Big Beyond Belief

As regulatory hearings enter their next phase on the $6-billion proposal, the 50-year-old Mary River iron discovery holds huge promise for remote Baffin Island economy.

Imagine a single new mine project, anywhere in Canada, that would need the equivalent of one in every 12 people who live in the province to build it. In Ontario, that would be about three million workers. In Saskatchewan, that’s about 100,000 or so.

On one project?

Unthinkable, but in Nunavut … it’s reality.

It’s where, pending approval, as many as 2,700 workers could be engaged two years from now building Baffinland Iron Mine Corporation’s iron mine; digging ore so pure it can be fed unprocessed into the European blast furnaces of the world’s biggest steel makers.

It’s a paradigm-shift development with the potential to lift the vast Baffin region, even the entire adolescent territory, out of its economic torpor on a scale and a pace that eclipses anything undertaken to date across Arctic Canada.

It would also ripple across the vulnerable Arctic social and environmental landscape in ways the territory is trying to absorb as it labours through an approval process now in its second year.

The joint venture between the world’s top steelmaker, ArcelorMittal of Luxembourg and Toronto-based Iron Ore Holdings LP, hopes to start shipping 18 million tonnes a year by 2016. That could grow to 30 million tonnes.

Providing the permits are granted, Baffinland will invest $6 billion in building two coastal ports, plus the infrastructure to support a workforce of 950 harvesting a mountain of ore, along with a 150 km railway, the world’s northernmost. It’s an investment that would dwarf even the biggest yet seen North of 60: the Diavik diamond mine cost a mere $1.3 billion in 2002.

A 50-year evolution

Arctic prospector Murray Watts found the Mary River iron deposit in 1962, one of his string of legendary discoveries including the Raglan nickel mine and Asbestos Hill. But it was so remote that even its astonishing 65 per cent pure quality meant it was caribou pasture.

Until his death in a car accident in 1982, Watts promoted the property, but a feasible enterprise never came together, said former Baffinland chair and CEO Richard McCloskey in Business Excellence magazine in 2010.

In 2004, with $5.5 million raised through friends and business associates, he took the prospect public. Further work that showed there could be game-changing one billion tonne deposit.

Fuelled by soaring Chinese demand, iron hit record values and sparked the high-profile takeover battle in 2011, when ArcelorMittal acquired Baffinland Iron Mines Corp., with a joint bid of about $600 million with rival US private investment firm Energy and Minerals Group. ArcelorMittal holds 70 per cent.

Mineral resource estimates as of 2008 for three of nine ore zones have been pegged at 865 million tonnes of which 365 million tonnes are proven and probable reserves grading 64.7% iron, 52 million tonnes are measured and indicated resources grading 64.6% iron and 448 million tonnes are inferred resources grading 65.5% iron.

All Aboard

Despite Baffinland’s remarkable scope and isolation 1,000 km north of Iqaluit, in a daunting land where winter averages -30 Celsius and the sun disappears for three months a year, CEO and President Tom Paddon says the technologies and methods proposed are actually quite conventional.

It’s the $2 billion, 150 km railway that’s attracted the most attention, but even as the world’s northern-most rail system, it’ll work, he says.

“The project, in and of itself, is logistically challenging. It is large,” he said in Up Here Business in November of 2011. “But we have the benefit of not having to invent new processes or implement untried technology.”

But they will have to cold-modify the fleet of 11 diesel locomotives and forge special steel alloy for the rails. Thirty-one bridges and 200 culverts will be needed, and the two tunnels — one of them 1300 metres long — will have to be insulated to keep the permafrost permanent.

Six trains a day, each a kilometre long, will roll at 60 km/hr from the mine south to Steensby Inlet, discharging their cargo into specially commissioned, ice-breaking chartered ships for the 5741 km voyage to Europe. The return voyage in winter will take 45 days. Plans call for the mine itself to close for one month during the deep of winter, when cold and dark make it too inefficient to operate.

Impacts Far and Wide

By some estimates, Baffinland holds the promise of tripling the Territory’s GDP growth rate and generate $5 billion in tax revenue and royalties over its projected 21-year life. On top of almost 1,000 direct jobs, many more will be needed elsewhere in Nunavut and southern Canada to support and supply them.

Baffinland’s draft Environmental Impact Statement, which detailed how the mine will plan and manage impacts at every level, was submitted in January 2011. It has been revised to answer more than 300 questions from the Nunavut Impact Review Board, and the final 10-volume EIS got a positive reception when it was filed in February of this year.

The EIS outlines the mine’s giant footprint: two-kilometre wide open pits will level the top of Deposit 1 and an airstrip capable of commercial jets will be needed to support a camp of almost 1,000. Beyond the mine itself, a 100-km long all-season road already connects the property to the coastal port at Milne Bay to the northwest; this will be the project’s construction supply route. It will be mothballed after the 150-km long railway is built to Steensby Inlet to the southeast, but will be put back in service for oversized loads the railway can’t handle.

Then there is the unknown impact on the Arctic sea life — walrus, three species of whale, seal, fish and polar bear — of year-round shipping, one every other day, by 10 freighters plying the waters of the Foxe Basin and Hudson Strait between Steensby and Rotterdam, a route that is today virtually ship-free.

To its credit, Baffinland also doesn’t shy from the not-so-positive realities of what new wealth will bring to an area already coping with social, addiction and violence issues that are among the highest in Canada.

Its February project summary acknowledges the dilemma, saying that “The increased purchasing power of employees as well as the redistribution of wealth generated by Project activities has the potential to accelerate the changes currently being experienced by the Inuit society and families,” and promising to “undertake collaborative monitoring and address issues as they arise.”

 The Nunavut Impact Review Board will hold final public hearings into the project this summer in Iqaluit, Pond Inlet and Igloolik.

 www.baffinland.com