Human Rights Assessment

1. Mary River Mine – Full Finding

Key message

The Mary River Mine is a massive and unprecedented mining development for Nunavut (and the Arctic region in general). On the one hand, it represents a major opportunity for potential benefits to workers and their families, to Inuit communities and designated Inuit organizations, as well as to the territorial and federal governments. On the other hand, there are risks of negative impacts related to the environment, socio-economic conditions and human rights. Therefore, all of the relevant actors should have strong and shared interests that the Mary River Mine will become a good example of responsible and rights-respecting northern development. 

Overview of the Mary River Mine

The Mary River Mine is an open pit iron mine on North Baffin Island on Inuit owned lands in the Qikiqtaaluk Region of Nunavut. The grade of the iron ore is very high quality and does not require any further chemical processing or tailings. It can be shipped away as soon as it has been taken out of the ground.

The iron ore deposit was discovered in 1962, but only in recent years has it become economically viable to develop the mine due to high commodity prices. Climate change is also making the Arctic region more accessible for natural resource extraction.

The Mary River Mine is owned by the Baffinland Iron Mine Corporation (BIMC), a private company headquartered in Toronto, Ontario. BIMC is jointly owned: 50% by ArcelorMittal, the world’s largest steel-maker, and 50% by Iron Ore Holdings LP, a U.S.-based private equity firm.

The initial project for the Mary River Mine was submitted to the Nunavut Impact Review Board (NIRB) in 2008. After a lengthy and rigorous review process by the NIRB, including public hearings in the summer of 2012, the proposed mine was approved by the Minister of Aboriginal Affairs and Northern Development on December 3, 2012.

However, shortly afterwards, BIMC submitted a proposal to change the project and include an “Early Revenue Phase” for the mine. BIMC submitted a new Environmental Impact Statement for this “Early Revenue Phase” at the end of June 2013 and the NIRB will be conducting a reconsideration process to determine whether the Project Certificate needs to be modified to address potential new impacts on the environment and on communities. Additional public hearings will take place in the late summer or fall of 2013.

Information on Baffinland Iron Mines Corporation (BIMC)

BIMC ownership

50% by ArcelorMittal
• ArcelorMittal is the world’s largest steel company with operations in 60 countries
• Headquarters are in Luxembourg
• 245,000 employees worldwide
• Publicly traded on the stock exchanges of New York, Amsterdam, Paris, Luxembourg, Barcelona, Bilbao, Madrid and Valencia
• Mr. Lakshmi Mittal is the CEO and owns 40% of the shares and voting shares in the company

50% by Iron Ore Holdings LP
• Incorporated according to the laws of Delaware, U.S.A.
• Backed by the Energy and Minerals Group, a $2 billion private equity firm based in Houston, U.S.A.

Brief corporate history

• 2004: BIMC goes public to raise funds for exploration. It is listed on the Toronto stock exchange (TSX).
• 2010-2011: Bidding war between different investors to gain control of BIMC.
• 2011: ArcelorMittal and Iron Ore Holdings LP join forces to acquire all the shares of BIMC for $590 million. BIMC is “taken private,” meaning that it is no longer listed on the Toronto stock exchange. At the time, ArcelorMittal owns 70% and Iron Ore Holdings LP owns 30% of BIMC.
• 2012: Ontario Securities Commission begins a proceeding alleging insider trading against former BIMC consultant: http://www.osc.gov.on.ca/en/Proceedings_soa_20120109_waheed-walter.htm
• 2012: ArcelorMittal sells 20% of its interest in BIMC to Iron Ore Holdings LP, so they currently each own 50% of BIMC.

Senior management

• Tom Paddon, President & Chief Executive Officer
• Michael Anderson, Vice-President, Operations
• Stephanie Anderson, Chief Financial Officer
• Ronald Hampton, Vice-President and Project Director
• Erik Madsen, Vice President, Sustainable Development Health, Safety & Environment
• Richard (Dick) Matthews, Vice President, Technical Services
• Greg Missal, Vice President, Corporate Affairs
• Michael T. Zurowski, Executive Vice President
• Biographies of senior management team: http://www.baffinland.com/about-us/leadership/?lang=en

Original proposal for Mary River Mine

The following description of the Mary River Mine is taken from the NIRB Final Hearing Report:

The Mary River Project Proposal consists of the proposed construction, operation, closure, and reclamation of an open pit mine and associated infrastructure for the extraction, transportation and shipment of high grade iron ore from a deposit located on the North Baffin Island, in the Qikiqtaaluk Region of Nunavut. The proposed mine site would be 280 kilometres from Arctic Bay, 415 kilometres from Clyde River, 192 kilometres from Hall Beach, 155 kilometres from Igloolik, 1000 kilometres from Iqaluit and 160 kilometres from Pond Inlet. The Proponent of the Mary River Project is Baffinland Iron Mines Corporation (the Proponent or Baffinland).

The iron ore deposit, Deposit No. 1 consists of an estimated 365 Mt (million tonnes) of direct shipping iron ore with an average iron grade of 64.66%. The Project would involve the production and shipment of an estimated 18 million tonnes-per-annum (Mt/a) of high grade iron ore from Deposit No. 1. The Proposal indicates that the high grade iron ore from this deposit is suitable for shipment to international markets after crushing and screening with no requirement for additional processing. Deposit No. 1 is estimated to be sufficient to meet the production design for an operating period of 21 years.

After crushing and screening, the Proponent proposes to transport the iron ore from the mine via a 150 kilometre Railway that would be constructed between the mine site and an all season deep water port to be located at Steensby Inlet. Upon reaching Steensby Port, the iron ore would be loaded from the rail cars into purpose-built ore carrying vessels with ice-breaking capabilities for shipment to European customers.
During the construction period, material, equipment and supplies required for the construction at the mine site and the northern portion of the Railway would be received via a port site at Milne Inlet. A freight dock would be constructed at Milne Port. At the onset of the Project, much of the construction material and supplies, fuel and mining equipment would be received at Milne Port during the open water season. Milne Port and the existing Milne Inlet Tote Road linking the mine site to Milne Port would be upgraded to improve access from the Milne Port to the mine site. It is proposed that Milne Port would operate during the open water season while Steensby Port would operate year round. Once Steensby Port is operational, Milne Port would only be used occasionally for the delivery of oversized equipment to the mine site.

The Project would include the following major phases:
• Construction, which is projected to take four years;
• Operations, which is projected to last approximately 21 years;
• Closure, which is projected to take 3 years and Post-Closure Monitoring, which is projected to 
last for 5 years, and if closure objectives are not met, could extend beyond 5 years.

Early Revenue Phase

The following summary of the Early Revenue Phase (ERP) is taken from the Popular Summary of the Addendum to the FEIS submitted to the NIRB by Baffinland:

With the introduction of the ERP, the Mary River Project consists of mining iron ore from the reserve at Deposit No. 1 at a production rate of 21.5 Million tonnes per year (Mt/a). 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 for the prices of iron ore, the Company intends to proceed with the construction and operation of the larger Approved Project which includes the construction, operation, closure, and reclamation of a large scale mining operation (open-pit mine) and associated infrastructure for extraction, a railway link for the transportation of ore to Steensby Port, and, the construction and operation of a year around port facilities on Steensby Inlet for the shipment of iron ore.

There are 3 main project locations for the Early Revenue Phase (ERP) – the mine site, Milne Port north of the mine site, and the Tote Road which connects the Mine Site to Milne Port. Only limited development will occur at the Mine Site, sufficient to support the mining of 3.5 Mtpa of iron ore. The Tote Road will be upgraded to enable safe and efficient transportation of ore by truck from the Mine site to Milne Port.
Milne Port will be fully developed and will accommodate a 3.5 million tonnes ore stockpile, an ore dock, maintenance facility and associated infrastructure for the operation of the port facilities.

Concluding observations

This overview of the Mary River Mine defines the corporate and operational context for the human rights analysis in the following sections of the HRIA report.

Some key questions and issues that the corporate and operational context raises are:

• Now that ArcelorMittal and Iron Ore Holdings LP are 50% partners, what are the implications for Baffinland’s policies? Will it continue to implement ArcelorMittal’s strong policies and procedures—including its Human Rights Policies—as it would have when ArcelorMittal was a majority owner (70%)?

• The high grade of the iron ore at Mary River is an important consideration, especially as it means that there is no processing or tailings required at the mine site. This significantly reduces the human rights risks related to the environment, employees’ health and to closure.

• The fact that the mine will be developed more slowly now because of the “Early Revenue Phase” presents some positive aspects from a human rights perspective: there will be more opportunities for formal consultation with the affected peoples through the NIRB process; earlier opportunities for jobs and training for Inuit who want to work at the mine; and, more time to complete studies and prepare monitoring programmes related to the environmental impacts of the railway and shipping route out of Steensby Inlet.

• There will inevitably be other changes over the mine’s lifespan, and therefore Inuit need to be informed and consulted on an on-going basis if they are going to participate successfully in the development of the mine.

Additional Information

BIMC website: http://baffinland.com

ArcelorMittal website: http://www.arcelormittal.com/corp/

Profile on Mr. Laksmi: http://en.wikipedia.org/wiki/Lakshmi_Mittal

Energy and Metals Group website: http://www.emgtx.com/

Further information on the original proposal for the Mary River mine is available on the NIRB website (see, in particular, the Final Environmental Impact Assessment submitted by BIMC):
ftp://ftp.nirb.ca/02-REVIEWS/ACTIVE%20REVIEWS/08MN053-BAFFINLAND%20MARY%20RIVER/1-SCREENING/01-APPLICATION/080320-08MN053-Development%20Proposal%20for%20the%20Mary%20River%20Project.pdf

Further information about the Early Revenue Phase is available on the NIRB website (see in particular the Addendum to the Final Environmental Impact Assessment): http://ftp.nirb.ca/03-MONITORING/08MN053-MARY%20RIVER%20IRON%20MINE/01-PROJECT%20CERTIFICATE/04-AMENDMENTS/

A good summary of the revised project, including the Early Revenue Phase, is included in the correspondence between Baffinland and the Nunavut Planning Commission: http://ftp.nirb.ca/03-MONITORING/08MN053-MARY%20RIVER%20IRON%20MINE/01-PROJECT%20CERTIFICATE/04-AMENDMENTS/2012%20EARLY%20REVENUE%20PHASE/01-CORRESPONDENCE/