Revised plan for mining Mary River iron

Six months after the Canadian government rejected a plan to double approved output from the Mary River iron mine on Nunavut's Baffin Island, the mine's operator, Baffinland Iron Mines Corp., is working to get the green light to move ahead with a different proposal.

The new plan, which the company calls a "Sustaining Operations Proposal," surfaced in December, about a month after federal Northern Affairs Minister Daniel Vandal rejected the earlier plan Nov. 16 to expand operations and double approved shipping output from the mine to 12 million metric tons of iron ore annually.

Baffinland, owned by private equity firm Energy and Minerals Group and steel giant ArcelorMittal SA, had said the expansion was necessary to keep the Mary River operation viable. Without the federal government's approval of its expansion plans, the company had indicated that it might have to close the mine and terminate the employment of more than 1,100 workers.

Baffinland's latest proposal seeks to continue the mine's current operations of trucking and shipping up to six million metric tons of iron ore per year, for which the company was first approved in 2018 and approved again in 2022.

But continuing to operate at current levels will require Baffinland to apply to the Nunavut Impact Review Board to amend the mine's project certificate. The operation is only approved to ship 4.2 million metric tons in 2023.

Mining a rich deposit

The Mary River mine site hosts one of the world's richest iron ore formations, with more than nine high-grade iron ore deposits that can be mined, crushed, and screened onsite before being shipped directly to markets with further processing.

Though the iron deposits were discovered in 1962, Baffinland did not start exploring and developing the Mary River mine until 1986. In 2014, the company won federal approval to develop an 18-million-tonnes-per-year operation focused on initial mining of Deposit No. 1.

This gave Baffinland the go-ahead for the Early Revenue Phase amendment to the Mary River Project involving the seasonal shipping of 3.5 million tons of iron ore from Milne Inlet on the north coast of Baffin Island, and operations began a year later.

Currently, Baffinland trucks the iron ore mined at Deposit No. 1 to Milne Port and ships it to market during a brief open-water season every summer.

A sustainable plan

In early 2023, Baffinland asked nearby communities to consider another option that would allow the mine to continue operating indefinitely.

Brian Penney, Baffinland's chief executive officer, said in a statement that the company is asking Inuit residents in the region to "consider options for regulatory and operational stability for the current project, to give all of us an opportunity to focus on the long-term vision for Mary River."

"Ultimately, Baffinland must switch to a rail operation for the economic longevity of the project but continuing the approved trucking and shipping levels in 2023 and beyond would allow us to sustain operations, maintain important commercial relationships, continue to provide employment and deliver benefits to communities on North Baffin Island," he said.

Baffinland wants to increase the tonnage of ore it is allowed to truck and ship from its Mary River mine to 6 million metric tons from 4.2 million, for both 2023 and 2024. It says the increase is needed to ensure a stable supply of iron ore to customers and that if it's not granted, the company will have to scale back operations, including reducing employment.

Baffinland also is requesting that beyond the six million metric tons, it be allowed to ship ore that was stranded at the Milne port in 2022 as well as any that could be left behind at the end of this year's shipping season due to "unexpected circumstances." The company said large volumes of early sea ice in Milne Inlet last year resulted in shipping operations having to end several weeks early.

Baffinland has asked the Nunavut Impact Review Board to make a recommendation on the request by August.

In a letter sent to the review board in April, Northern Affairs Minister Dan Vandal, alongside other relevant federal ministers, said Baffinland's timeline was "reasonable," and the request should be made a priority.

Mixed reaction

Baffinland was previously granted approval to extract, transport, and ship up to 6 million metric tons of ore from the mine in 2018 while it awaited a decision on a separate proposal to increase production to 12 million metric tons as part of long-term expansion plans at the mine. An earlier temporary production increase had been extended until the end of 2021.

When Baffinland requested a further extension in 2022, it said it would have to lay off nearly 1,200 employees once the limit of 4.2 million metric tons was met. When the extension was granted in October, the company said it was rescinding all termination notices.

The following month, federal ministers rejected Baffinland's request to double production at the mine to 12 million metric tons, in line with a recommendation from the review board, citing concerns about potential negative environmental and socio-economic impacts.

Baffinland's earlier long-term expansion proposal included plans to build a 110-kilometer railway north from the mine to the port at Milne Inlet.

The company recently said it is now considering constructing a railway south from the mine to Steensby Inlet. A proposal for that project was approved in 2012, but Baffinland did not pursue it due to funding concerns.

Several governments and organizations have written to the Nunavut Impact Review Board in response to Baffinland's recent request to increase shipping to 6 million metric tons until the end of 2024, expressing a range of both positive and negative reactions to the proposal.

Decline in exploration spending

Natural Resources Canada, meanwhile, is projecting a 28% decrease in spending in 2023 by mining companies for exploration and deposit appraisals in Nunavut.

Although all three Canadian territories are expected to experience lower spending levels in 2023 in the sector, Nunavut will see the largest drop, decreasing C$65.5 million (28%) to C$171.7 million from C$237.2 million a year earlier.

NRcan's projections, for 2023, based on preliminary spending intentions mining companies reported to the federal government, also included a 6% dip in Northwest Territories to C$74.8 million from C$79.6 million in 2022 and an 11% decrease in Yukon Territory to C$144.7 million from C$163.1 million a year earlier.

"While NRCan provides no explanation, presumably critical mineral exploration is a driving factor," observed NWT & Nunavut Chamber of Mines President Kenny Ruptash in a recent statement.