Baffinland calls rejection of expansion plan ‘surprising and disappointing’
CEO predicts ‘immediate and significant implications’ for Mary River mine that employs 2,500 people and accounts for 23 per cent of Nunavut’s economy
Baffinland Iron Mines Corp. CEO Brian Penney announced Thursday his company will go back to a scrapped plan to use Steensby port to ship its ore. (File photo)
Baffinland Iron Mines Corp. calls it “surprising and disappointing” that federal Northern Affairs Minister Daniel Vandal turned down the company’s proposal to expand its Mary River mine on Wednesday.
In a statement issued late Thursday, the company’s CEO Brian Penney hinted at an uncertain future for the mine, which employs about 2,500 people and represents nearly one-quarter of Nunavut’s economic activity. Baffinland is the largest private-sector employer in the territory.
The expansion would have generated about $4.7 billion in tax revenue for Nunavut, royalty and tax revenue for the federal government and royalties to Inuit associations, Nunavut Tunngavik Inc., and the Qikiqtani Inuit Association over the lifetime of the mine’s expansion.
“The minister’s decision has immediate and significant implications for the current Mary River operations and our workforce of 2,500 people,” Penney said in the release.
That statement came a day after Vandal formally rejected the company’s expansion plan, known as Phase 2.
Baffinland wants to increase the mine’s output by building a 110-kilometre railroad from the mine to Milne Inlet to make it easier to ship more iron ore, build a new wharf at the inlet to allow more ships to come in, and to increase its shipping limit to 12 million tonnes of iron ore a year from six million tonnes.
Vandal’s decision marked the end of a four-year assessment of Baffinland’s proposal by the Nunavut Impact Review Board, the body that advises the federal government on the social and economic impacts of development in Nunavut.
On Wednesday, Vandal approved the recommendation NIRB made in May not to allow the expansion to go forward. NIRB said there was no way to mitigate the environmental and wildlife impacts the expansion would have.
Throughout the assessment process, Baffinland has said it needs the expansion to make the Mary River mine financially viable.
“Baffinland’s Phase 2 expansion plan would have created long-term stability for our business, for the local communities on Baffin Island and for the territory of Nunavut …,” Penney said Thursday.
He added the proposed expansion would have lowered the marine and terrestrial effects the mine’s current operation has and would have increased employment.
“Given the clear benefits to Inuit, Nunavut and Canada as a whole, and the fact that Baffinland high-grade ore is also the greenest path to steel production, the minister’s decision is both surprising and disappointing,” he said.
If the mine isn’t financial viable at current extraction and shipping volumes, and has to close, then the Government of Nunavut will have to slash its budget massively to make up the revenue shortfall. That may be the price of environmental preservation. The blunt reality is all mining harms the environment, and stopping Industrial, massive-scale resource extraction to save traditional Inuit society and practices may come with a cost of having to give up some Western lifestyle expectations, like telecom, or commercial air travel accessible to consumers, or fuel for snow machines. This cannot be paid for pit of traditional hunting activities. Tough choices ahead.
Baffinland paid $10 million in payroll tax, and $4.7million in fuel tax to the GN. Now the same reports show $15 million of that is to Inuit employee wages, (12%).
Now Baffinland just in 2021 paid $9.2 million in royalties to QIA AND $3.4 million in rent. It also spent $5.9 million to implement the IIBA, and $2 million in ICA implementation.
Also Pond Inlet and MHTO got $140,000 and a $400,000 harvester program.
So it seems NTI and QIA have more to lose then the GN, as the GN budget with transfer payments is $2.02 Billion. I don’t think the GN will feel this loss, however NTI and QIA will!
Out of 2500 workers are actually from Nunavut? And reside in Nunavut?
Why can’t they try the other mining companies?
Royalties don’t mean nothing when you will never get the land back as it use to be . Go figure ?
you seriously think another mining company is going to do business in a place where there are an unknown amount of hurdles to jump through? where a group of people who had already made tens if not hundreds of thousands of dollars off the mine can protest, claim its for the environment when it was all about royalties and more money in their pocket. what dream land do you live in?
You didn’t understand my question did you? Baffin Land isn’t the only Mining Industry in Nunavut, Why can’t the workers seek other employment with others? Cambridge Bay, Rankin Inlet, Baker Lake, even NWT, -Yellowknife to name a few
then the “affected” communities get absolutely nothing and do you know how much it costs for someone to get from northern baffin to Iqaluit? nevermind all the way to Yellowknife? i dont think mines would be willing to the shell out that kind of dough every rotation to get someone to work , they would give them a travel allowance, and i could bet that it wouldnt be enough to cover those costs for an individual to make it feasible for them to work there in the first place, theyd end up working to cover the costs of flying to work
Don’t bite the hand that feeds ya! Talk about wanting to have your cake and eat it too!
So Baffinland is surprised and disappointed that its lobbying of the Minister failed to convince him to overturn the decision of the body established under the Nunavut Land Claim Agreement, which did its job. This should not be surprising!
Would you say they had done their job if they had sided with Baffinland?
“The expansion would have generated about $4.7 billion in tax revenue for Nunavut, royalty and tax revenue for the federal government and royalties to Inuit associations, Nunavut Tunngavik Inc., and the Qikiqtani Inuit Association over the lifetime of the mine’s expansion.”
.
Please provide a breakdown. How much would have gone to each?
.
Is it not true that maintaining current production rates will result in roughly the same $4.7 billion going to those same parties, but over a longer period of time?
.
Is it not true that maintaining the current production rates will result in more money going to Inuit workers than would have gone to Inuit workers if the expansion would have been approved?
.
Is it not true that, if BIM were to shut down, those Inuit workers currently at BIM would be able to earn good livings by slightly reducing the need for southern workers to build the 3,000 homes the GN hopes to build in Nunavut between now and 2030?
1. The royalty structure and payment schedules are set out in the IIBA, try reading it sometime.
2. The company has repeatedly said that it cannot remain profitable at the current production rates, so your question is moot. There can only be future profits if the mine remains viable and operating. This concept shouldn’t be that difficult for you to grasp.
3. You assume that there will be a mass layoff of Inuit workers once the railroad is completed. Mining companies aren’t in the business of training and then releasing skilled workers, other jobs would be available to those workers. So, NO there will be no net benefit to Inuit if the mine stays at its current rate of production. This is especially true if the mine shuts down (which it will) and those 200 plus Inuit permanently lose their jobs.
4. The mine had an expected life span of 100 years. How long does it take to build a house? Are you seriously expecting a one-to-two-year construction project to make up for 100 years of ongoing employment? And exactly how many miners and heavy equipment operators will be needed?
“The company has repeatedly said that it cannot remain profitable at the current production rates, so your question is moot.”
And BIM has proven to be a trustworthy company and would never lie to us.
I dont trust BIM so this statement is moot.
You say that they consistently lie. Can you provide multiple examples to support this statement? Saying they consistently lie doesn’t mean it is true. If you can’t provide some solid irrefutable examples of them lying, then that makes you someone who is spreading untruths.
You know why I’m excited about the decision against Phase 2 expansion? Because now I won’t have to read all the snarky, rude, patronizing, racist, neo-colonial vitriol in the Comments section about it. It’s been a long four years. ….
If you’ve already decided then there is no point in anyone engaging with you.
Cynicism probably makes decision making super easy.
Poof! There goes 23% of Nunavut’s GDP and $4.5 Billion in future revenues. Hope the North Baffin likes poverty and government handouts because that’s all they’re going to have now!
you show me the short list of improvements to north baffin communities as a result of BIM and I will consider your comment outside of its whining. im particularly curious where the training facility ended up.
You mean beyond the benefit of access to high paying jobs for the next 100 years or so or maybe the billions in royalties, benefits and revenue that will go to the Inuit of the Qikiqtaaluk?
Oh you mean the jobs that will be lost after the rails are put In?
Except if they did get to their increase to 12 Million tons/year that would decrees from 100 years to 50 years. then they also have plans to go up to 30 Million tons and if that were to happen that would decrease the it down to like 20-30 years, do you think they would stop there? they would ask to increase it more because in 100 years the current owners will be dead and i have no doubt the owners want as much out of the ground and sold while they are the owners (there not thinking about making there kids and grand kids work there)
This is an interesting comment. It goes to the question as to whether someone wants $100 in their pocket today or $1 per year for the next 100 years. A faster mining rate means higher revenues for the company but it also means more jobs now, more royalties now, more territorial taxes now, etc… At the same time the company is exploring for more and other companies are looking at mining. To say this is the only mine that will ever exist and so the production needs to be dragged out over many years, means it takes many years for those same benefits to move into the hands of Inuit. Not all Inuit want to work at a mine. However, those royalties, taxes, etc… can be used now to build infrastructure and training to support all Inuit whether they want to work in mining or not.
It doesn’t work like that that’s a 100 years with the deposit they are mining right now , they have found more deposit in the area will likely find more as time goes on
I go up there a few times a year but Iive in Sudbury my family has been in the mine industry in this area for 6 generations and will likely be for 6 generations more.
BIM obviously makes money regardless. They wouldn’t be here, otherwise. They just wanted more.
Actually the 25% owner of Baffinland which is publicy traded ArcelorMittal recorded a $45 million loss in 2021 on Baffinland when Iron prices started to decline from their highs. If we assume the other 75% ownership that a $180 million loss last year alone.
Now the year prior 2020 they made $300 million but note that was at record high Iron prices. In 2019 they lost $288 million. So just on these 3 years alone thats a loss of $168 million.
How much of the loss in 2019 was from them buying and shipping all the rail tracks to Milne Inlet before they got the approval?
Those purchases for expansion would be capital assets and would go on the balance sheet. They wouldn’t show up as loss on an the income statement. The loss would be solely from Operations (production and sale of product). If they now can’t be used, then they might become a write-off on the balance sheet which is a further negative on top of the operating loss already mentioned.
Umm, that is not how accounting works.
I’m sure that many of these losses were as a result of covid implication and less likely as a result of actual “Mining” losses.
COVID really started in Canada in March 2020… so how does that explain 2019 losses?
In the other article commenters were mentioning that Nunavut was still “Mine friendly” because there are like 2-3 other ones operating in this province.
Can those users please get back to me on how much % of the GDP those mines make as well? That 4.7 Billion could have built quite a few homes. It’s not Baffinland’s fault the GN mismanages the money.
Everyone failed to realize …before all of this ever was , no shovel on the ground yet. It was just a land and traditional and cultural people that would have been using to this day. yet pristine in nature it was destroyed and left everyone with all this mess. Every person even before the mine was ever conceived in ones mind was a happy person without a thought of this fiasco. Each Baffin community was just functioning and evolving to the times.
I fail to understand why if Steensby was the original plan – and a profitable one at that, why all the brimstone and fire now? Peehaps Brian Penny’s continuous crys of Wolf are now falling on deaf ears? People seem to forget that the ore will stay in the rock regardless so the mine will be profitable again whether through Baffinland or someone else down the road. Ps.I hear there may be a railroad for sale shortly…..
I’m so happy it wasn’t approved, pure ignorance of traditional values of Inuit who depend on wildlife and harvest. Which is healthy diet and very valuable traditional food, which the southerns know nothing about, I’m sure majority staff are from down south, which is breaching Nunavut Lands Claim Agreement as it’s operating in Nunavut. Very happy it wasn’t approved period.