QIA says Baffinland Iron Mines owes it millions in advance royalty payments

The Qikiqtani Inuit Association is going to arbitration with Baffinland Iron Mines, alleging the company owes itmore than $6.25 million in advanceroyalty payments.

In a statement of claim filed Aug. 26, QIA saysBaffinland hasn't paid its $1.25 million quarterly advance royalty payments since the first quarter of 2015, as per the Inuit Impact and Benefit Agreement the document which outlinesbenefits Inuit are to receive for Baffinland using Inuit-owned land.

"It's definitely something that we don't take lightly at all," said QIA president P.J. Akeeagok.

"I thinkit's not just the IIBA we have to look at, but the Land Claims Agreement as well that gives us these rights. That definitely is something that's very dear to me to ensure that Inuit-owned lands,that were selected to ensure we're self-sufficient in terms of the resources that are there, allow Inuit to benefit."

Dispute over production

The company'sMary River mine, located about 160 kilometres southwest of Pond Inlet, Nunavut, shipped its first load of ore in August 2015.

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The IIBA stipulation at the heart of the argument Article 5,which QIA made public earlier this year says Baffinland is required to pay advance royalties to QIA until Baffinland reaches "commercial production," which is 60 per cent of the mine's capacity.

Baffinland hasn't yet filed its statement of defence, nor will it comment on the allegations made by QIA.

But the dispute, at least in part, appears to be over the mine's capacity, and whether Baffinland has reached its 60 per cent production mark, which would then stop the advance royalty payments to QIA. When the mine was given its project certificate from the Nunavut Impact Review Board in 2012, the project's capacity was set at 18 million tonnes per year.

But to help get the mine off the ground, Baffinland requested and was granted an amendment to institute an "early revenue phase" where the mine's capacity would be set at 3.5 million tonnes.

QIA is arguing in its statement of claimthat the commercial production number upon which the IIBA was negotiatedis, in fact, 18 million tonnes per year, and not the 3.5 million tonnes from the early revenue phase.

"This particular section is clearly laid out for when those quarterly payments are to be paid," Akeeagok said.

He said he hasmet with Baffinland's top executive to discuss the matter, but wouldn't go into details about what they talked about.

"We've been working extremely hard with them. We went through the proper steps through the IIBA, and it's very unfortunate but we have to assert Inuit rights, which are clearly laid out in the benefits agreements, to ensure the benefits that are outlined there are lived up to."

QIA taps Thomas Berger as its arbitrator

QIA appointedformer B.C. Supreme Court judge Thomas Berger as its arbitrator.

Berger is currentlyrepresentingFirst Nation and environmental groups in a dispute with the Yukon governmentover Peel watershed land use planning. In 2005, he wasappointed as conciliator in the Nunavut Land Claims dispute between the federal government and Nunavut Tunngavik.

Hewill be joined on the arbitration panel by Baffinland's nominee Jim McCartney. The chair of the three-member panel,Murray Smith, was chosen by Berger and McCartney.

"He's very familiar with working with Indigenous people throughout Canada and he has many years of service dealing with situations like this," Akeeagok said of Berger.

"So we feel very confident as our appointee to the board."

The two-day hearing is set forOct. 25-26 in Vancouver, which QIA has requested be videolinked or recordedand madeavailable toNunavummiut.