Canadian Mining Journal


Hot Prospects in a Cold Climate

It’s the largest island in Canada, the fifth largest in the world*, and it contains some of the most beautiful land and seascapes on the planet, but Baffin Island is also one of the harshest and most unforgiving places on earth when it...

It’s the largest island in Canada, the fifth largest in the world*, and it contains some of the most beautiful land and seascapes on the planet, but Baffin Island is also one of the harshest and most unforgiving places on earth when it comes to Mother Nature and her weather conditions.

It’s a place where trees can’t grow, songbirds are rare, and perhaps most of all, it’s an extremely cold place where the sun comes in seasonal divides. 

From November to January, the island experiences nearly 24 hours of darkness with less than two hours of twilight. On the flip-side of the calendar, there is continuous daylight from May to August. During the spring and fall months, it’s a gradual fade from dark to light and light to dark, respectively.

At first glance, Baffin Island seems to be an uninviting place, but look a little closer at the more than 11,000 people who live there because they love this massive rock at the top of the world that they have always called “Our Land.”  It’s the only home they know, because most of the residents represent generations of Inuit people who have always lived on the island.

Much like their surroundings, the Inuit of Baffin Island are a rugged and stoic bunch. More recently, Baffinland Iron Mines of Toronto is demonstrating the same characteristics, having persevered since 2005 working on its Mary River Iron Ore Project in the northwest part of the island.

Located about 3100 km north of Toronto and just 500 km west of Greenland, the Mary River mine site is, to put its location in perspective, about as far north as Guatemala is south of Toronto.

It is, as Baffinland’s President and CEO Tom Paddon says, “The first large open-pit mine planned within North America at this latitude.”  He goes on to say that, “The climate conditions play an important role in the planning and execution of this project as the area experiences very cold temperatures that average minus 30 degrees Celsius in the winter.”

These extreme conditions are typical of Arctic environments, and Paddon adds that they require a great deal of consideration in the planning and logistics relative to almost everything that goes on at the site, but especially from a safety perspective for the people who work there.

Tom Paddon says, “The Mary River Project will not be a fully operational mine for some time yet. The advantage of this time frame, in terms of health and safety, is a clean slate for developing a culture that embraces the belief that zero harm is possible.  We have the opportunity to embed this culture of safety right from the planning stage and we want every person who works for us and with us, now and in the future, to be fully compliant with the highest of safety standards.”

Safety First, Always

Because of the Mary River mine site’s location and often limited access thanks to seasonal weather conditions, Baffinland lives by its Health and Safety motto, ‘Safety First, Always.’ Since the company arrived at the site, it has been working diligently with federal and territorial authorities to develop a formal Project Plan that would make safety a priority, both for people and the environment.

In terms of healthcare, in November, Baffinland signed a Memorandum of Understanding with the Government of Nunavut’s Department of Health covering such topics as Air Ambulance Medical Evacuation, medical examinations, and an on-site Health services plan amongst other things.

First Discovery

Getting to Baffinland’s current point in the development schedule for the Mary River iron ore mine – the construction phase – has been a monumental task to which many mining companies can relate. Like all projects, it started with a vision, dating back to 1962 when prospectors Murray Watts and Ron Sheardown discovered, through airborne reconnaissance, a massive high-grade iron ore deposit of world-class proportions.

Located exactly at 71o 19’24″N, 079o 12’38″W, the Watts/Sheardown discovery had a total strike length of about 4 km and contained a resource estimate, in measured and indicated categories, of more than 350 million tonnes at an average grade of 64 per cent.  Since that time these numbers have only grown, both in terms of overall size and grade.

It was a huge discovery and since 1962, the property has gone through periods of interest and dormancy as iron ore prices rose and fell. While the future price of iron ore is obviously important to the project, what has really changed in the last few decades is the knowledge and experience of the mining industry in terms of unlocking remote sites and bringing projects to development safely, responsibly and on budget.  Paddon and his team have a proven track record which they are bringing to the Mary River Project.

Because of its geographical location, mine development has required early and extensive planning and coordination between equipment operators, surveyors, mine planners and geologists.

Under Baffinland Iron Mines, the Mary River Project underwent an extensive environmental impact assessment lasting for five years, which culminated on December 28, 2012 with the Nunavut Impact Review Board issuing a Project Certificate. The receipt of the Project Certificate paved the way for the Class A Water License process that was completed with the Nunavut Water Board in July 2013.

“With the Inuit Impact Benefit Agreement and Commercial Production Lease in hand, Baffinland was able to safely and effectively make its first sealift of materials to the site,” said Paddon. “And this was no small lift.” he added.

In fact, Ron Hampton, Baffinland’s Vice-president and Project Director said: “In total, nine dry cargo and three fuel vessels were utilized, safely transporting 32,700 tonnes of cargo, 33 million litres of Arctic diesel and 2.1 million litres of Jet A fuel.”

In order to complete the enormous mobilization effort, Baffinland contracted two majority Inuit-owned companies: Nunavut Sealink and Supply and Nunavut Eastern Arctic Shipping to oversee the shipping and delivery of materials.

“With over 200 million dollars worth of materials and equipment now on site, construction activities are well underway and continuing through this winter at both Mary River and Milne Port in anticipation of the first ore production in 2015.” 

Early Revenue Phase

The company’s initial Project consisted of mining iron ore from the reserve at Deposit No. 1 at a production rate of 18 Million tonnes per year (Mt/a). The Nunavut Impact Review Board (NIRB) issued the Project Certificate for this Project on December 28, 2012.

On January 13, 2013, Baffinland informed the Nunavut Impact Review Board (NIRB) that, due to various global business drivers, Baffinland was proposing to make changes to the schedule and specific activities in the initial stages of the development associated with the Mary River Project. An Early Revenue Phase (ERP) at a lower production rate has since been started, although at more than $750M, it’s still an impressive initial investment.

Initially, for the Early Revenue Phase, 3.5 Mtpa of iron ore will be mined, transported by trucks to Milne Port and shipped to markets from Milne Port during the open-water season. As global markets improve, Baffinland will turn its attention to the construction and operation of the larger Approved Project which includes a railway link for the transportation of ore to Steensby Port and, the construction and operation of a year-round port facilities at Steensby Inlet for the shipment of iron ore.

The key advantages of the ERP approach include;  the reduction of initial capital requirements and the generation of early revenue and open water shipping during the Early Revenue Phase, while enabling Northern communities to adjust to training, jobs and business opportunities.

The existing Tote Road will be upgraded to enable transportation of ore by truck from the mine site to Milne Port where further work will take place to accommodate a 3.5-million tonne ore stockpile, an ore dock, maintenance facility, and associated infrastructure for the operation of the port facilities and the shipping of iron ore during the open water season.

The road to a fully operating mine

The nature of the mining industry is such that it requires high upfront investment, contains a notable level of risk and a relatively long period of time to market from the exploration phase.  For the Mary River Project it is no different – the execution of the Approved Project requires a large financial undertaking by Baffinland and its owners (50% ArcelorMittal and 50% Nunavut Iron Ore (NIO), with Baffinland as Project Operator). Although the financial returns generated by this investment could prove very attractive, the Approved Project, as planned in the Project Certificate, has two main risks; the funding requirement is large, with 4 years of construction prior to revenue, and there have been global market and economic uncertainties in the minerals sector.  The Approved Project will be fully executed if/when infrastructure debt financing becomes available and markets improve. In the meantime, the infrastructure developed for the Early Revenue Phase will serve in part for the construction of the Approved Project.

“Baffinland is committed to building and operating the Mary River Mine,” say CEO Tom Paddon. “Right now, the Early Revenue Phase is a good solution that keeps the project progressing while giving us more time to consider all aspects of the operational mine and its impacts. Our vision remains to safely and efficiently identify and develop resources within Baffin Island, unlocking their wealth-generating potential to the benefit of all stakeholders. As an undertaking based on the principle of mutual benefit, we firmly believe that the Mary River Project will contribute to the development of infrastructure, skills training, employment and business opportunities for the people of Nunavut.”

Editor’s Note: In keeping with Baffinland’s motto: “Safety First. Always” it should also be noted that an advanced thermal treatment system for handling solid and liquid waste has been designed and installed at the site by Eco Waste Solutions of Burlington, ON. And, of further interest, the company and its ECO Mobile units were recently named the winner of the prestigious Deloitte Technology Green 15 Award. The Award recognizes companies that create technological solutions that reduce environmental impacts while improving operational performance and productivity.

*The four islands larger than Baffin Island are Geenland, New Guinea, Borneo and Madagascar.

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