3. ECONOMIC DEVELOPMENT OPPORTUNITIES

This section of the SEPA concerns business opportunities that will arise primarily downstreamDownstream: downstream business refer to suppliers of products and services such as exploration, production, processing, product development, technical services, marketing and sales that supply the mine but are not owned by the mine. from the mine, and how to increase Aboriginal participation in them. Very important here are measures that will help Aboriginal people find business partners. (For example, provisions that give Aboriginal businesses priority in downstream opportunities or that build the experience and skills of Aboriginal business owners.)

It is often the job of the Implementation CommitteeImplementationImplementation: the carrying out or execution of an agreementAgreement: any explicit, signed document that is negotiated and includes mutual concessions or limitations placed on both sides. Examples are Negotiation AgreementsNegotiation Agreement: an early agreement in the mining process, likely to occur in the Exploration StageExploration Stage: the whole range of activity from searching for and developing mineralMineral: A naturally-occurring, homogeneous substance that has a definite chemical composition and (usually) a crystalline structure. deposits., which would outline the basis of the relationship between the Aboriginal group and the mining company and how the relationship will evolve if the mine moves forward. , Exploration Cooperation Benefit Agreements, Socio-Economic Participation Agreements., decision, or plan. Committee: the group responsible for putting a decision, plan, or contract into effect. to see that many of the provisions of this section get carried out.

General Provisions Regarding Contracting and Business Opportunities

Most SEPAs stipulate that the mining company will try to subcontract work to Aboriginal businesses. Sometimes a SEPA will specify that a quotaQuota: the share that is due from, due to, or allocated to a person or group. of the total annual value of those contracts will go to Aboriginal businesses. At other times a SEPA will express a preference for Aboriginal businesses if they qualify to do the work.

Identification of Businesses and Business Opportunities

This subsection outlines how the company will make sure that Aboriginal businesses are aware of opportunities. Often a registry of Aboriginal businesses is drawn up. A list of opportunities can also be made public so that Aboriginal entrepreneurs may act on them or bid on the contracts.

General Preferences for Aboriginal Businesses

This subsection may detail the options a mining company will use when securing goods and services through contractors. One option may be to issue requests for proposal or invitations to tender. The company may then negotiate directly with Aboriginal businesses that have the ability to deliver certain goods or services in a timely, efficient, and competitive manner.

To establish a preference for Aboriginal businesses, this subsection may require the mining company to provide advanced notice of its contract requirements to the Aboriginal party or to award contracts directly to them. It may also stipulate that non-Aboriginal contractors must make efforts to use Aboriginal subcontractors, suppliers, and employees.

Aboriginal businesses may also receive the first right to negotiate for specified types of contracts. Those types of contract may be listed right in the SEPA.

The Brewery Creek SEPA (see *Case Study #3, p. Intro-30) stipulates that Loki Gold will negotiate contracts in good faith with Tr’ondëk Hwëch’in (TH) for the following services:

• fuel supply, storage, and distribution
• housing supply
• bussing
• site security
• road maintenance
• freighting requirements
• vehicle leasing and maintenance
• concrete batching
• lube supply

For the term of each contract, TH will be the sole source of that service for the mining company and for its mine site contractors. TH must fulfill those contracts in a timely, efficient and competitive manner. Otherwise, the company may consider other sources when a new contract is put to tender. The company will unbundle large contracts so that TH can take on more of the work.

Two contracts, one for fuel and the other for trucking, TH undertook as Joint Ventures with companies based in Dawson City. In both cases, TH eventually bought out the owners, who were nearing retirement. While the Brewery Creek mine closed years ago, these two companies continue to operate. They employ 45 people.

Remember to define the term “Aboriginal Business” with care.

The Raglan Agreement (see *Case Study #2: Raglan Mine, p. Intro-21) defines "Inuit Enterprise" as a partnership, including a Joint Venture, of which at least 50% is owned by one or more Inuit. It can also be a co-operative or non-share capital corporation, in which the majority of voting members are Inuit. It can also be a share-capital corporation in which a majority of the voting shares are beneficially owned by Inuit people or by any of the aforementioned partnerships, co-operatives, or corporations.

Note that, to many people, a Joint Venture with less than 50% Aboriginal ownership is still an “Aboriginal business.” This need not be a serious problem. Even minority ownership can be very powerful if the Joint Venture agreement is carefully negotiated. (See Module 6, “Factors Affecting the Allocation of Shares,” p. 6-16),

Procedure for Securing Contract Goods and Services on a Competitive Basis

This subsection explains how competitive bids are to be ranked. It provides definitions and guidance about how bids are to be assessed.

“Unbundling” of Contract Requirements

In this subsection the mining company explains how it will tailor service contractsService Contracts: agreement whereby a contractor supplies time, effort, and/or expertise instead of a tangible product. to the capacity of Aboriginal businesses. That entails breaking down big contracts into smaller components that suit the abilities, experience, and assets (for example, trucks and planes) of Aboriginal business owners.

Monitoring of Contracting

This subsection stipulates how contracting to Aboriginal businesses is to be monitored and reported. Only with these provisions can the parties learn if contracting is occurring as they agreed, and adjust matters if they go off-course.

Assistance for Local Business Development

Often local Aboriginal businesses are unable to take advantage of service contracts. This section would explain how the mining company has agreed to help Aboriginal businesses to increase their capacity (with an assistance program, for example).

To build up the capacity of Aboriginal business, Nacho Nyäk Dun and Alexco chose to create a Business Development Committee. (See *Case Study #5: Keno Hill Silver District, p. Intro-45.) It is a partnership between the company and the First Nation of Nacho Nyäk Dun. First the Committee provides basic services, in catering and housecleaning for example. As the businesses gain experience, Alexco works with them to improve their management and expand their range of services.

Research and Development

Provisions for partnerships in research and development may be built into a SEPA. By helping Aboriginal partners develop specialized expertise and technology, a mining company may prepare Aboriginal businesses for longer-term business opportunities. A SEPA may identify areas for joint research and development projects, for example:

• ice road construction and maintenance
• land reclamation methods
• wind and power generation technologies
• water and sewage disposal and treatment for remote camps
• socio-economic monitoring and impact assessment

Aboriginal businesses may be well-suited to playing a role in research and development that addresses the challenges peculiar to mining in remote locations and harsh climates.

Right of First Refusal on Equipment and Property

Lack of equipment is one of the biggest barriers faced by Aboriginal businesses. In the course of mining, however, valuable equipment and other property may become surplus and go up for sale. A mining company may choose to give the Aboriginal party the right to bid on that equipment before anyone else does. This right of first refusal can help Aboriginal businesses acquire the equipment necessary to take advantage of more business opportunities.

Committee on Economic and Business Development

The SEPA may set up a committee to handle matters of economic and business development. However, like the Employment and Training Committee, this task may well be left to the Implementation Committee.