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QIA inks lucrative deal with Baffinland that gives Inuit greater authority over iron mine

The Qikiqtani Inuit Association has extracted huge commitments and what could amount to more than $100 million in additional payments from Baffinland Iron Mines through a newly-signed agreement, provided Mary River mine phase two expansion proceeds.

Baffinland Iron Mines, operators of the Mary River mine, could pay out in excess of $100 million to the Qikiqtani Inuit Association and its impacted communities over the coming years if the mining company’s phase two expansion plan moves ahead.
photo courtesy of Baffinland Iron Mines

The deal, known as the Inuit Certainty Agreement, will give Inuit greater authority in monitoring developments at the mine and associated impacts on the environment and the Inuit way of life.

The QIA’s royalty would rise incrementally to three per cent once Baffinland’s phase two mine expansion is underway for 72 months. That royalty starts at 1.19 per cent.

Baffinland will also make one-time “milestone payments” of $5 million – if and when phase two becomes effective – and $1.25 million every three months for the following eight quarters.

Then comes a $15 million lump sum after 54 months and another $15 million after 72 months.

Baffinland has also agreed to help build child-care centres in Pond Inlet, Arctic Bay, Clyde River, Iglulik and Sanirajak – worth up to $15 million in total – and will also assist with the same infrastructure in Kinngait and Kimmirut, if the company’s mine expansion proposal reaches Steensby Inlet. In addition, the mining company will pay $19 per child per day to help offset the cost of childcare in those communities.

Inuit Impact Benefit Agreement implementation costs will result in payments of $2.25 million per quarter for 14 straight quarters, then dropping to $2 million per quarter.

If Baffinland chooses to make an initial public offering of shares through the stock market, the QIA will receive five per cent of that amount or $10 million, whichever is less.

Baffinland must also post a $10 million project bond that will be ensure it meets at least minimum standards and objectives.

There will be a one-time $1.3-million payment to the Mittimatalik Hunters and Trappers Organization in Pond Inlet for “changes in the hunting experience” since Mary River mining activity got underway.

Another $750,000 will be paid annually into a Harvesters Enabling Program that will go to HTOs in the five affected communities.

Baffinland will pay QIA $400,000 for failing to meet “Inuit content” goals to date, such as purchasing from communities, subcontracting or training

A revised Water Compensation Agreement will be worth $225,000 per year to the QIA, but that amount will be prorated for 2020 as the Inuit Certainty Agreement was only signed in mid-June.

This is all on top of improved contracting measures, evolving Inuit employment goals that come with monetary penalties for Baffinland if they fall short and the formation of a committee that will monitor issues such as language preservation, access to country food, support for youth and elders, quality of life, housing, income and cost of living, mental health, education and training.

‘Unprecedented,’ says Akeeagok

QIA President P.J. Akeeagok called the deal “unprecedented” and “holistic.”

“We’ve structured a very robust, unprecedented stewardship plan that puts Inuit, especially from the impacted communities, at that decision-making authority.” says P.J. Akeeagok, president of the Qikiqtani Inuit Association.
image courtesy of the QIA

“When we started the discussions with Baffinland, it was our priority to ensure that we find a way that puts Inuit in the forefront in terms of oversight… for Inuit world view, Inuit concerns, Inuit Qaujimajatuqangit to truly have meaning,” said Akeeagok. “So we’ve structured a very robust, unprecedented stewardship plan that puts Inuit, especially from the impacted communities, at that decision-making authority.”

Akeeagok emphasized that the agreement “echoes” the concerns expressed by Inuit in the communities affected by the mine. He added that some of the funds will flow directly to those communities.

“They want to see self-determination and want to participate through the different benefits structures, whether it’s the decision-making or monetary benefits,” he said, adding that a policy is being developed to define the percentage of revenues that will be distributed to the communities.

Not all the differences between Baffinland and the QIA have been ironed out yet. Concerns remain over potential shipping impacts on marine life, Akeeagok acknowledged. He also pointed out that the Inuit Certainty Agreement doesn’t supersede the NIRB proceedings, which have yet to be completed for Baffinland’s phase two.

“We highly respect the process of NIRB,” he said. “This Inuit Certainty Agreement does not limit or make any less the concerns that the intervenors but, more importantly, the HTOs and hamlets can make (themselves heard) right through the NIRB process.”

The QIA president admitted that his organization and Baffinland have weathered “a lack of historical trust,” but he expressed hope that the parties are reaching to a new understanding.

“I think over the years we’ve really tried pushing hard in terms of finding that common ground,” he said. “(This agreement) really puts the Inuit on equal footing in terms of the oversight, monitoring and research aspect of it… I’m very optimistic that we’ll be able to work well with the communities to truly advance what’s within the agreements and that Baffinland will live up to all their obligations that are outlined in the Inuit Certainty Agreement.”

Baffinland president and CEO Brian Penney expressed confidence that the miner will deliver on its commitments.

“We are confident in the success of the Mary River Project and are absolutely confident in our ability to meet all obligations in the Inuit Certainty Agreement,” stated Penney.

Baffinland is currently permitted to mine six million tonnes of iron ore through Dec. 31, 2021. The company is proposing to increase mine output initially to 12 million tonnes and later to 30 million tonnes by rail, if permits are granted. The project cost, including a 110-km railway, is pegged at approximately $900 million.