Baffinland is $1B in debt, lacks liquidity to buy fuel for this season’s sealift
Mary River iron mine might have to cease operations, company says in court fillings
Baffinland Iron Mines Corp. is more than $1 billion in debt, court documents say. (File photo)
Baffinland Iron Mines Corp. spent more than $1.46 billion on a proposed expansion that was ultimately rejected by the federal government, and these expenditures led to the company seeking creditor protection.
Now, the company owes $1.07 billion it cannot repay, according to court documents filed May 14 with the Ontario Superior Court of Justice. The court documents list dollar amounts in USD, which Nunatsiaq News has converted to Canadian dollars.
Between 2017 and 2022, the company “entered into significant contracts” in anticipation of approval of its proposed 110-kilometre railway from Mary River iron mine, near Pond Inlet, to a port at Milne Inlet, according to the court documents.
But the federal government rejected the project, named Phase 2, at Milne Inlet after a heated, years-long public hearing.
“When the Milne railway was ultimately rejected by the regulatory authorities, these expenditures left the debtors carrying significant debt attributable to a project that could not proceed,” the court documents read.
As a result, Baffinland lacks the “liquidity” to buy fuel before this year’s sealift shipping window closes, which may force the mine to “cease operations entirely.”
Despite this, Baffinland expects no operational disruptions and day-to-day decisions are still being made by executives, “subject to court oversight,” said Baffinland spokesperson Peter Akman in an email to Nunatsiaq News.
Akman ignored questions about the company’s debt or the billion-dollar investment in its unapproved Phase 2 project.
Baffinland still intends to build a separately planned $5.7-billion railway and deepsea port project at Steensby Inlet, Akman said, which would allow the company to ship 22 million tonnes of iron ore per year.
That said, the company “does not currently have sufficient capital committed to advance the [Steensby] project,” according to the court documents.
Baffinland told the court it has attempted to address its “liquidity constraints” by renegotiating supplier contracts and laying off staff, the documents state.
The company, which is Nunavut’s largest private sector employer, laid off 10 per cent of its staff in 2024.
But despite these cost-reduction measures, Baffinland’s financial troubles still persist.
Tim Hodgson, the federal minister of energy and natural resources, was asked Tuesday during a separate news conference in Nunavut about Ottawa’s stance on Baffinland’s situation.
“[Baffinland doesn’t] have the capital to operate the mine,” Hodgson said.
“And the Steensby expansion is incredibly important to the long-term vitality of that mine and quite frankly to the entire economy of Nunavut.”
When asked, Hodgson didn’t say whether Ottawa is considering a bailout for Baffinland, but said “on top” of the situation.
So, the heart of the matter is Baffinland made a very poor decision to enter into agreements for the Phase 2 expansion, before the NIRB review was completed, knowing full well that the proposed expansion was deeply unpopular and might not receive regulatory approval.
Hope them hunters are happy for a soon to be abandoned mine like the old nanisivik
Wow! That could put hundreds of Inuit workers out of a job.