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Baffinland Iron Mines is developing an iron ore mining operation in the northern part of Baffin Island (Baffinland Iron Mines)
Baffinland Iron Mines is developing an iron ore mining operation in the northern part of Baffin Island (Baffinland Iron Mines)

A railway to Arctic riches: economic boom, environmental threat? Add to ...

Residents in places like Pond Inlet, 170 km from the proposed mine, are wrestling with the project. "This project is large, very large," said Colin Saunders, the town's economic development officer. "The amount of jobs and opportunities that will be available to the High Arctic residents are going to be significant, very significant.

"But there's a trade-off and you have to balance the jobs and the contracts with the environmental impacts."

The evolution of a mine

Just about everyone in the mining world has known about the iron ore at Mary River for decades. Mining it has been a dream ever since Murray Watts, a legendary Canadian prospector, climbed into a beat-up Cessna in July, 1962, to scout around the northern part of Baffin Island.

No one took the trip seriously at the time; mining industry players figured that finding anything in the barren setting was hopeless. But Mr. Watts had long believed in the riches of the north and he had been exploring the northeastern Arctic for 30 years. After a few more trips that summer, Mr. Watts found four iron ore deposits south of Pond Inlet. The site was named Mary River by Europeans, but it had been a meeting place for Inuit hunters for centuries.

The richness of the deposit astounded even Mr. Watts. The iron content ranged from 65 to 70 per cent. That's so pure that the ore can be picked up, dusted off and tossed into a blast furnace. And yet, despite the attractiveness of the find, no company had the financial wherewithal to mine it.

Mr. Watts died in a car crash in 1982, and four years later, the site ended up in the hands of Baffinland Iron Mines Corp., a small Toronto-based company. But development costs were just too high and the project was shelved. Interest was reignited in 2004, when Baffinland went public and raised enough money to cover some testing and surveying at the site. The results confirmed the remarkable quality of the find and that it was the one of the largest undeveloped iron ore deposits in the world. By 2007, the company had calculated that a mine would cost more than $4-billion, far beyond the ability of a small player like Baffinland to raise, especially with a global credit crunch starting to unfold.

By the middle of last year, financial markets had recovered and the price of iron ore was climbing to record levels. Suddenly Mary River was in hot demand and Baffinland was the target of a global bidding war that pitted a U.S. private equity fund against Luxembourg-based ArcelorMittal SA, the world's largest steel maker. After battling for months, and jacking their bids from 80 cents a share to $1.50, the two sides called a truce and made a joint offer last January worth more than $500-million. The takeover closed in March.

Now, with ArcelorMittal's backing, Baffinland was finally ready to forge ahead with its dream mine at Mary River, at a price tag of $4.1-billion.

There was never any doubt the project would be expensive and gigantic. But material filed at the Nunavut Impact Review Board - 10 volumes of documents spanning more than 5,000 pages - offer a unique perspective on just how complex it is.

The rail line is the trickiest part. It will cost nearly $2-billion, or up to $13-million per kilometre, and take four years to build. Construction will require more than 1,000 workers, divided into four teams camped out along the route. The track will run from the mine site to a new port at Steensby Inlet, along the western side of central Baffin Island. Mapping the route took years because of the difficult terrain; the rail line will require 31 bridges and two tunnels, including one measuring 1.3 kilometres.

Building all that would be hard enough anywhere, but the constant cold in the Arctic means many sections of the line, including the bridges, will have to be pre-assembled and then shipped in. But even with global warming, regular transport ships still have to travel mainly in summer, making logistics a potential nightmare. "You only get one chance a year to get material up there," said Ron Hampton, the project director. "It forces you to be very efficient at your planning."

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