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QIA MaryRiverProject Backgrounder Final ENG

QIA MaryRiverProject Backgrounder Final ENG

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Published by James Henry Bell

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Published by: James Henry Bell on Sep 06, 2013
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09/07/2013

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The Qikiqtani Inuit Association and the Mary River Project
 
a backgrounder
September, 2013
 
 
pg. 1
Where we are today
The Qikiqtani Inuit Association (QIA) is extremely pleased to have reached an agreement with Baffinland Iron MinesCorporation (BIMC) on terms of a Commercial Production Lease (CPL), Water Compensation Agreement (WCA), andInuit Impact and Benefit Agreement (IIBA) for the Mary River Project.These agreements will be officially signed into effect on September 6, 2013, at a Signing Ceremony to take place inIqaluit, Nunavut. This ceremony will welcome attendees including Board Members to join QIA and Beneficiaries for thismomentous occasion. Ratification represents the culmination of a long period of development and negotiation, and asignificant step toward enhancing the self-reliance and quality of life of all Beneficiaries in the Qikiqtaaluk region(“Qikiqtaalummiut”).In many respects, the signing of these agreements can be thought of as the end of one chapter and the beginning of another. For QIA, and for Qikiqtaalummiut, the majority of the work is still ahead; while we pause to enjoy a well-deserved celebration of what has been accomplished to date, we quickly turn toward the next task, which is ensuring thatthese agreements are implemented effectively and in a manner which will bring maximum benefit to the Beneficiaries onwhose behalf they were negotiated.
The Mary River Project
The Mary River Project “The Project” is an iron ore mining initiative located on North Baffin Island in the Qikiqtaaluk Region of Nunavut, in an area that has long been known to Inuit as Nuluujaat, a landmark used to guide travel throughthe area. The Mine Site is located approximately 160 km south of the community of Pond Inlet (Mittimatalik), and 1,000km northwest of Iqaluit. It represents one of the largest and richest undeveloped iron ore deposits in the world, and thefirst open pit mine in North America at this latitude.The Project involves the development of iron ore reserves at one of nine known deposits in lands that BIMC holds mineralleases for. It is estimated that Deposit No. 1 contains at least 365 million tonnes of high grade (~64%) iron ore. This oreis of sufficient quality that it can be blasted, screened, and transported to market without further on-site processingrequired.Project plans call for a number of significant infrastructure developments, including building various facilities at the MineSite and at Milne Inlet, enhancing the Tote Road, building a 150 km railway to be from Mary River to Steensby Inlet,and constructing an all-season deep water port and ship loading facility also at Steensby Inlet. Costs of fully developingthe mining operation are estimated at $4 billion.The Project is expected to advance in phases, over the course of an estimated 21 year lifespan of the commercialproduction component. The Early Revenue Phase will run from the second quarter of 2014 through the forth quarter of 2018, and will see an estimated 3.5 million tonnes of iron ore each year beginning in 2015 transported from the mine sitealong the Tote Road to the marine facilities and port at Milne Inlet. From there it will be loaded onto carriers and shippedto market during the open-water season, which lasts approximately 90 days.The Approved Project Execution Phase will see an additional 18 million tonnes of iron ore produced each year andtransported by rail to the deep water port facilities at Steensby Inlet. The ore will be loaded onto special ice breaking orecarriers built specifically for the Project and shipped through the Foxe Basin and Hudson Strait and on to Europe.Shipping will be year round, with a ship passage either in or out expected every day. Construction on this phase isexpected to commence in the third quarter of 2015, with the first ore shipped in the first quarter of 2019. At peak production, estimated to begin in 2021, the mine will produce 21.5 million tonnes of iron ore annually.
 
 
pg. 2
The commercial production phase will be followed by an estimated three year reclamation phase and a minimum of fiveyears dedicated to a post-closure environmental monitoring phase.During operation there will be permanent work camps at Mary River, Milne Inlet and Steensby Inlet. During constructionadditional camps will be required along the rail line. At the peak of construction over one-thousand employees will berequired. Later, during the operation of the mine there will be between 700-900 workers required for all projectactivities.
Project Timeline
Vast iron ore deposits in what is now the Qikiqtaaluk Region of Nunavut were first discovered by mining prospectorMurray Watts during the 1960’s. For the next 20 years, Watts tried to find financial backing to develop these resources,but given the weak global ore prices and the logistical challenges of the Arctic, no company was willing to make such amassive investment in the infrastructure needed to build a mine.In 1978, Queen’s University MBA student Gordon McCreary wrote a thesis in the viability of transporting from the MaryRiver site, concluding that while transportation is a key challenge, it would become a mine one day when the economicconditions were right.In 2004, BIMC began advanced exploration of the deposits, and completed a bulk sampling program in 2007 and 2008which involved mining and transporting 113,000 tonnes of iron ore through the port at Milne Inlet. To carry out theprogram, BIMC consulted with Inuit communities, and also worked closely with Inuit firms such as the Qikiqtaaluk Corporation and Nuna Logistics Ltd. Testing of the bulk sample in Europe confirmed the high grade of the ore at theMary River site.In 2006, a global iron ore shortage increased demand for iron and unlocked the potential for development of the MaryRiver Project. In September 2006, BIMC began talks with QIA on mine development and an IIBA.In 2007, BIMC began formal consultations with the seven communities most impacted by the mine: Arctic Bay, CapeDorset, Clyde River, Igloolik, Hall Beach, Kimmirut and Pond Inlet. During this period, reports indicate that Arctic Icehas shrunk to the lowest total area on record, making Arctic shipping more viable than in the past. However, BIMC wassignificantly impacted by the collapse of the global financial markets in 2007, and the global demand for iron oredropped sharply.The environmental assessment process began in 2005, with BIMC starting work on the Environmental Impact Statement(EIS) in pursuit of federal approval for the Project and the issuance of the Project Certificate by the Nunavut ImpactReview Board (NIRB). This process involved numerous scientific studies as well as the collection of InuitQaujimajatuqangit and extensive community consultation. The Mary River Project received federal government approvalon December 3, 2012, and NIRB issued a Project Certificate on December 28, 2012.In January of 2013, BIMC notified NIRB that as a result of various economic drivers it would be unable to move directlyinto full scale operations, and applied to amend to Project Certificate to reflect this in anticipated mining activities andproduction. BIMC modified its Final Environmental Impact Statement to propose an Early Revenue Phase, a scaled-back operation involving only the Milne Inlet port. It is estimated that this phase will see 0.5 million tonnes of ore shipped in2014, 2.0 million tonnes in 2015, and 3.5 million tonnes of ore each year after for the remaining duration of the Project.Railway, facility and Steensby Port development will be deferred until the global economy improves and capital becomesmore readily available to BIMC.While BIMC is unable to say with certainty when this will occur, the amended EIS assumes that construction of infrastructure for the full Project will be completed in five years, with the first ore being shipped out of Steensby in 2019.

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