Baffinland enters CCAA as arctic fuel window raises stakes for Nunavut mine

Nunavut Iron Ore, Inc., Baffinland Iron Mines Corporation and 12334992 Canada Inc. obtained protection under the Companies’ Creditors Arrangement Act on May 15, 2026, with the stay also extending to Baffinland Iron Mines LP, the operating limited partnership that owns substantially all of the group’s assets and employs its workforce.

The companies operate the Mary River Mine in the Qikiqtani Region of Nunavut on Baffin Island. The Mine has been in commercial production since 2015 and is described as one of the world’s highest-grade iron ore mines, with historic average iron content exceeding 67%. Baffinland is also Nunavut’s largest private sector employer, with approximately 1,200 employees, including approximately 300 Inuit employees. Approximately 1,088 employees are based at the Mine and 112 are based at the Oakville head office.

The business is built around a remote logistics model. Ore is mined and processed at the Mary River site, trucked approximately 100 kilometres along the Tote Road to Milne Inlet, stockpiled, and shipped during the open-water season. Milne Inlet is currently Baffinland’s sole export point. The record states that shipping generally runs from mid-July to mid-October and that the Mine’s current permits do not authorize year-round shipping through Milne Inlet.

The companies’ problem is not ore quality; it is the capital structure and logistics model around that ore body. Baffinland is restricted to transporting and shipping 4.2 Mtpa through Milne Inlet, after a temporary increase to 6 Mtpa between 2018 and 2024 expired. It had sought approval to build a 110-kilometre Milne Railway to increase capacity to 12 Mtpa, but the Nunavut Impact Review Board recommended refusal in May 2022 and the federal Minister of Northern Affairs rejected the proposal on November 16, 2022. The companies say they spent more than $1.06 billion between 2017 and 2022 in anticipation of the project, leaving them with debt tied to infrastructure that could not proceed.

Baffinland has since revived the longer-term Steensby Railway concept, a southern route to a deep-water port at Steensby Inlet that the record says could increase production and shipping to approximately 22 Mtpa. But the current estimated cost is at least $4 billion, and the companies do not have committed capital to advance it. The result is a high-cost trucking and seasonal shipping operation carrying debt sized for a growth plan that stalled.

The financial pressure is acute. For the year ended December 31, 2025, Baffinland and 1234992 Canada reported a consolidated net loss of $102.4 million, while current liabilities exceeded current assets by $761 million. Nunavut Iron Ore reported a consolidated net loss of $545.1 million, but that included a $423 million non-cash goodwill impairment relating to the value of the Mine.

The secured debt stack totals approximately $777 million in principal. An entity associated with Oaktree Capital Management LP and Hartree Partners, LP sits first under a $126.5 million Credit Facility. EDC is owed $75 million under a term facility, ranking pari passu with the $575 million of 8.75% senior secured notes due July 15, 2026. The companies are in default under the Oaktree/Hartree facility, which triggered cross-defaults under the EDC facility and the 2026 Notes. The defaults have not been waived.

The unsecured picture adds further strain. Nunavut Iron Ore has $230.9 million of 2029 Notes outstanding, with $81.7 million of deferred interest as of December 31, 2025. Nunavut Iron Ore also has promissory notes to Arcelor totalling $27.9 million. Baffinland faces approximately $87 million in past-due trade payables, including approximately $30 million for fuel supplied during the 2025 shipping season. Toromont Industries Ltd., acting on behalf of Toromont Arctic Limited, filed a lien claim in March 2026 for approximately $17.1 million for parts, labour and capital tools supplied between July 31, 2025 and March 4, 2026.

The near-term crisis is fuel. The Mine depends entirely on arctic diesel and jet fuel delivered by sea during the annual July-to-October sealift window. The companies say there is no viable fallback if the full fuel allotment is not delivered during that period. Air freight is economically prohibitive for bulk fuel volumes, and a fuel shortfall could force a partial or complete shutdown. The companies face approximately $100 million in near-term expenses to procure annual fuel and supply requirements for shipment beginning in July.

The initial order followed a contested opening hearing. Counsel for an ad hoc committee representing approximately 70% of the 2026 Noteholders sought a 3-day adjournment to pursue a proposal to pay out the EDC and Oaktree/Hartree indebtedness and provide additional liquidity. EDC, Oaktree/Hartree and the proposed monitor did not support the adjournment. Justice Conway denied the request, finding that the proposal was not a commitment and that the companies needed stability to address an urgent fuel and supply procurement requirement for the upcoming shipping season.

The purpose of the CCAA process is to stabilize operations, procure annual fuel and supply needs, secure DIP financing, and pursue a refinancing, recapitalization, restructuring plan, investment or sale solicitation process.

FTI is the monitor. Counsel is Davies for Baffinland, Osler for the monitor, Stikeman Elliott for Oaktree and Hartree, Cassels for the 2026 Noteholders, Norton Rose Fulbright for EDC, and Goodmans for the Government of Canada.