Arbitration hearing on QIA-Baffinland royalties dispute starts April 18 (Nunatsiaq News – April 18, 2017)

Inuit org alleges mining company in breach of Mary River IIBA obligations

A long awaited arbitration hearing aimed at resolving a complex dispute between Baffinland Iron Mines Corp. and the Qikiqtani Inuit Association over advance royalty payments for the Mary River project got started April 18 in Vancouver before a three-person panel, the QIA has announced in a release.

In a statement of claim filed Aug. 26, 2016, the QIA alleged that Baffinland, under their Inuit Impact and Benefit Agreement for Mary River, owed them, at that time, at least $6.25 million in advance payments.

Under the Mary River IIBA, Baffinland has already made advance payments to QIA—against future royalties— worth a total of $20 million: $5 million on the date the IIBA was signed, $5 million after the water licence was received, and $10 million after making their final construction decision.

After that, Baffinland was to have paid QIA advance payments of $1.25 million each quarter-year until the start of “commercial production.” And at the commercial production stage, those advance payments were to be replaced by quarterly royalty payments, calculated at 1.9 per cent of Baffinland’s net sales revenue, minus permitted deductions.

At the same time, Baffinland would claw back the advance payments from the royalty payments through deductions of up to 25 per cent for the first 36 quarters and up to 50 per cent thereafter. But the QIA’s big problem right now is that—in their opinion—Baffinland stopped making those advance payments too early, and is paying royalties instead.

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