Now that Baffinland Iron Mines has secured much-needed cash, the real work begins on keeping its operations in Nunavut afloat.
The Ontario Superior Court of Justice last week approved an immediate $153-million loan to help Baffinland restructure, with more money set to come. The company has also received an extension to creditor protection until Aug. 28.
As one of Nunavut’s largest private-sector employers, there’s a lot riding on Baffinland coming out of this financial strait. As of May 14, the company owed $2.6 billion to creditors.
Anna Stanley, an adjunct professor at the University of Guelph’s department of geography, environment and geomatics, describes the restructuring Baffinland will be completing over the next few months as an “austerity” program.
She said the company will likely be renegotiating debt, cutting costs, or selling assets to preserve as much value as possible.
“That’s kind of the objective. The objective is not necessarily to preserve jobs or maintain environmental standards or support communities or even pay off all the different creditors,” she said.
Stanley worries the threat of insolvency could see communities buckle to certain concessions — such as cutting costly environmental consultants — to preserve jobs held by Inuit at the Mary River Mine.
In a statement to CBC News, Baffinland said it’s continuing to engage with all stakeholders to ensure there’s continued support for the company, but it could not comment beyond what it has stated in court.
Jobs not at stake, union says
Baffinland has maintained that it does not intend to lay off workers – and the union representing employees at the mining company isn’t worried about that either.
Mike Gallagher, the business manager of Local 793 of the International Union of Operating Engineers, said there’s a collective agreement that, by law, must be respected even if there is a sale of the company.
“That would not be in their self-interest to take skilled workers and lay them off and try to replace them with somebody else. And there’s just not anybody else to replace them,” he said.
There are also people leaving voluntarily. Court documents show at least 19 employees have quit because of the financial instability, but Gallagher urges people not to panic.
“All of the wages, the conditions of work, responsibility to training and funding the benefit plan for all the workforce that’s there … none of that is at stake,” he said.
In order for Baffinland to remain a viable operation long term, economist Graeme Clinton of Yellowknife-based Impact Economics believes the company needs to work on its relationship with Inuit.
Baffinland has a payroll of roughly 1,300. In a May 26 news release, the Qikiqtani Inuit Association and Nunavut Tunngavik Inc. said roughly 300 Inuit work at the Mary River Mine.
“There’s always going to be that question of, ‘we’re not benefiting enough from these projects to sort of have a vested interest in their continuation,’” he said.
Survival hinges on Steensby expansion
For Paul Hébert, chief executive officer of the N.W.T. and Nunavut Chamber of Mines, Baffinland’s financial situation tells a broader story about Nunavut’s mining sector.
“Northern projects need more certainty. They need clearer timelines. They need stronger alignment between regulatory decisions, infrastructure planning, financing, Inuit participation, long-term economic development,” he said.
Iron ore is one of Canada’s 34 listed critical minerals, and Baffinland said its Mary River Mine contains some of the highest grade deposits in the world.
The roughly $4 billion Steensby port and railway expansion would allow the company to ship 22 million tonnes of iron ore per year from its Mary River Mine – up from its current limit of 4.2 million tonnes.
Baffinland previously blamed its financial woes on that cap, and Clinton agrees that the company needs to be able to increase production to survive.
“You can kind of turn what’s a potential threat into an opportunity by growing rather than shrinking,” he said.
The Steensby expansion still faces stiff opposition from hunters and trappers organizations in Sanirajak, Igloolik and Naujaat, who worry the project poses a major threat to marine animals and caribou. They want a pause on new permits until Baffinland does further consultation with them.
Nunavut MP Lori Idlout, who as a lawyer advocated against former plans to expand the Mary River Mine project, said the geopolitical environment today is different than in years past, but those concerns by Inuit must continue to be taken into consideration.
“There needs to be a determination as to whether another assessment needs to happen, and if Inuit are requesting it, then we need to make sure that Inuit feel heard in the process.”
Related stories from around the North :
Canada: It’s ‘weird busy’ this summer, says Yukon shop owner. Tourists came back but the workers didn’t, CBC News
Finland: Miners hunting for metals to battery cars threaten Finland’s Sámi reindeer herders’ homeland
Greenland: Greenland’s leader hails EU as trusted friend and urges investment in its minerals, The Associated Press
Sweden: Just how significant is the discovery of rare earth metals in Arctic Sweden?
United States: ConocoPhillips’ plans for 4 new Arctic wells unaffected by toppled rig, company says, Alaska Public Media
