The federal government has blocked Baffinland Iron Mines Corp.’s plans for a massive production increase in Nunavut, sending a strong message to the mining industry that any future large resource development in the Far North must be offset by sufficient environmental damage mitigation and proper consultation with the Inuit.

Baffinland, based in Oakville, Ont., had hoped to double its production of iron ore at its Baffin Island mine in Nunavut to 12 million tonnes a year, from six million tonnes. The privately held company, which is owned by U.S. private equity group the Energy & Minerals Group and Luxembourg-based steel producer ArcelorMittal, said that getting the go-ahead on the expansion was key to it becoming economically viable over the long term.

In his decision to reject the production increase, federal Minister of Northern Affairs Dan Vandal said the expansion could cause “significant adverse eco-systemic effects” to marine mammals, fish, caribou, terrestrial wildlife, vegetation and freshwater. He also raised concerns about the potential detrimental effect on Inuit harvesting, culture, land use and food security. Baffinland, he concluded, had not demonstrated it could adequately mitigate the damage, or assuage the concerns of the Inuit.

“The Minister’s decision is both surprising and disappointing,” Brian Penney, CEO of Baffinland, said in a statement.

The decision by Prime Minister Justin Trudeau’s Liberal government followed more than four years of consultation among Baffinland, Inuit stakeholders, local hamlets, hunter and trapper organizations, environmental activists and myriad business groups.

Baffinland said that the expansion of its Mary River iron ore mine would bring billions in added economic benefits to the territory. Baffinland is already a key contributor to the economy, accounting for about 23 per cent of Nunavut’s GDP, and it is also the biggest private-sector employer.

But Inuit organizations had warned repeatedly in public hearings that the existing mine, which went into production in 2014, had already damaged their traditional way of life. In Nunavut, the hunting and trapping of caribou, seals and whales have persisted for thousands of years, providing sustenance, food and clothing. Among the biggest complaints about the existing mine was that iron ore dust kicked up by haulage had contaminated ice on seal-hunting grounds. Hunters and trappers also alleged the Arctic char population had plummeted. There were also worries about a new railway damaging permafrost hunting grounds.

“With the expansion, there was too much uncertainty about the environmental management of the mine,” said Jeremy Tunraluk, executive committee member with the Qikiqtani Inuit Association (QIA). “And us Inuit, we live off the land. It is our culture that we are trying to protect.”

In May, the Nunavut Impact Review Board, the territory’s environmental assessment agency, advised Mr. Vandal to veto the expansion, saying it had the potential to inflict great damage on marine mammals, fish, and caribou, as well as be detrimental to harvesting land and food security.

Mr. Vandal said Wednesday that the NIRB ruling, as well as the fact that the land on which the mine is located is not held by the Crown, was a major factor in his decision. The Inuit secured ownership of the land as part of a historic land-settlement agreement with the federal government in 1993, which laid the foundation for the formation of Nunavut six years later.

Ottawa is opening up the door for Baffinland to reapply for the production expansion, but with caveats. In an interview with The Globe and Mail, Mr. Vandal said he encourages Baffinland to find a “path forward,” but to “do it in a way that is not harmful to the environment, and not harmful to the Inuit traditional harvesting and land use.”

QIA too says it will work with the iron ore company. The Inuit organization reiterated it is not opposed to mining and development on its lands.

“We don’t want to close things down for future development,” said Levi Barnabas, Mary River project portfolio lead. “This is something that is going to affect my grandchildren, and my great grandchildren.”

The decision by the federal government to put the brakes on a massive new resource project is also being seen in some quarters as a possible window into how Ottawa might decide on other large scale mining developments, such as Ontario’s Ring of Fire minerals project. The development in Ontario’s Far North pits a giant foreign-owned mining company, Australia’s Wyloo Metals Pty Ltd., against Indigenous stakeholders, some of which are already opposed to development, and environmental activists. Added to the mix in Ontario is a fervently pro-business provincial government in Doug Ford’s Progressive Conservatives.

Mr. Vandal declined to comment on what the government’s decision on Baffinland might mean for Ontario’s Ring of Fire, but he made it clear that every decision around mining development in the North is evaluated on a case-by-case basis. The Liberals, he added, are by no means anti-development. Mr. Vandal pointed to other large-scale mining that is happening in Nunavut, including Agnico Eagle Mines Ltd. operating several large gold mines in the territory.

“Everyone wants to see the economic and social benefits of mining, and the employment,” he said. ”But it has to be done in a way that respects the environment and respects Indigenous rights.”

The Globe and Mail, November 17, 2022