Conservationists allege Baffinland withheld vital information from regulators
Oceans North says the company told investors it could triple production at the Mary River mine—a far bigger increase than what’s been publicly considered
(Updated Nov. 1, 4:30 p.m.)
Citing allegations of “major inconsistencies,” Oceans North, a conservation organization active in Nunavut, wants the Nunavut Impact Review Board to suspend its environmental assessment of Baffinland Iron Mines Corp.’s railway-based phase two expansion plan for the Mary River iron mine.
They allege Baffinland has failed to disclose the full scale and impact of the project to the NIRB and to the public.
“The Proponent has failed to disclose critical information of direct relevance to a fair assessment of actual and potential impacts of its project proposal,” Oceans North alleges in a notice of motion filed with the NIRB on Tuesday, Oct. 29.
The result is that regulators cannot properly assess the phase two expansion project, Oceans North alleges.
Oceans North filed its notice of motion with the review board on Oct. 29, saying they’ll ask that the NIRB hear the motion on the morning of Nov. 2, when a final public hearing on Baffinland’s expansion proposal is scheduled to start at the Iqaluit cadet hall.
Allegations of conflicting production levels
At the heart of their notice of motion is an allegation that, in 2018, Baffinland gave potential investors a description of the expansion project that differs from the description they’ve given regulators.
Oceans North’s evidence in support of that allegation includes a 722-page document called a “preliminary offering circular” that Baffinland distributed among potential bond holders in 2018. (See the document embedded at the foot of this story.)
Oceans North, in its notice of motion, says they want that document placed on NIRB’s public registry, along with an affidavit from Oceans North researcher Georgia MacDonald.
That document did appear, on Oct. 29 and part of Oct. 30, on a public registry list related to the review board’s consideration of the Baffinland expansion proposal.
But it’s now gone from NIRB’s site. At the end of the day yesterday, NIRB said Baffinland has raised a “confidentiality issue” with the document and that NIRB is reviewing it.
“The Proponent’s Preliminary Offering Circular (2018) reveals a large body of information regarding project plans that are fundamentally inconsistent with the project proposal under review,” the Oceans North notice of motion alleges.
Bond sales are a common method that companies, governments and other large entities use to borrow money.
Those who purchase a bond are effectively lending money to the company, to be re-paid after a fixed period of time, in exchange for an agreed interest rate.
Nunatsiaq News has viewed a copy of the preliminary circular offering. In that June 2018 bond offering, Baffinland proposed to borrow US$550 million to help finance its railway-based expansion plans.
In its pitch to potential investors, Baffinland appears to tell investors that the company may use its proposed Arctic railway to ship up to 18 million tonnes of iron ore each year through its port at Milne Inlet by 2021.
“Primary models and mine plans have been developed around the Rail Expansion work to support rail haulage of up to 18 Mtpa [metric tonnes per annum] of iron ore through to Milne Port,” the company states on page 105 of its bond circular.
On the other hand, the project proposal Baffinland filed with the NIRB seeks permission to ship only 12 million tonnes of ore through Milne Inlet, with future development shifting south to Steensby Inlet.
That’s double the six million tonnes the company was permitted to ship in 2019. A production increase of up to 18 million tonnes would represent a tripling of production from this year’s level.
An affidavit filed by Oceans North researcher Georgia MacDonald—published online yesterday by The Narwhal—also alleges that Baffinland told investors about plans to ship up to 18 million tonnes of iron ore through Milne Inlet, which suggests that there could be more that 200 ship transits per year through Eclipse Sound.
Oceans North has already said it fears that increased production and ship traffic poses unacceptable risks to narwhal and to the marine environment.
In a written response made on Nov. 1 to the Oceans North motion, Baffinland said the motion is without merit and should be dismissed summarily.
In another written response Nov. 1, a lawyer representing the Government of Canada said Georgia MacDonald’s affidavit and relevant sections of the circular to bondholders should be put on the public record. But the federal government also said they are opposed to a suspension of the proceedings.
The review board has not ruled on Oceans North’s allegations and has neither rejected them nor accepted them as fact.
Oceans North also says they will ask the review board to suspend its environmental assessment proceedings on the expansion project until after the NIRB and interested parties have had a chance to review the Oceans North material.
Baffinland offers to file confidential summary of financials
In another notice of motion, Baffinland’s lawyers say they will ask the NIRB for permission to file an 11-page summary of its consolidated financial statements.
That summary will explain why the project “cannot sustain production of 6 million tonnes per annum on an ongoing basis and that the Project is only financially viable at a greater rate of production,” the Baffinland notice of motion says.
But Baffinland told the NIRB they want that financial summary to be kept “entirely confidential” and that it should not be placed on the review board’s public registry.
The company has claimed in the past that the Mary River project cannot become viable unless it expands.
The review board’s public registry at www.nirb.ca contains multiple documents related to environmental assessments and is accessible to anyone with an internet connection.
In a letter filed on Tuesday, Oct. 29, the NIRB agreed to consider the motion immediately after its chairperson makes her opening remarks at the start of the public hearing on the morning of Nov. 2.