Baffinland Iron Mine

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Baffinland Iron Mine
Location
Baffinland Iron Mine is located in Nunavut
Baffinland Iron Mine
Baffinland Iron Mine
Territory Nunavut
Country Canada
Coordinates Lua error in package.lua at line 80: module 'strict' not found.
History
Opened 2014[1]
Owner
Company Baffinland Iron Mines Corporation
Website www.baffinland.com

The Baffinland Iron Mines Corporation is working to develop a large open pit iron mine in the Mary River area of Baffin Island, Nunavut, Canada.[2][3][4][5][6][7] It is said to be the world's sixth most northerly mine.[8]

Paul Waldie, a Globe and Mail business reporter, called the project one of the most ambitious in any Arctic region, and said it was expected to "triple the territory's annual gross domestic product growth rate and provide nearly $5-billion in tax revenue and royalties to the territory over the life of the project."[9]

Environmental critics express concern over the impact the railway will have on migrating caribou, and the impact the frequent passages of the big ice-breaking freighters will have on sea mammals.

Archeologist Sylvie LeBlanc has described how the railway line will parallel the longest line of ancient inuksuit yet found -- Inuit navigation sculptures—over inuksuk sculptures in a line 6 kilometers long.[10][11][12][13]

In 2012, in a move that surprised many observers, Baffinland seemed to abandon its original development strategy, where a railway would have transported ore to a new port on the south coast of Baffin Island in favour of a having ultra-large dump trucks convey the ore directly from the mine-site via a "tote road" over 100 kilometers to a new port on Baffin Island's north coast.[14] The move surprised observers because the original plan had spent several years undergoing an environmental assessment, and was abandoned not long after the plan had been approved. The plan to carry ore via giant trucks has not gone through an environmental assessment. Baffinland has asserted that changes in the market for iron ore required a plan that was less expensive to get underway, even if it would be of limited capacity, and would be more expensive to run.

Timeline

Timeline
date event
1962
  • Prospector Murray Edmund Watts explores the region and finds the ore body.[9] Iron ore prices are considered too low for development of the mine to be economically worthwhile.
1982
  • Murray Watts dies.[9]
1986
  • The claim is acquired by Baffinland.[9]
2004
  • Baffinland goes public, raising enough funds for further testing.[9]
2006
  • Canarail is approached for an estimate of what the railway will cost to build.[2] They predict it will cost $350 million CAD. By 2011 the projected cost to build the railway will have quadrupled.[9]
2007
  • Baffinland has determined development of the mine site will require $4 billion CAD to exploit the site.[9]
2007-09-26
  • The Age reports that fluctuations in the value of its investments required Baffinland to secure an emergency loan, of $43 million CAD, before the end of the 2007 shipping season, to ship supplies to the 200 workers it then had on the Baffin Island—to provide enough food, fuel and other important supplies to last them through the long winter.[15]
2010
  • Baffinland hires experienced mining executive Jowdat Waheed as a consultant to prepare confidential reports.[16]
2010-08
2012-12-03
2013
2014

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  • Operation kind of started in September, according to the Operation chapter below.

The ore body

Mary River site

Iron ore was first discovered in the Mary River area by Murray Edmund Watts (founder of Watts, Griffis and McOuat Limited) and Ron Sheardown, in 1962.[5] But exploitation of the ore body waited for an increase in the price of ore. According to the Railway Gazette International the ore in this ore body is sufficiently pure that it will not be necessary to conduct any processing before shipping it to market.

The corporation expects to sell the ore in Europe at no less than $67 per tonne for lump ore and $55 per tonne for fines.[5] The corporation expects to produce 18,000,000 t (18,000,000 long tons; 20,000,000 short tons) per year for 20 years or more, and to pay down the cost of building the mine within the first 3 to 7 years.

In 2008 a 150,000 t (150,000 long tons; 170,000 short tons) sample was shipped to Europe for testing.[22][23] The ore was transported to Milne Inlet, where it was carried by barges to a freighter waiting off-shore.

Finance

Mary River mine site

Australian newspaper The Age reported that due to the financial crisis of 2007 Baffinland needed to secure an emergency loan of C$43.8 million, in order to ship enough supplies for the workers on site—or they would not have been able to survive the winter.[15] According to The Age the emergency line of credit was necessary because the Baffinland management did not have the funds available to ship supplies to the 200 workers on site before shipping closed for the season, "after investing in commercial paper that borrowers couldn't repay." According to The Age 95 percent of Baffinland's funds had been invested in short term debts investment vehicles, of 364 days or less. The iron ore price has gone down from around US$150 in 2010-2013 to around $70 per tonne in early 2015, which should be a concern.

Take-over

In September 2010 a specially formed private equity firm Nunavut Iron Ore tried to buy all of Baffinland for C$274 million.[24] Richard McCloskey, then Baffinland's chairman, told Mining Weekly in August 2010 the firm was seeking partners to provide the financing for the mine's construction.

ArcelorMittal bid to buy Baffinland; Nunavut Iron Ore Acquisition Company (NIO) subsequently made a hostile offer and increased it in December 2010.[17][25] The two firms agreed to merge their bids on January 14, 2011.[26] Reuters reports that the share price tripled during the four-month bidding war.

In March 2011, it was announced that ArcelorMittal had taken a 70% share in the additional stake, and Iron Ore Holdings the remaining 30%.[27] "Iron Ore Holdings is a limited partnership formed under the laws of Delaware for the purpose of making the Offer. Iron Ore Holdings is owned by Bruce Walter, the Chairman of Nunavut Iron, Jowdat Waheed, the President and Chief Executive Officer of Nunavut Iron, and funds managed by The Energy & Minerals Group (a private Houston-based fund that makes equity investments of $150 to $400 million in entities with talented, experienced management teams[28]) which is providing the majority of the equity financing for the Offer.[29] The Energy & Minerals Group is a private investment firm with a family of funds with over US$2 billion under management that invest in the energy and minerals sectors."[25] Subsequently, Nunavut Iron became WW Mines.[30] ArcelorMittal retain the position of Project Operator in this 50-50 joint venture.[31]

Insider trading reports

Camp site

In January 2012 The Globe and Mail reported that some senior executives were suspected of profiting from "insider trading" of Baffinland stock.[16]

According to the Mining Weekly Jowdat Waheed, an alumnus of Sherritt International and director at Sprint, and Bruce Walter tried to exploit information Waheed learned when he worked for Baffinland in early 2010 to try to mount a hostile takeover later in 2010.[32][33] In February 2012 CBC News reported that a hearing before the Ontario Securities Commission had been scheduled for January 2013. The initial phase of the hearing began Jan. 14, 2013 and is scheduled to run through to Feb. 22, 2013.[34] Both Jowdat Waheed and Bruce Walter were exonerated by the Ontario Securities Commission.[35]

Design

Initially a 100 km (62 mi) route to Milne Inlet on Baffin Island's north shore was preferred.[4] However the plans Baffinland submitted to regulatory boards revolved around an ambitious plan to build a special cold-weather railway line from the mine-site to a newly built port in Steensby Inlet on the south shore of Baffin Island.[5] This was described as more environmentally sensitive than a road route, cheaper to operate over the decades the mine will be in use, and a port in Steensby Inlet would be ice-free for eleven months—months longer than Milne Inlet. Ore would be warehoused at the port during the month the port was locked in ice.

After this plan had already received environmental approval Baffinland announced that a decline in the price of ore required sidelining the railway plan. Instead the ore would be trucked over 100 kilometers over a "tote road" to Milne Inlet on the north shore of Baffin Island. Under the current plan freighters will continue to use the port even when Milne Inlet is ice-bound.

The Mine itself was always intended to be a huge open pit mine.

Railway route to Steensby Inlet

The railway route had a higher initial capital cost than any plan to ship ore by truck, before it could ship any ore.[5] But it was touted as being able to carry more ore than a roadway, for less per ton. Over the decades its higher initial cost would have been reclaimed several times over.

The 149 km (93 mi) route to Steensby Inlet on the south shore was said to be chosen, in part, because it would have been ice-free for a longer portion of the year.[36]

According to the Financial Post this will be the most northerly operational[37] railroad in the world,[38] the Baffinland mine being about a degree of latitude farther north than the Russian railhead in the Yamal Peninsula. In April 2011 the Nunatsiaq News online edition reported the railway was anticipated to cost $1.9 billion CAD—just under half the entire $4 billion cost of constructing the mine.[39]

CBC News reported that Sylvie LeBlanc an archaeologist from Carleton University described an "uninterrupted alignment of nearly 100 inuksuit" that is parallel to the proposed route for the rail line.[10] Some of the inuksuit date back 4500 years.[11] The chain runs from Steensby Inlet to 10 km Lake, a distance of 6 km (3.7 mi).[12] LeBlanc described the uninterrupted chain of inuksuit as unprecedented in length and historical value.[13]

Railbed

File:Non-free image of Baffinland's planned embankments.jpg
The unique problems of building a rail line over permafrost would have required special rail embankments.

In 2008 the Railway Gazette reported construction of the rail line was planned to begin in 2012.[5][40] Because Baffin Island's soil is permafrost, the route was chosen so it lies on rock, gravel, or large-grained sand as much as possible. Fine-grained sand and clay soils pose more of a heaving problem when the surface layer annually thaws and freezes. The route will include five multi-span bridges totalling 1,400 m (4,600 ft) in length. Two tunnels 800 m (2,600 ft) and 250 m (820 ft) will be required. The tunnels will have to be lined and insulated to make sure waste heat from the trains and summer air doesn't melt the permafrost surrounding the tunnel. The route detours around large areas of poorly drained glacial deposits and areas likely to contain deposits of fossil ice.

The rail line will require 24 bridges in total and 300 culvert crossings.[39] Seven of the bridges will be longer than 100 m (330 ft) Much of the line will run on top of a 4 m (13 ft) embankment, which needs to be pierced by culverts so wild-life can cross under it.

It is planned to use older carbon steel alloys for the rails, instead of more modern, higher performance alloys, because these can become brittle at very low temperatures.[5] The rails and bridges are designed for fifty years of active service.

Construction of the rail line will require the opening of four quarries.[41]

Parallel roadway

Road to Mary River

Parallel to the rail line there will be a roadway, 8 to 12 m (26 to 39 ft) wide, capable of carrying trucks weighing up to 100 t (98 long tons; 110 short tons).[39]

During 2010 and 2011, when two separate firms were bidding to buy out the original Baffinland management team, an alternate shipping proposal was under consideration.[26][42] In this alternate proposal ore would be shipped, by truck. The advantage to this approach would smaller start-up costs, and a shorter period before ore was shipped to market. Disadvantages were higher operating costs, making the price of a ton of ore approximately double that under the rail proposal, and a smaller capacity of ore, 3,000,000 t (3,000,000 long tons; 3,300,000 short tons) per year, as opposed to the 20,000,000 t (20,000,000 long tons; 22,000,000 short tons) per year under the rail proposal.

Rolling stock

Baffinland has considered using diesel electric locomotives like this EMD SD70.

The Railway Gazette reported in July 2008 that Baffinland planned to purchase three train sets, each containing 64 hopper cars, which will each make two round trips per day.[5] Nunatsiaq News online edition reported in April 2011 that the two diesel locomotives per train-set would be called upon to lead trains containing 100 to 130 hopper cars.[39] The Railway Gazette reported that EMD SD70 and GE Dash-9 were candidates for the lines' locomotives. Initial plans included running a personnel train several times per week. Later plans included building a permanent airstrip at the mine site.

Nine icebreaking freighters

According to the Canadian Broadcasting Corporation (CBC), Baffinland plans to employ nine icebreaking freighters, each displacing 190,000 tonnes.[43] Baffinland plans to contract the Fednav Group to manage its shipping. When in full operation Baffinland plans to fill one freighter every two days. The plan to have freighters operating year-round has stirred controversy, because of its potential impact on sea mammals living on the winter ice-pack.

According to Splash247 Nordic Bulk Carriers acquired a five-year contract, worth $135 million, to carry 30 loads of ore a year from Baffinland.[44] Nordic Bulk Carriers will allocate four panamax and two handysize vessels to this contract.

Tote road route to Milne Inlet

This unfinished tote road is expected to carry hundreds of 200 tonne dump trucks per day, every day, for several decades.
Baffinland plans to feed large Capesize freighters, moored offshore, from freighters small enough to ferry ore from Milne Inlet.

Jowdat Waheed's group suggested using a cheaper tote road route during its 2011 attempt at a hostile takeover of Baffinland.

The tote road approach seemed to have been abandoned when the two groups of investors fighting to assume control of Baffinland agreed to a partnership. However, in late 2014, after the Railway plan had spent several years undergoing it environmental impact assessment, that plan was shelved.[45][46] Baffinland claimed a drop in ore prices required a return to the tote road plan.[47] Between January 2013 and August 2015, the price of ore, per dry metric tonne, dropped from $152 to just over $50 USD.

Milne Inlet is not as open to large, deep draft cargo vessels as Steensby Inlet. Therefore, Baffinland wanted to increase the number of departures to 150 per year.[45] The new plan would require the mine operating 75 ultra large dump trucks, instead of the 22 required by Mine proposal. The increased number of trucks would require widening the road, "twinning" portions of it, from one lane to two, and twinning some bridges.[47] The port facilities would need to be enlarged, to house more staff, and to store more ore.

Baffinland had requested that the Minister of Aboriginal Affairs and Northern Development, Bernard Valcourt grant the company an exemption from the land use plan.[48] When the Nunavut Planning Commission turned down Baffinland's revised proposal, one of the options the Commission offered to Baffinland was to seek an exemption from the North Baffin Regional Land Use Plan from an "appropriate federal minister"—like Valcourt.[49] Valcourt's exemption allows Baffinland to bring its amended Phase 2 proposal directly to the Nunavut Impact Review Board.[50][51]

Baffinland's request stirred fear and distrust from residents of nearby communities, who appealed to Valcourt to turn down the request.[52] Nevertheless, Valcourt authorized Baffinland to by pass the Nunavut Planning Commission’s decision and allowed it to proceed to present its proposal to the Nunavut Impact and Review Board for getting a new environmental assessment, on July 13, 2015.[53] The ten month shipping proposal has not yet been approved. The first ship full of ore from Baffinland Early Revenue Phase, which ships only 90 days a year, left Milne Inlet less than a month later.

On August 31, 2015, the Nunavut Impact and Review Board informed Minister Valcourt, and a Baffinland Vice President, Erik Madsen, that they were recommending to Ottawa that the changes to their plans that Baffinland had made were significant enough that a full review, and public consultation were necessary.[47]

Railway route to Milne Inlet

In February 2016 Baffinland requested permission for yet another large change in their plans as to how to get ore onboard their freighters.[54][55] When permission was given for Baffinland's original plan to build a railway from the mine site to a new port in Steensby Inlet they were given permission to ship 18 million tons of ore, per year. In their second plan, where ore was to be trucked, via a tote road, to Milne Inlet, they had initially only requested permission to ship 4.2 million tons per year. When they requested permission, in 2015, to truck 12 million tons to Milne Inlet Nunavut authorities informed Baffinland that a change of that scale would require an additional extensive environmental review. Six months later Baffinland announced that, while they wanted to increase the amount of ore shipped through Milne Inlet, they would transport that ore there by rail—not by truck.

Elyse Skura, of CBC North, pointed out that Baffinland still had permission to ship 18 million tons of ore to Steensby Inlet, if they built that southern rail route.[54]

Thomas Rohmer of Nunatsiaq Online noted that Baffinland's enrollment of Iniut workers had been disappointing, and fell short of the stated agreements.[55]

Operation

Lua error in package.lua at line 80: module 'strict' not found. The mine was planned to commence operations in 2014, staffed by a crew of 500.[5] In fact operations began in September 2014.[1] The sun sets on November 18 and does not rise again until January 23.[56]

On February 29, 2012, the Nunavut Impact Review Board announced final environmental hearings would be held in Iqaluit, Igloolik and Pond Inlet, in July 2012.[57][58]

The bulk carrier Federal Tiber departed from Milne Inlet on August 8, 2015, with the first shipment of ore from the mine.[59][60] She was bound for Nordenham, Germany, at the mouth of the Weser River, with 53,624 tonnes of ore.[61]

Nordic Bulk Carrier's first vessel, the panamax Nordic Odin, traveled from Baffinland's Milne Port, to Gijon, Spain, four days later, from August 12 to August 23, 2015.[44] She encountered sea ice. Her ice class is a relatively light 1A.

Environmental concerns

The CBC interviewed Inuit from the region in April 2008, about their concerns with the plans.[62] Jaypetee Palluq, an Igloolik resident who had been asked to serve on a Baffinland advisory committee, was concerned that the mine's operation would interfere with the traditional hunts for sea mammals, like walrus. He called on Baffinland to "find an alternate shipping route to the mine, regardless of the cost." Paul Quassa, Mayor of Igloolik, also expressed concern, over the effect of freighters on the ice used by the Walrus. He said the region was known for its highly prized aged, fermented walrus meat, a valuable export from the region.

Mary River camp

In August 2008 the CBC reported that Baffinland acknowledged three fuel spills.[63] Baffinland's vice-president of sustainable development, Derek Chubb, asserted that the three spills were contained within "secondary engineered containment facilities", and that there was no environmental damage. 5,000 L (1,100 imp gal; 1,300 US gal) of aviation fuel leaked from a fuel bladder at the mine's port facilities on Milne Inlet. The other two leaks of 200 L (44 imp gal; 53 US gal), occurred near the mine site. Baffinland acknowledged that the leaks had been found months earlier, but had not been made public. Michael Nadler, the regional director general of the Department of Indian and Northern Affairs speculated that mine officials may not have felt an obligation to publicly report the leaks because they believed there had been no damage.

On September 22, 2008, 100,000 L (22,000 imp gal; 26,000 US gal) of contaminated water was released in what officials described as "human error".[64][65]

In January 2012 Baffinland submitted a draft environmental plan to the Nunavut Impact Review Board.[66] On February 29, 2012, the Nunavut Impact Review Board announced that Baffinland's 10 volume environmental plan broadly met its requirements for the points this kind of plan should address.[67] The Board then begins its technical review of the plan. When the Board's technical review is complete it will hold public hearings in Iqaluit, Igloolik and Pond Inlet

In May, 2012, archeologist Sylvie LeBlanc described a chain of inuksuit that is parallel to the proposed route of the rail line as of unprecedented length and historical value.[10] LeBlanc registered her concern with the Nunavut Impact Review Board that explosions necessary to build the rail line will trigger vibrations which will damage the inuksuit. An internal Baffinland environmental impact study had said that there should be a "buffer distance" between the site of any blasting and sites of archeologically significant structures—but the study didn't specify what the distance was.

Future expansion

The corporation has signed a joint venture agreement with Nunavut Tunngavik Incorporated.[68][69] Nunavut Tunngavik controls the resource exploitation of Inuit owned lands. The agreement allows Baffinland exploration and resource development rights to 170 km2 (66 sq mi) of Inuit-owned land adjacent to the mine-site.

See also

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References

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  37. Mining railways used to operate in the much more northerly Svalbard, but they appear to have been abandoned. See The Railways of Spitsbergen
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