminating in a March 25 pre-hearing conference at which participants will try to iron out various unresolved questions about the company’s expansion plan.

Penney also didn’t talk about the 16 charges the company now faces under the Nunavut Mine Health and Safety Act, laid last December by the Workers’ Safety and Compensation Commission following a haul truck crash that killed a worker.

Those charges, as yet unproven, are still before the courts.

But Penney did talk about two other subjects: what makes Mary River special and why Baffinland needs to expand annual production from last year’s six million tonnes of ore up to 30 million tonnes at some point in the future.

And that, as Baffinland has asserted many times in the past, is because the Mary River needs to produce greater volumes of ore to become financially viable.

“We measure success in tonnes, not ounces, and we need millions and millions of tonnes to be successful. And we ship all these tonnes in a three-month period. No other iron ore producer, to my knowledge, does this,” Penney said.

That “three-month period” means the ice-free season during which ore-hauling vessels are able to come to Milne Inlet to pick up stock-piled ore for delivery to customers in Europe.

At the same time, their customers make use of that product through the entire year—and Baffinland must be able to guarantee they can make deliveries to them on time.

“If we don’t deliver, the customer could be in trouble and they won’t be our customer next year,” he said.

But to get those “millions and millions of tonnes,” the company needs to produce more ore, at a faster rate of production, using a more powerful and efficient mode of transportation to get it to port: a railway.

That 110-kilometre railway from Mary River to Milne Inlet lies at the heart of Baffinland’s phase two expansion proposal.

To explain how it would work, Penney showed a video illustrating the design of the railway, as well as the massive new ship-loading infrastructure that would be built at Milne Inlet.

That ship-loading system, acquired from ThyssenKrupp of Germany, includes two 10-storey pre-fabricated buildings and a number of small structures, shipped from last year from Bremerhaven, Germany.

“It’s one of the largest ship-loading systems built for an iron ore project anywhere in the world,” Penney said.

He also said it’s the largest single sealift of equipment every undertaken in the Canadian Arctic.

Assuming the federal government approves the expansion plan, the fleet of 90-tonne haul trucks that Baffinland used to ship about six million tonnes of ore last year to Milne Inlet would be replaced by three train sets.

That would bring iron ore production up to a rate of 12 million tonnes annually, creating the need for up to 176 voyages a year from ore carrying vessels.

And after the northward railway to Milne Inlet is completed, the company would turn to the south and build a railway to a port at Steensby Inlet, through which an additional 18 million tonnes a year would be shipped.

That would bring its total production up to 30 million tonnes a year.

Baffinland received regulatory permission in 2012 to build the Steensby Inlet railway.

But soon after that, they opted for what they call their “early revenue phase”—a short-term truck route to Milne Inlet.

“Everyone in the world who cares about iron ore and steel production has their eyes on Baffinland,” he said.

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(7) Comments:

  1. Posted by The Old Trapper on

    A company’s first duty is to it’s shareholders; to safeguard the shareholder’s investment, to produce a return (prof it) for the investor, and to ensure that the company continues to operate.
    Lofty objectives like preserving the environment or supporting indigenous culture is far down the agenda. It doesn’t mean that these aren’t necessary items, just that they are not at the top of the list.
    By indicating that these are the primary factors in Baffinland’s decision making is somewhat ingenious and misleading. Do I believe Mr. Penney? Well I believe that he wants the railroad, and that he want Baffinland to be more profitable.

    • Posted by Akademick on

      More modern theories and best practices in Corporate Governance generally favour a broader subsection of stakeholders than the traditional shareholder value model.

      I find it gratingly condescending when Mr. Penney speaks to us like this, but it’s worth pointing out it IS the right thing to do.

  2. Posted by Enoo Bell on

    Then when the mine nears closing they will claim bankruptcy like every other mine and leave a huge mess it’s happened that way everywhere.

  3. Posted by Cry Wolf on

    Baffinland has yet to follow through on their commitments for years now , what would make us think that this “story” will be any different ?

  4. Posted by North Baffiner on

    It is your insistence to try to keep shipping via Milne Inlet that is causing the problem. You are already approved at 18 million tonnes per annum via Steensby Inlet and year-round with room to grow it past that amount, yet Baffinland insists on driving all of the precious sea mammals away from Eclipse Sound thereby destroying the Inuit culture and way of life…quite the opposite of their intended goals.
    It seems they want to make Inuit non-hunters so they can just work at the mine instead of blocking their precious shipping routes. They are also pre-purchasing materials when their proposals haven’t even been approved… why do you insist on orating your desire to protect Inuit, Inuit hunting and cultural rights and on the other hand, commit marine mammal cultural habitat destruction? Very European of you!

    • Posted by Inuit on

      Baffinland is not yet approved to stock pile and ship 18 million tons yet, as of now, they are only licenced to ship 6 million tons.

  5. Posted by Observer communicator on

    The negative impacts of the mine are already felt by hunters in that area, caribou migration and marine life interference.
    Summit air flying at low altitudes disturbing caribou migration, the hundreds of ships disturbing marine wildlife.
    The people of Pond Inlet are greatly affected by this and the people of pond inlet should get royalties.

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