Canadian mining company Baffinland faces millions in liens over stalled expansion project in Arctic

A specially made iron ore handling system for the Mary River expansion project arrives at Milne Inlet last summer. The company who made the processing plant is filing a claim of lien against the mining company for over $50 million, now that the expansion is on hold. (Submitted by thyssenkrupp Industrial Solutions)
Construction companies are taking steps to make sure they’ll get paid for work they did for Baffinland’s Mary River Mine.

Last year, the mining company purchased work and machinery with the expectation that its application for a production increase would be approved by this year.

Some equipment it purchased includes a specially designed iron ore handling system made to unload rail cars, crush and screen iron ore, and load it onto ships. Part of that processing plant for the expansion was shipped to the mine site during the summer from Germany.

But the Mary River expansion is in a state of stalemate and, in November, Baffinland scaled back work and cut contracts related to the increase, shortly after necessary environmental hearings were adjourned unfinished.

Now, the company that designed the handling system, Thyssenkrupp Industrial Solutions (Canada) Inc., has filed a claim of lien against the mine for more than $50 million.

Under Nunavut’s Mechanics’ Lien Act, contractors can make a claim of lien when there is concern they won’t get paid. A lien guarantees payment of a loan or debt, and allows a creditor to seize assets if money is not paid.

Baffinland calls liens ‘ordinary’

This is standard business practice, and does not mean Baffinland is, or isn’t, paying out its contracts.

“From time to time contractors or subcontractors register liens against the company … over time the liens are removed,” Baffinland told CBC News in an email. “This happens in the ordinary course of a mining business.”

Neither Baffinland or the three contractors who filed liens on the mine site in November and December would comment on the status of the claims. Any claim made would still have to be settled or recognized in court. The liens are not currently registered at the Nunavut Court of Justice.

The claim of lien by Thyssenkrupp is for work that started in April of 2017 and — as of a contract amended last May — wasn’t set to finish until August of 2022. It claims an amount “due or to become due” of $50,716,025.45

Pilings and rail bridges purchased for expansion

Another company based in Edmonton, Aecon Mining Construction Services, made a claim of lien for around $33,801,292.18, for work it said was done on or before Nov. 22, 2019, and that was still being done at the time the claim was filed.

Aecon declined comment, calling the claim of lien a “confidential commercial matter.”

But the claim is for work and materials like “piling and rail bridges” for “the Mary River expansion project.”

Qikiqtaaluk Sana Ltd., a Nunavut arm of the Quebec company Group Gilbert, made two claims of liens.

One claim is for work done on or before Nov. 15 of 2019. That work included quarry building, drilling, blasting and excavation. The lien was for $19,619,399.12.

A second claim, for $5,781,149.98, is also for construction work like crushing and excavation, drilling and blasting done on or before Dec. 18 of last year.

Qikiqtaaluk Sana called the claims “usual and standard measures” afforded by law.

“Claims for lien are often encountered in large construction projects, in particular when temporary suspension events occur,” Qikiqtaaluk Sana Ltd. said in an email. “We strongly believe in the merits and the quality of Baffinland Iron Mines’ expansion project.”

While the liens are placed on three parcels of Inuit-owned lands Baffinland holds leases for — the Qiqiktani Inuit Association said because Inuit-owned lands are protected under the Canadian constitution, “such claims against Baffinland only affect the leasehold titles, estate and interest of Baffinland.”

Sealift orders struck out

Next steps for Mary River expansion hearings by the Nunavut Impact Review Board are being decided in March. In the meantime, Baffinland’s tonnage allowance of six million has expired, and the company’s application to continue mining that amount will be heard by the review board in February.

The company said the hearing adjournment, a delay in rescheduling, and new timelines for a final decision on the expansion mean the scope of work at the mine has been vastly changed for this year.

“Any non-essential work and work tied to phase two (the expansion) has been impacted,” Baffinland said.

By extension, that’s also true for its expansion contractors.

Documents submitted to the Nunavut Water Board show mass orders of equipment like generators, trailers and loaders were cancelled for the 2020 sealift season.

Related stories from around the North:

Canada: Northwestern Canadian First Nation asks N.W.T. to speak out against northern Alberta mine, CBC News

China: US sanctions against Chinese shipping company could hurt Russia’s LNG exports, The Independent Barents Observer

Norway: Norway’s Equinor to drill new Arctic well in Barents Sea, The Independent Barents Observer

Russia: Russian company Gazprom finds more gas than expected in future Arctic field, The Independent Barents Observer

United States: Seattle council votes to withhold business from oil companies that explore Arctic Refuge, Alaska Public Media

Beth Brown, CBC News

Beth Brown, CBC News

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