Summary of contract

• Negotiation, representation, and other relevant context

  The parties to the Inuit impact and benefit agreement are Qikiqtani Inuit Association (QIA) and Baffinland Iron Mines Corporation (Baffinland), a corporation having its registered office in Toronto, Ontario that is extra-territorially registered to carry on business in Nunavut (Preamble). Baffinland has proposed the development and exploitation of iron ore resources, including mine construction in the North Baffin area of the Nunavut settlement area known as the Mary River project (Preamble). QIA is the registered owner of the fee simple title to all Inuit Owned Lands in North Baffin, excluding mineral rights but including specified substances (Preamble). The Mary River Project involves the development and exploitation of resources that are wholly or partly on Inuit-owned lands and is a major development Mary River project within the meaning of Section 26.1.1 of the Nunavut Land Claims Agreement. Section 26.1.1 also requires to finalize an Inuit impact and benefit agreement (Preamble). Baffinland and QIA wish to enter into the agreement to address the impacts on Inuit and provide for the benefits and opportunities to Inuit arising from the Mary River project (Preamble). The agreement's underlying principles are mutual benefit, collaboration, and consultation for the QIA and Baffinland. Benefits for the Inuit include financial participation, comprehensive training, target levels of Inuit employment, capacity building, business opportunities, and Inuit content considerations in awarding contracts. If the Inuit achieve these benefits, Baffinland will benefit from efficient, high-quality Inuit companies, a well-trained local workforce, and support for the Mary River project (Art. 2.1). Baffinland and the QIA agree that the Inuit must have equitable and meaningful participation in the Mary River project (Art. 2.2). QIA and Baffinland agree to cooperate to build capacity to maximize Inuit participation over time. QIA and Baffinland will consistently encourage Inuit to maximize ownership, subcontracting, management, and employment benefits arising from the Mary River project (Art. 2.3). QIA will commit to meeting objectives of the agreement, particularly in the areas of employment and training. Baffinland, in consultation with QIA, will work to prepare the workplace to actively encourage Inuit to contract and work at the Mary River project, through culturally appropriate working conditions and cross-cultural training for both Inuit and non-Inuit managers and workers (Art. 2.4). Baffinland and QIA each agree to use their best efforts to maximize Inuit participation during the life of the Mary River project, including by utilizing the Executive Committee. Baffinland and QIA also agree to use their best efforts concerning Inuit participation in training and education, Inuit employment opportunities, particularly with respect to the minimum Inuit employment goal, contracting to Inuit firms, and subcontracting Inuit firms (Art. 2.6). The description of the Mary River project is in Article 3.

• Governance, implementation, dispute resolution

  Qikiqtani Inuit Association (QIA) and Baffinland Iron Mines Corporation (Baffinland) will appoint their representatives to a senior Executive Committee to oversee implementation of the agreement, and a Management Committee for continuous monitoring of the operation and management of the project (Art. 2.5, 4.1, 4.2). Baffinland will be responsible for the committees' costs, including costs for technical advisors and committees' obligations cited in the agreement (Art. 4.3.2, 4.5.2). The dispute resolution process will include consulting and taking direction from the presidents of QIA and Baffinland, the management, and the executive committee (Art.2.7). All reasonable attempts will be made to resolve at an administrative level, a dispute that may arise in implementing the agreement. To facilitate the dispute resolution process, the presidents of QIA and Baffinland may meet (if requested by the executive committee) to resolve any disagreements that could not be settled by either the management committee or the executive committee (Art. 4.1.5). If the management committee is unable to reach a consensus and the executive committee is unable to obtain an affirmative vote of 5 out of 6 executive committee members, the executive committee may request the presidents of QIA and Baffinland to convene a meeting to resolve the dispute. If the presidents cannot resolve the dispute, either QIA or Baffinland may refer the dispute to mediation. If mediation does not resolve the matter to the satisfaction of both QIA and Baffinland, and the issue relates to certain functions of the executive committee, either QIA or Baffinland may refer the matter to arbitration (Art. 4.6). The executive committee shall approve the implementation budget. Disputes relating to the implementation budget are subject to the mediation and arbitration processes set out in Art. 21 (Art. 4.10.1). A full outline of the procedures relating to mediation and arbitration is set out in Art. 21. Baffinland will prepare an annual report to summarize all reports generated in relation to the project, environmental issues, social and cultural objectives, financial provisions and participation, Inuit training and employment, contracts, and economic benefits (Art. 4.11). Baffinland will fund QIA to hire to coordinate reporting and monitoring activities on behalf of QIA, act as QIA liaison with Baffinland Coordinator, co-chair the management committee, and sit on the executive committee (Art. 4.12, 4.13). The executive committee will review (i) a report to be submitted annually by QIA on the use of the IlagiiktunutNuna/innullu Pivalliajutisait Kiinaujat Fund, (ii) the quarterly reports to be provided by Baffinland, (iii) the annual report on the implementation of the agreement, and (iv) the Inuit participation report that Baffinland will prepare annually (Art. 4.9, 20.1-20.3). Schedule 20.1 is a list of required reports under the agreement (p. 130).

• Fiscal obligations: content

  Qikiqtani Inuit Association (QIA) and Baffinland Iron Mines Corporation (Baffinland) will establish an annual implementation budget for the Mary River project duration. The implementation budget shall identify the amounts of contributions and expenses (including direct and indirect implementation costs that Baffinland and QIA expect they will incur during the upcoming fiscal year). The implementation budget shall be approved by the executive committee (Art. 4.10.1). Baffinland is required to pay advance payments, royalty payments, and, where applicable, extension payments to QIA (Art. 5.1.1). Baffinland must pay the following advance payments: (i) $5 million the date the agreement is signed; (ii) $5 million within five business days after a class A water license is issued to Baffinland; (iii) U$10 million within five business days after the date of the construction decision concerning the initial Mary River project; and (iv) $1.25 million at the end of each calendar quarter, beginning one year after the end of the calendar quarter in which the construction decision is made and ending at the end of the calendar quarter in which commercial production begins (Art. 5.2). If Baffinland does not notify QIA about the construction decision within 90 days after the date a type A water permit is issued for the Mary River project, Baffinland will pay to QIA $1.25 million at the end of each calendar quarter starting in the calendar quarter after the type A water permit is issued until the calendar quarter when the construction decision is made (Art. 5.3). Advance payments and extension payments are subject to the following terms and conditions: (i) advance payments and extension payments are fully creditable against royalty payments; (ii) 60 days following any termination of the Mary River project by Baffinland, Baffinland shall have no further obligation to pay advance payments or extension payments; (iii) 60 days after any suspension of the Mary River project by Baffinland, Baffinland shall have no further obligation to pay advance payments, but will continue to pay extension payments; (iv) advance payments and extension payments are payable when due, subject to interest and non-refundable; and (v) total advance payments and extension payments will not exceed $75 million (Art. 5.4). Baffinland must pay royalty payments each calendar quarter to QIA beginning the first calendar quarter after the commercial production begins, equal to the net sales revenue for the calendar quarter multiplied by the royalty percentage 1.19% (Art. 5.6, 5.15). Baffinland may deduct from the advance payments up to 25% of the royalty payments payable for the first 36 calendar quarters after commercial production begins. Baffinland may deduct from the advance payments up to 50% of the royalty payments payable for each calendar quarter after the first 36 quarters after commercial production begins (Art. 5.6). Baffinland will contribute $250,000 annually to support the business capacity and start-up fund (administered by QIA and its subsidiary organizations) to provide start-up and capacity-building assistance to designated Inuit firms in the Baffin region (Art.6.3.3-6.3.4). For the first two years following the agreement's date, Baffinland will contribute $1,000,000 annually to an education and training fund. In subsequent years, the executive committee will establish contributions to the education and training fund as part of the annual budget process (Art. 8.6). QIA and Baffinland agree that mitigating existing and potential impacts, promoting community well-being, and developing long-term individual and community capacity is a shared responsibility and agree to cooperate to address the challenge. Addressing social and cultural impacts may include building capacity and the well-being of individuals, families, and communities to sustain a productive workforce and build good relations with Inuit and Inuit communities (Art. 12.1). To achieve these goals, Baffinland and QIA agree to establish the Ilagiiktunut Nunalinnullu Pivalliajutisait Kiinaujat Fund. Baffinland and QIA will share equally in the contributions to the fund. For an initial six-year period, Baffinland will match QIA's contributions to the fund, up to a maximum annual contribution of $375,000 (Art. 12.2) The objectives of the fund will be: (i) creating opportunities for capacity building and synergy with the communities; (ii) ensuring equity and fair distribution of impact within and between communities and across generations; (iii) maintaining consistency with community development goals; (iv) improving social and cultural consequences of proposed mitigation, or enhancement is unsuccessful, or if unanticipated impacts emerge; (v) promoting mutual understanding and learning; and (vi) ensuring transparency and accountability. The fund's activities may include, among others, (i) participation in community projects, youth, and elder programs, hunter support activities, cultural learning and revitalization programs, (ii) providing social support for families and individuals and (ii) providing educational incentives (Art. 12.2). Baffinland will pay $750,000 to QIA to establish a wildlife compensation fund, to which Inuk or Inuit may apply for compensation for loss or damage relating to wildlife as a result of development activity related to the Mary River project. If the wildlife compensation fund is depleted to less than $50,000, Baffinland will decide to make further monetary contributions or terminate the fund. If Baffinland decides to terminate the fund, it is required to provide QIA with written reasons (Art.17.6).

• Community development obligations: Local content

  Benefits for the Inuit will include target levels of Inuit employment, capacity building, business opportunities and Inuit content consideration in contracting (Art. 2.1.1). Qikiqtani Inuit Association (QIA) and Baffinland Iron Mines Corporation (Baffinland) agree to cooperate to build capacity to maximize Inuit participation over time. QIA and Baffinland will consistently encourage Inuit to maximize ownership, subcontracting, management and employment benefits arising from the Mary River project. Initial thresholds will be set at levels that reflect current availability of people and skills, with increasing target levels to be established and reviewed as the Mary River project progresses. Baffinland will take reasonable steps to meet Inuit training employment and contracting objectives described in the agreement (Art. 2.3). Baffinland will work to provide a workplace that actively encourages Inuit to work at the Mary River Project, by implementing culturally appropriate working conditions, as well as cross-cultural training for both Inuit managers and workers and non-Inuit managers and workers (Art. 2.4). Baffinland will maximize contracting and subcontracting opportunities for qualified Inuit Firms in some business areas (Arts. 6.1, 6.2). To address shortfalls in the capacity of Inuit firms, Baffinland will: (i) assist Inuit firms to develop capacity in the bidding process; (ii) identify opportunities to break down large contracts into smaller components to improve the capacity of Inuit firms to bid on, and carry out, contracts; (iii) encourage contractors to break down large subcontracts into smaller components; (iv) help QIA or a subsidiary of QIA establish a business capacity and start-up fund to assist Inuit firms to develop their capacity (Art.6.3.3-6.3.4). Baffinland will use its best efforts to maximize Inuit participation in contracting goods or services including, among others, recruitment, training, road and airstrip construction, accommodation complex construction, communications systems, power plant, water supply, open pit and underground equipment and site preparation at the mine, and identified in the comprehensive list of contracts for which Inuit are eligible, as well as subcontracts for the same contracts (Art. 6.6.1). Baffinland will consult QIA regarding the design of the contracting, tendering, evaluation and monitoring process (Art. 6.6.2). Baffinland agrees to use its best efforts to maximize Inuit subcontracting in all of its existing contracts and will notify each company awarded a sub-contract that it will have to adhere to the Inuit content provisions of the agreement (Art. 6.7.1). In circumstances in which Baffinland choose to contract by invitational tender or request for proposal, preference will be given to companies that maximize Inuit content (Art. 6.9.4). Whenever possible, Baffinland will hire Inuit into all levels of employment (Art. 7.1.1). Baffinland will work with QIA, the executive committee and the Inuit employment and training coordinator to integrate training programs with employment opportunities (Art. 7.1.2). In the instance of a temporary closure or reduction in the work force, Inuit employees will be the last to be laid off, as long as the individual employee’s skill level meets or exceeds job requirements (Art. 7.1.3). Inuit who lack fluency in English may qualify for positions where their lack of fluency does not compromise safety (Art. 7.4). Inuit will be given preference over other applicants when hiring (Art .7.5). Baffinland will fund QIA to hire and train an Inuk for the position of a QIA Employment and Training Coordinator (Art. 7.9, 8.4). Baffinland and QIA will develop and implement the Inuit human resources strategy spanning the construction, operations and decommissioning phases of the Mary River project. As part of the Inuit human resources strategy, Baffinland and QIA will identify any existing barriers to the employment and advancement of Inuit, particularly Inuit women, and will use all reasonable efforts to reduce barriers throughout the Mary River Project. The employment component of the Inuit human resources strategy will include all relevant provisions of Art. 7, including: (i) recruitment and selection; (ii) retention and advancement; (iii) target levels for Inuit employment; (iv) Inuit women’s employment; (v) summer student employment; (vi) employee well-being; and (vii) other matters agreed to between Baffinland and QIA from time to time (Art. 7.11). Baffinland will ensure that a continuing effort is made to connect training received by Inuit directly with employment opportunities and advancement, including advancement into management positions (7.13.1). Based on the established list of specific employment opportunities, the management committee will calculate and the executive committee will establish a specific minimum Inuit employment goal for any contract drawn from the comprehensive list of contracts referred to in Art. 6.2.2 (Art. 7.14). Baffinland’s human resources policies will be implemented to ensure equal access to employment for Inuit men and women. To promote Inuit women’s access to employment in the Mary River Project, Baffinland may depart from the guidelines set out in Art. 7 in order to increase the number of women in the Mary River project workforce (Art. 7.15). Baffinland directly or indirectly through its contractors will make summer work employment opportunities available to Inuit students (7.16). Baffinland will provide training to Inuit in all areas of the mining project (Art. 8.1). Measures to link education and training to employment and advancement may include: (i) letters of intent to employ; (ii) supporting cooperative education programs; (iii) supporting summer student jobs and other student employment opportunities; and (iv) mentoring (Art. 8.3). The education and training parts of the Inuit human resources strategy will include all relevant provisions of Art. 8, including, among others, the following components: (i) pre-employment preparation; (ii) adult education initiatives; (iii) a construction training program; (iv) a training program for the operation phase; (v) training programs for contract and sub-contract activities, including catering, expediting, shipping and business management; (vi) a management training program; (vii) an advanced skills training program; and (viii) education initiatives (Art. 8.10.2). Baffinland and QIA employment and training coordinators will maintain relations with partner education and training organizations and institutions (Art. 8.4.4). Baffinland will contribute $1,000,000 annually for two years to an education and training fund. In subsequent years, the executive committee will establish contributions to the education and training fund as part of the annual budget process (Art. 8.6). As a part of the education and training fund, Baffinland will contribute at least $25,000 annually for a scholarship fund (Art. 8.7). The Inuit human resources strategy will include a pre-employment preparation component (Art. 8.11). Baffinland will provide for Inuit employment opportunities in relation to shipping, navigation and safety, including, among others, shipping monitors, deck crew, deck officers, marine engineers, catering staff and all other shipping related positions (Art. 9.5.2). Maritime shipping for the Mary River project is subject to Art. 6 regarding Inuit rights to business and contracting opportunities (Art. 9.7). If the executive committee or an arbitrator determines that Baffinland or a sub-contractor failed to use its best efforts to comply with its stated commitments to Inuit content levels and, therefore, that it is Baffinland or the sub-contractor’s fault that a stated commitment to Inuit content levels has not been met, the executive committee or the arbitrator may implement remedial measures (Art. 10.5). Remedial measures may include: (i) undertaking specific additional measures to achieve the stated commitment to Inuit content levels; (ii) providing a contractor with information about specific Inuit or Inuit firms who are available and qualified; (iii) withholding progress payments from contractors; (iv) terminating the contract; or (v) requiring compensatory measures to fund Inuit education, training and employment programs or to another objective or purpose of the agreement (Art. 10.6). Schedule 7.1 includes job descriptions for Inuit employment opportunities (p. 61). Schedule 8.1 includes a list of potential training program categories, including: (i) heavy equipment operator training; (ii) trades: apprenticeship programs; (iii) professional training: technical and professional; (iv) business administration; and (v) operational health and hygiene (p. 74). Schedule 2.1 includes a list of matters considered appropriate for Inuit benefits (p. 13).

• Community development obligations: Infrastructure and social services

  Baffinland Iron Mines will provide adequate training facilities and classrooms on-site for training programs and sufficient dormitory space on-site for trainees (Art. 8.8). To mitigate against the restriction on Inuit travel and access rights, Baffinland will provide fuel, food, and shelter at the Mary River Project facilities and support Inuit in identifying safe routes in and around the Mary River infrastructure (Art. 13.3).

• Community development obligations: Other

  Qikiqtani Inuit Association (QIA) may acquire assets that constitute part of the Mary River project following the procedure established in Art. 23.4.

• Environmental and social protection

  Baffinland Iron Mines Corporation (Baffinland) will pay for training for Inuit ship monitors. Inuit monitors (or other ship monitors if Inuit monitors are not available) will be present on Mary River project-related voyages that pose a significant environmental risk (Art. 9.4.1). Inuit monitors will observe the activities that will include oil spill contingency plans, pollution prevention measures, and landing and docking procedures for vessels (Art. 9.4.2). Baffinland will ensure that all safety, spill response, operational plans, and mitigation measures acknowledge, respect, and protect the relationship of Inuit to the seam sea ice and marine resources (Art. 9.6.4). Baffinland and a designated Inuit organization shall develop and implement gender sensitivity trainings (Art. 11.5.4). Baffinland will ensure that any contract awarded for catering or food provision contains a requirement to provide country food to Inuit employees regularly and ensure that there are adequate freezer and storage space for Inuit employees to store country food at the worksite (Art. 11.7). Baffinland's rules and procedures will have a "zero-tolerance policy" for all employees regarding personal harassment and discrimination, including harassment or discrimination based on race or sex (Art. 11.8). Baffinland recognizes that the Inuit have a right of access under Section 5.7.16 of the Nunavut Land Claims Agreement for harvesting (Art. 11.9.1). Baffinland and Qikiqtani Inuit Association (QIA) will establish policies relating to Inuit traditional activities, including wildlife harvesting and the secure storage of firearms by Inuit employees compatible with Baffinland's land-use activities (Art. 11.9.2, 11.10). Baffinland will permit Inuit employees to visit other Inuit engaged in traditional activities on the Mary River project area (Art. 11.9.3). Inuit employees shall be permitted access to all areas of the Mary River project for harvesting (Art. 11.10). QIA and Baffinland agree to identify ways the project may contribute to the well-being of Inuit and engage communities with respect to stewardship and environmental sustainability (Art. 14). QIA and Baffinland agree to hold an annual project review forum to discuss project issues with members from impacted communities directly. The Forum shall compare actual key impacts, their significance, and actual mitigation results against the anticipated residual effects (Art. 14.3-14.13). Baffinland will implement mitigation measures and monitoring provisions developed through the environmental, health, and safety management system to mitigate the environmental and socioeconomic impacts of the Mary River project to acceptable levels. As part of the environmental, health, and safety management system, Baffinland agrees to undertake a series of monitoring programs (Arts. 15.2, 15.3). Baffinland will pay QIA the cost of funding a fulltime presence on the site for environmental monitors, who will be appointed and employed solely by QIA. Monitors will work with Baffinland's environmental department to ensure the proper implementation of all management and monitoring plans related to the physical environment (Art. 15.8). Coordinators for QIA and Baffinland shall work with and support broader socioeconomic activities and organizations, including any socioeconomic monitoring committees, related to the Mary River Project. No later than 6/09/2016, Baffinland and QIA may amend the agreement to provide additional socioeconomic monitoring measures if Baffinland and QIA determine that socioeconomic impacts are not being adequately measured (Art. 15.9). If Baffinland and QIA identify a significant environmental or socioeconomic risk to the Inuit arising from the Mary River project and there are limited regulatory requirements in respect of this matter, Baffinland and QIA shall conduct a review of mitigation measures and may consider implementing these measures in the environmental, health and safety management system (Art. 15.10.3). Baffinland will report all wildlife kills or accidents that occur in the Mary River project area by employees of Baffinland or contractors (Art. 17.2). If an employee, contractor, or subcontractor of Baffinland causes an accidental or emergency kill of a polar bear within the Mary River project area, an affected community may apply for compensation to be paid by Baffinland. QIA shall determine the amount of compensation, which in no case shall be less than $20,000 (Art. 17.5). Baffinland will pay $750,000 to QIA to establish a wildlife compensation fund, to which Inuk or Inuit may apply for compensation for loss or damage relating to wildlife as a result, directly or indirectly, of development activity related to the Mary River project. (Art.17.6). Baffinland and QIA agree that the Nunavut Settlement Area's archaeological record is of spiritual, cultural, religious, and educational importance to Inuit (Art. 18.1). Baffinland agrees to comply with all of the requirements of Art. 33 of the Nunavut Land Claims Agreement and all related legislation, regulation, and policy, including the Historic Sites and Monuments Act. Baffinland will provide all of its employees and contractors with an orientation to facilitate the recognition of archaeological and other heritage sites (Art. 18.2). QIA and Baffinland are permitted to refer any matter, issue or question relating to conservation, maintenance restoration or display of archaeological sites and specimens, or any other matter that may be of significant cultural importance to Inuit, to the Inuit Heritage Trust, who will make a recommendation to the executive committee (Art. 18.3). Inuit enjoy all rights to carving stone on Inuit owned lands within the Mary River project and to carving stone on Crown lands as outlined in Art. 19 of the Nunavut Land Claims Agreement (Art. 19.2).

• Transparency or confidentiality

  During the fourth quarter of the year before a year in which a royalty payment is due, Baffinland Iron Mines (Baffinland) will deliver to Qikiqtani Inuit Association (QIA) its forecast for all royalty payments for the forthcoming year. QIA will hold the forecast in confidence and may not disclose it to any other person except for its professional advisors, who shall be required to keep the forecast confidential (Art. 5.7). If Baffinland or QIA makes a request, the agreement's terms and conditions shall remain confidential for up to 90 days. After 90 days, either Baffinland or QIA may disclose the agreement. Either Baffinland or QIA may disclose their professional advisors' agreement or, if required by law or administrative, regulatory, or court proceedings. QIA may provide general information and a summary of the agreement to beneficiaries of the Nunavut Land Claims Agreement so that the beneficiaries can understand the anticipated impacts and benefits of the Mary River Project (Art. 25.6).

• Other noteworthy clauses

  The term "Inuit Qaujimajatuqangit" or "IQ" means the traditional, current and evolving body of Inuit values, beliefs, experience, perceptions, and knowledge regarding the environment, including land, water, wildlife, and people, to the extent that people are part of the environment (Art. 16.1). IQ will provide environmental, ecological, cultural and socioeconomic information otherwise unavailable, which will be used to assist in the following measures, among others: (i) assisting in the verification of the effectiveness of mitigation measures for the potential biophysical and socioeconomic effects of the Mary River Project; and (ii) contributing to enhanced long-term relationships among QIA, Inuit and Baffinland (Art. 16.2). Baffinland will consider IQ for all of its decisions when considering the accuracy of impact productions and designing or interpreting the effectiveness of impact reduction activities and modifying these activities, including but not limited to socioeconomic elements (Art. 16.2).