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The iron age returns to Nunavut

New investors revive Mary River iron ore project

JIM BELL

An ambitious group of investors will spend $7.5 million this year to explore the old Mary River iron ore site on northern Baffin Island, about 160 km south of Pond Inlet, betting that one day they'll make money by shipping huge quantities of high-grade iron ore to steel-mills in Europe.

"Pond Inlet will soon be a beehive of activity," said Gordon McCreary, the CEO and chair of the Baffinland Mining Corp., the company that's held mineral leases for the area since 1963.

McCreary said Baffinland will hire 18 people from Pond Inlet this summer to work on their exploration program, on a two-week-in, one-week-out basis, divided into three six-person teams.

Mike Zurowski, Baffinland's president, will manage the work, which is intended to expand knowledge of the site's iron ore resources. Next week, he'll fly up to Pond Inlet to oversee the transport of supplies from Pond Inlet to Mary River via aircraft.

Between 1962 and 1965, Baffinland Mining, then under different ownership, put in three airstrips, a camp site, and a road from Mary River to a potential port at Milne Inlet. Their geologists confirmed the presence of at least 130 million tonnes of iron ore.

But the company never developed the project into a mine. The site lay dormant for years, visited only by the occasional geologist, and in 1991, a clean-up crew funded by the federal government.

Then, in 2002, McReary and a business partner, Richard McCloskey, bought a controlling interest in Baffinland. McReary has dreamed about the economic potential of the Mary River site since 1978, when he wrote a thesis about it while studying for an MBA degree.

Just last month, McReary took the final step. He quit his former job as vice-president of corporate affairs at the Kinross Gold Corp., owner of Nunavut's Lupin mine, and moved over to Baffinland Mining.

McCreary and Zurowski say the Mary River site holds a "world-class" iron ore resource, and hope to prove the existence of at least 250,000 tonnes of iron-rich hematite and magnetite. Samples show the ore body yields an average grade of 66.8 per cent iron.

Last March, they met with groups in Pond Inlet, including the hunters and trappers organization, to explain their plans. They said they heard many concerns, especially from elders.

"They realize that they can't have a benefit without an impact," Zurowski said.

The greatest environmental issues are likely to be raised by their proposed method of shipping, and not by the mine itself, Zurowski and McCreary say.

Their mining methods would be simple, and wouldn't produce any toxic material. They'll simply extract huge quantities of rock, crush it into small pellet-size pieces, then transport it by a short railway leading to a deep-sea port, most likely at Milne Inlet.

There the company would load ore onto huge ice-strengthened ships for transport to markets in Europe. The gargantuan, 250,000-tonne vessels they would use for this task would be many times the size of the 28,000-tonne M.V. Arctic, which was once chartered to ship lead-zinc ore from Nanisivik.

The company estimates they can ship 10 million tonnes of iron ore from the Mary River site every year for at least 25 years. To keep the supply flowing, they hope to extend the area's shipping season from about 90 days a year to eight or 10 months, starting in July and continuing into the early winter through to February.

Although Baffinland Mining controls all rights to the lands listed in its mineral leases, the area is completely surrounded by land designated as Inuit-owned under the Nunavut land claim agreement, some of it sub-surface-title land controlled by Nunavut Tunngavik Inc. Other pieces of land are designated as surface-title only, controlled by the Qikiqtani Inuit Association.

Baffinland's rights to the area are guaranteed by a "grandfathering" arrangement, and the Nunavut land claim agreement contains a section giving the company a right of access to an old road that connects the Mary River site to Milne Inlet.

That means that their mineral leases are administered by the Department of Indian and Northern Affairs. Zurowski said the company has already received a permit from DIAND for this year's work, and will soon get a water licence from the Nunavut Water Board.

McCreary said Baffinland Mining will work with the Qikiqtani Inuit Association to develop an Inuit impact and benefit agreement for the project, and has begun consultations with affected communities.

They say that Mary River's high quality iron ore would be highly attractive to steel producers in Europe, and that escalating world prices mean that it's become a profitable commodity.

With their rapidly industrializing economy, buyers in China have been buying up huge quantities of iron ore to be transformed into steel in recent years.

In turn, that increased demand has driven up iron ore prices everywhere. Since nearly three-quarters of the seaborne trade in iron ore is dominated by three big companies, steel-mills in Europe are looking for new sources of supply.

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