TERMS OF REFERENCE FOR THE SOCIAL IMPACT ASSESSMENT BAFFINLAND IRON MINES CORPORATION TRANS-SHIPPING OF IRON ORE IN GREENLAND WATERS MARCH 2015 MARY RIVER PROJECT Terms of Reference SIA March 2015 TABLE OF CONTENTS Section 1.0 - Introduction ........................................................................................................................................ 5 1.1 Purpose of this document ....................................................................................................................... 5 Section 2.0 - Project Description and Evaluation of Alternatives ............................................................................ 8 Section 3.0 - The SIA Process .............................................................................................................................. 10 3.1 Legislative Framework .......................................................................................................................... 10 3.2 Documents for Approval ........................................................................................................................ 10 3.3 Relevant Authorities .............................................................................................................................. 11 Section 4.0 - Stakeholder Engagement and Public Participation ......................................................................... 12 Section 5.0 - Methodologies .................................................................................................................................. 13 5.1 Qualitative methods............................................................................................................................... 13 5.2 Quantitative methods ............................................................................................................................ 13 5.3 How will impacts be assessed? ............................................................................................................ 13 5.4 Scoping phase ....................................................................................................................................... 13 5.5 Study of the local use of the proposed trans-shipping areas ................................................................ 13 Section 6.0 - Potential Positive Impacts ................................................................................................................ 15 6.1 Business Life ......................................................................................................................................... 15 6.2 Employment at the Project .................................................................................................................... 15 6.3 Public Service and Economy ................................................................................................................ 15 6.4 Infrastructure ......................................................................................................................................... 15 6.5 Summary of impacts .............................................................................................................................. 15 6.6 Maximization of development opportunities .......................................................................................... 15 Section 7.0 - Potential Negative Impacts .............................................................................................................. 16 7.1 Socio-Economic Issues ......................................................................................................................... 16 7.2 Health issues ......................................................................................................................................... 16 7.3 Recreational values ............................................................................................................................... 16 7.4 Summary of impacts .............................................................................................................................. 16 7.5 Mitigation Measures .............................................................................................................................. 16 Section 8.0 - Possible project expansions and closure scenarios ........................................................................ 17 Section 9.0 - References ....................................................................................................................................... 18 2 of 18 MARY RIVER PROJECT Terms of Reference SIA March 2015 Figures Figure 1 Conceptual Shipping route from Milne Port to trans-shipment locations Figure 2 Preferred Trans-shipping Location (N3) Appendices Appendix 1 – Project Description 3 of 18 MARY RIVER PROJECT Terms of Reference SIA March 2015 ACRONYMS AND ABBREVIATIONS Proponent Baffinland Baffinland Iron Mines Corporation Government Agencies & Organizations PAIAN Ministry of Nature, Environment and Justice BMP Bureau of Minerals and Petroleum DMA Danish Maritime Authority GINR Greenland Institute of Natural Resources ISNN Ministry of Industry, Labor and Trade (former Ministry of Industry and Mineral Resources) Social Assessment Terminology TOR Terms of Reference EIA Environmental Impact Assessment SIA Social Impact Assessment NIA Natural Impact Assessment SEP Stakeholder Engagement Plan Other Acronyms IBA Impact Benefit Agreement MTPA Million Tonnes Per Annum PC4 Polar Class 4 vessels PC4 S/D Panamax Polar Class 4 self-discharging vessels GA Employers’ Association of Greenland KNAPK Greenlandic Association of Hunters and Fishermen SIK National Workers’ Union GMC Greenland Maritime Center Spill Responses Acronyms GOSR Greenland Oil Spill Response 4 of 18 MARY RIVER PROJECT Terms of Reference SIA March 2015 SECTION 1.0 - INTRODUCTION Baffinland Iron Mines Corporation (Baffinland) is a Canadian company with its corporate head office located in Oakville, Ontario, Canada, and a northern headquarters located in Iqaluit, Nunavut, Canada. Baffinland is a joint venture between ArcelorMittal (50%) and Iron Ore Holdings LP (50%), with AcelorMittal acting as the Project Operator. Baffinland operates an iron ore mine at the Mary River site, located in the North Baffin region of Nunavut, Canada (Figure 1). The mine is scheduled to begin shipment of iron ore from Milne Port during the open-water season of 2015. A second phase of the Mary River Project development (Phase 2) will enable Baffinland to increase shipment of iron ore from 4.2 million tonnes per annum (mtpa) to 12 mtpa from Milne Port by 2018. This second phase of development will extend the shipping season from June through to March each year for 21 years. Phase 2 will see a ramp up to the nominal 12 mtpa over several years. Baffinland intends that up to 6 mtpa would be transshipped in Greenlandic waters. The current design of the Milne Port ore dock is limited to Post-Panamax-size ore carriers. To achieve cost effective iron ore shipping, a trans-shipment operation to larger Cape-size bulk carriers (capacity of approximately 180,000 dwt) will be required. For Phase 2 of the Mary River Project, Baffinland will design and purchase two self-discharging ice reinforced PC4 (DNV ICE17) Panamax ships, capable of transporting 85,000 dwt per voyage. During the open-water season in Nunavut, from mid-July to October, trans-shipment of ore to the larger Cape-size ore carriers will be conducted in Eclipse Sound, Nunavut. During the periods of ice coverage, specifically June to mid-July and mid-October through March, Baffinland proposes to conduct seasonal trans-shipment operations off the coast of Greenland. A more detailed Project Description for proposed trans-shipping activities is located in Appendix 1 of this document. 1.1 PURPOSE OF THIS DOCUMENT The trans-shipping operation in Greenland waters requires authorization from the Government of Greenland. In order to be granted a licence to undertake vessel trans-shipping activities in Greenland waters it has been agreed that, Baffinland must: 1. Provide an environmental impact assessment (EIA) for the Project activities. For the preparation of the EIA, Baffinland use as a guide the Bureau of Minerals and Petroleum (BMP) Guidelines for preparing an Environmental Impact Assessment (EIA), Report for Mineral Exploration in Greenland, 2nd edition, dated January 2011, supplemented with best international practices where applicable; 2. Provide a social impact assessment (SIA) for the Project activities. The SIA should be adjusted and scaled to fit the size of the project, as the project is much more limited than a traditional mining project. For the preparation of the SIA, Baffinland used as a guide the BMP Guidelines for Social Impact Assessments for mining projects in Greenland, dated November 2009, supplemented with experiences, which the Government of Greenland has gained from 2009-2015 and best international practices where applicable; and, 3. Satisfy the requirements of the Danish Maritime Authority (DMA) as outlined in the DMA guidelines dated January 10, 2011, for an investigation of issues in connection with projects operating in Greenland waters. This document is a draft plan, i.e. a “Terms of Reference” (TOR), for the SIA. In the TOR all relevant issues that shall be assessed in the SIA are identified. The TOR also provides regulatory authorities and the public with a 5 of 18 MARY RIVER PROJECT Terms of Reference SIA March 2015