Baffin iron ore project makes headway

Baffinland Iron Mines Corp. is making considerable progress this summer in its ambitious quest to commence commercial production at the Mary River iron mine project in Nunavut. The company wants to develop an open pit mine on the Mary River property located on North Baffin Island in the Qikiqtani region of Nunavut and recently has been addressing questions regarding the mine's construction, operation, closure and reclamation.

Mary River is one of the largest and richest undeveloped iron ore projects in the world, containing nine known iron deposits that offer substantial upside potential for project expansion. Based on the current defined mineral reserve of 365 million metric tons averaging more than 64 percent iron in Deposit No. 1 at Mary River, the annual designed output is estimated at 18 million metric tons of ore.

The project is being advanced as global iron ore demand is expected to increase with countries such as China, India and other emerging nations continue to grow and develop while the economies of western countries continue to expand.

"The world needs iron ore to continue to build and develop the materials our society uses every day … Baffinland proposes to develop the (Mary River) Project to supply high-quality iron ore to world markets and provide an acceptable profit for its investors," the company said in a project summary filed with the Nunavut Impact Review Board.

Baffinland, which is 70 percent-owned by European steel-making giant ArcelorMittal, wants to build a C$4 billion mine, rail line and port project at Mary River that is awaiting project certification and final licenses and permits in anticipation of beginning construction in 2013.

ArcelorMittal is one of Canada's leading suppliers of iron ore to steel markets around the world, generating some 60 percent of Canada's total yearly iron production - about 15 million metric tons of iron ore concentrate and about 9 million metric tons of iron oxide pellets from its operations in Quebec.

Baffinland's 30 percent minority owner is Iron Ore Holdings LP, a private investment firm.

In a final environmental impact statement ruled sufficient Feb. 29 to comply with guidelines of the Nunavut Impact Review Board, Baffinland outlined components of the project, including associated infrastructure for extraction, transportation and shipment of iron ore. There are three main project locations - the mine site, Milne Port north of the mine site, and Steensby Port south of the mine site. Milne Port is connected to the mine site by an existing road, about 100 kilometers (62 miles) in length.

Drawing on ArcelorMittal Mines Canada's experience operating a 420-kilometer (260 miles) railway in Quebec that is renowned for safety and innovation, Baffinland plans to build a railway of about 149 kilometers (92 miles) with 30 bridges and two tunnels to connect the mine site to Steensby Port.

Multiphase proposal

Baffinland envisions transporting iron ore from Mary River to Steensby Inlet and on to markets in Europe and Asia, and is preparing for year-round operations.

The project is divided into a number of phases.

First, construction will take an estimated four years.

Next, the operational phase, based on current ore reserves, would span 21 years at the production rate of 18 Mt/a and ultimately could extend for at least 37 years -and some predict up to 100 years.

The project infrastructure is designed for a capacity of 30 Mt/a.

Then, closure of the facilities is expected to be carried out over a three- to five-year period, while post-closure monitoring will follow for an additional five years.

However, if closure objectives are not met, post-closure would extend beyond five years.

During construction, the work force at Mary River would range from 1,700 to 2,700 people before shrinking during operation to about 950 workers.

In its final EIS, Baffinland cited various project challenges, including:

• High costs associated with building and operating a mine operation and transportation infrastructure in the Arctic;

• Logistical challenges associated with construction and operation due to the limited seasonal access to the mine site and lack of existing transportation infrastructure;

• Long winters and extreme cold affecting efficiency of construction crews and operations;

• Difficult geotechnical conditions (permafrost, ice lenses) requiring specialized design and construction techniques; and,

• The competitive nature of the steel-making industry demanding a steady, consistent, and secure supply of iron ore.

Baffinland said two additional important factors to consider are that the project must provide real and measurable benefits for its shareholders and for Inuit landowners in Nunavut, and that its revenues depend on the world commodity prices for iron ore.

Countdown to permitting

In giving a green light for the review process to move to final hearings, the Nunavut Impact Review Board listed 356 aspects of the project on which Baffinland had to elaborate in its final EIS. These included issues such as shipping and rail routes, ballast dispersal and the cumulative effects of the project on caribou, virtually all of the impacts that a mine might have on water, air, land, animals and people.

During the 90-day technical review period that ended May 30, groups such as the Qikiqtani Inuit Association, the organization that represents Inuit in the Baffin region, and other parties submitted comments on the project's potential ecosystemic and socio-economic impacts, the adequacy of proposed mitigation and monitoring measures and, ultimately whether they support the approval of the project as currently proposed.

Government and Inuit stakeholders submitted to the review board by May 30.

The Qikiqtani Inuit Association expressed its conditional approval of the Mary River project provided appropriate mechanisms are in place to effectively monitor and manage the undertaking in an acceptable manner with community input throughout the life of the project.

The association indicated that it would accept a port at Steensby Inlet. But the QIA said it still wants to see an alternative to storing enough fuel for the first year of operations in a tanker offshore at Steensby Inlet.

The association also said it agreed with Baffinland to develop working groups in the areas of marine, terrestrial, and socio-economics, the QIA noted.

The Government of Nunavut also related concern about the idea of over-wintering fuel in Steensby Inlet and raised questions about in-migration generated by the project resulting in adverse effects on the capacity of the public healthcare system in the territory and increased costs to the GN.

In addition, the territorial government said it remains concerned about security on site, and it would like to see a working group on health to develop a memorandum of understanding between Baffinland and the GN's department of Health and Social Services and similar collaboration between Baffinland and its department of Justice and the RCMP.

While the Mary River project's proposed railway, which will carry ore from the mine site to the port, looks feasible, according to Transport Canada, it questioned the plan to carve out two tunnels for the railway, instead of taking a longer and possibly more expensive route.

Transport Canada also said caribou migrations could require immediate attention and possible changes to the railway's operations such as reduced speed or limiting train traffic.

Canada's Department of Fisheries and Oceans expressed concern that risks to marine mammals, particularly from year-round shipping activities, may have been underestimated and that the mitigation measures and adaptive management proposed by Baffinland may not be sufficient to adequately manage these risks.

Environment Canada said a lack of information available in some areas will increase the necessity for effective monitoring and adaptive management at Mary River.

In July, the Nunavut Impact Review Board conducted 11 days of final hearings in its review of the project in the Baffin Island communities of Iqaluit, and Pond Inlet and in Hamlet of Igloolik which is situated across Foxe Basin on the Melville Peninsula to the southwest of Steensby Port.

Technical issues and topics of public concern that remained unresolved at the beginning of summer were discussed at the hearings. The hearings also dealt with the Nunavut Water Board's review of Baffinland's application for a Type A water license.

The Qikiqtani Inuit Association joined Baffinland July 15 in confirming the status of an Inuit Impact Benefit Agreement and surface Lease of Inuit Owned Lands between them for the Mary River Project in advance of the final hearings, which began July 16.

The QIA and Baffinland said the documents had been forwarded to their respective counsels who were working towards resolution of outstanding issues and completion of final legal text for execution by the parties. However, the agreements would not be ready to sign before the review board's final hearing in July, and further meetings were to be scheduled "to bring closure to remaining issues."

They also jointly requested that the review board proceed to complete the final hearings associated with Baffinland's application for the Mary River Project as scheduled.

Earlier, Baffinland had signed a joint venture agreement with Nunavut Tunngavik Inc., which controls the resource exploitation of Inuit-owned lands. The agreement allows Baffinland exploration and resource development rights to 17,000 hectares (42,000 acres) of Inuit-owned land adjacent to the mine-site.

The review board's hearings marked one of the last steps in the permitting process for the mine project.

NIRB is expected to release its report for a project certificate by mid-September, which could lead to Baffinland beginning construction on the Mary River iron mine project next year.