New report urges slowdown at Nunavut’s Mary River iron mine
“Ramping up production in the short term will result to significant loss of benefits to Inuit in particular and the territory more generally”
The more Baffinland Mining Corp.’s Mary River iron mine in north Baffin ramps up production, the fewer relative benefits will flow to Inuit, a new report concludes.
“The most important thing is that ramping up production in the short term will result to significant loss of benefits to Inuit in particular and the territory more generally,” said Trevor Taylor, the Iqaluit-based vice-president of conservation for Oceans North, which commissioned the report.
The report, prepared by John Loxley, an economist from the University of Manitoba, found that Inuit occupy “a very small share of the jobs at this mine” and the rapid expansion of the workforce will in all likelihood further reduce the Inuit share.
The report considers the eventual impact of Mary River ramping up production to 30 million tonnes of iron ore per year. That could lead to Inuit missing out on up to $1 billion in salaries, the report estimates.
To deal with this imbalance, the report suggests that compensation to Inuit organizations could be calculated as the difference between the financial benefits received by Inuit had employment targets been met and the financial benefits actually received.
Another option would be to force labour target compliance by regulating the expansion of output at themine. This would see the mine’s ability to increase production connected to its capacity to increase Inuit employment.
“I think it’s an idea that could be sold,” said Taylor in a telephone interview. “But I don’t think the company would go there willingly.”
Taylor added that if the development isn’t providing benefits to the citizens, and not giving more taxes to the government, it raises the question why governments should support the mine.
“The value of this report is that it shows that a slower approach to increasing employment is a wise approach for the Government of Nunavut and the federal government to support,” Taylor said.
But he said that shouldn’t be on the backs on the Inuit organizations to enforce.
The report points out that the demand for labour at Mary River is expected to rise from 933 jobs in 2016 to 2,410 jobs in 2021. As its phase-two expansion proceeds, capital projects (railways and ports) will raise labour demand to over 3,600 jobs in 2022 and 2024, steadying at 1,960 per year between 2015 and the end of the life of the mine in 2035, as annual output reaches 30 million tonnes per year.
Total labour demand over the whole period is estimated at almost 40,000 full-time-equivalent jobs.
But the report points out that Inuit labour supply is not expected to be even close to the projected labour demand.
Right now, Baffinland has Indigenous employment numbers well below those of comparable mines (notably, Voisey’s Bay at 50 per cent and Agnico Eagle’s Nunavut mines at 29 per cent of total hours worked), the report said.
And the Mary River mine has the lowest Inuit employment targets of any of the Canadian operators, the report said.
At Baffinland, Inuit employees have a turnover rate of 45 per cent and Baffinland has been unable to hire and retain enough Inuit employees to meet the 25 per cent minimum Inuit employment goal of previous years.
There is little hope of meeting a 50 per cent target, the report states. And as output expands, benefits per tonne fall.
“Inuit leadership would be well served to advocate for slower increases in output and/or to resort to additional compensation approaches to account for the lost benefits associated with long-term underemployment in a non-renewable industry connected to an Inuit-owned resource,” the report states.
Rapid mine expansion at Mary River will mean Inuit are likely to forgo even more benefits with regard to training, employment, and contracting opportunities over the lifespan of the project, the report said.
“These cumulative losses could be substantial. Assuming average Inuit wages remain around $60,000 per annum, if Inuit employment post-expansion reaches only 10 per cent (a reasonable possibility given greater overall project labour requirements and an Inuit employment rate around 12.5 per cent at the time of Inuit impact and benefit agreement renegotiation), the lost wages associated with a 50 per cent Inuit employment target would amount to over $1 billion,” the report said.
The original Inuit impact and benefit agreement for the Mary River mine was reached in 2013, followed by an amendment in 2018.
The agreement contains provisions intended to support Inuit interests in terms of financial transfers (advance and royalty payments), employment, contracting/subcontracting, and training opportunities as well as social and environmental programs.
And, as the Oceans North report notes, two of the guiding principles and objectives of the agreement are the maximization of Inuit benefits and the maximization of Inuit participation over time.