(Reuters) -A Canadian review board on Friday cited environmental concerns as it recommended the government reject Baffinland Iron Mine Corp's request to double production at its Mary River iron ore mine on Nunavut's Baffin Island, a C$1.3 billion project that has divided the Inuit community.
The Nunavut Impact Review Board's decision is expected to heavily influence the federal Ministry of Northern Affairs, which will make a final ruling later this year.
Board chairperson Kaviq Kaluraq said in a letter that the proposal had "the potential to result in significant adverse ecosystemic effects on marine mammals and fish ... and these effects could lead to associated significant adverse socio-economic effects on Inuit harvesting, culture, land use and food security."
Baffinland CEO Brian Penney said: "We will be asking the federal government to consider all of the evidence and input and to approve the Phase 2 application with fair and reasonable conditions."
Canada's federal budget outlines more than C$3 billion for critical minerals, including digging new mines, signaling the importance of mining to the country’s future.
Baffinland has said the expansion would help meet rising global demand for iron ore, the mineral used to make steel, at a time when politicians across the Americas have been clamoring for more localized mineral supply in order to wean dependency off China.
Conservation groups have said expansion of the mine near Canada's newly established Tallurutiup Imanga National Marine Conservation Area would damage the environment, doubling the number of ships moving through Milne Inlet and harming wildlife.
Roughly a third of North America's beluga whales, walrus, ringed and bearded seals, as well as most of the world’s narwhals spend their summers in the area.
The potential expansion has split Inuit communities in the region over whether the risks outweigh any economic boost.
Chris Debicki, vice president of policy development and counsel at Oceans North, a conservation nonprofit, said the result was unexpected.
"It’s really rare in Canada that mine expansions don’t get approved," he said. "We actually really commend the Nunavut Impact Review Board for their courage, and for having listened to the overwhelming voices of community members."
(Reporting by Ernest Scheyder, Gloria Dickie and Costas Pitas; Editing by Chris Reese and Grant McCool)