THE NEGOTIATION

For Ekati mine, LKD and the other Akaitcho Treaty 8 First Nations negotiated an Impact Benefits AgreementImpact Benefits Agreement: a contractual agreement, usually between an Aboriginal community or entity and a mining company. (IBA) in 1998. For Diavik LKD negotiated a Participation Agreement (PA) in 2001. For Snap Lake, LKD negotiated another IBA in 2007. Each agreement turned out differently. Every time LKD was able to learn from its experience and make the next agreement better than the one before.

In the case of Ekati, there were actually three agreements in which LKD was involved: an environment agreement and a socio-economic agreement, as well as the IBA. All three were signed after construction of the mine had already begun. LKD only got 60 days to be involved in the negotiation of all three.³

A lack of time, resources, and knowledge kept LKD leaders from going fully prepared into the negotiation of the Ekati mine. They were overwhelmed by the complex plans for the mine. It was also difficult for them to foresee how the mine might affect their people and the traditional territory. Other issues also made a good deal hard to come by:

• The technical language used to describe diamond mining and its potential impactsImpacts: the effect or impression of one thing on another such as the impact of a mining project on the life of an Aboriginal community. was unfamiliar.
•  Information about the value of the diamonds to the company was insufficient. Because of that, LKD was at a disadvantage when negotiating compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury)..
• Negotiators did not have enough time to keep LKD elders and other community members fully informed.
• The Government of Canada denied Deninu Kue First Nation funding for the IBA negotiations, even though it is an Akaitcho Treaty 8 First Nation and the mine would affect its livelihood, too. LKD, Dettah, and Ndilo resolved instead to share their negotiation funding with Deninu Kue. This has been a source of tension among Akaitcho Dene First Nations ever since.

This first experience, while generally negative, did teach some lessons that the LKD took into the negotiation on the Diavik mine. Business opportunities at the mine were identified more effectively and targets for jobs and business contracts negotiated with more success. Training workshops and expert interpreters reduced the problems of the LKD with the language of mining. The leaders also knew they had the right to take the time to negotiate properly.

Discussions about Snap Lake began in 2002 when De Beers and LKD signed a Memorandum of UnderstandingMemorandum of Understanding: a document that records an understanding between a community and a mining or exploration companyExploration Company: a company whose principal activity is that of exploration.. The MOUMemorandum of Understanding: a document that records an understanding between a community and a mining or exploration company. The MOU defines principles for working together for mutual benefit. defines principles for working together for mutual benefit. to negotiate an IBA. The Memorandum outlined each topic they would discuss and when they would discuss it. Negotiations were to continue through 2003 and the IBA was expected to be complete in June 2003. In fact, it was not signed until April 2007 – two years longer than neighbouring First Nations took in their negotiations with De Beers. LKD took its time.
 

An important part of the negotiations with De Beers was traditional knowledgeTraditional Knowledge (TK): the knowledge, observations, and understandings about the natural environment, and about the relationships between living beings and their environment, that Aboriginal people have accumulated over many generations. (TK). An agreement between De Beers, the governments of Canada and the Northwest Territories, and four Aboriginal groups created The Snap Lake Environmental Monitoring Agency. On it are four scientific experts as well as four elders who have lived in the area of the mine site. In this way the agency combines traditional knowledge with scientific knowledge.

THE DEAL

The details of the Ekati IBA are confidential. It is known to have included annual compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). payments of $250,000 for all four First Nations⁴ and terms for employment and business opportunities, training programs, and scholarships.⁵

Here are some of the important terms of the Ekati IBA:

• QuotasQuota: the share that is due from, due to, or allocated to a person or group. for employment⁶
• Annual cash payments⁷
• Training and education programs⁸
• Health and wellness programs, counselling and support programs⁹
• numerous and challenging opportunities for community businesses¹⁰
• Scholarships and funding for some cultural activities (for example, caribou hunts)¹¹
• BHP Billiton must pay for an Independent MonitoringMonitoring: the act of observing something and often keeping a record of it. People monitor mining activities or impactsImpacts: the effect or impression of one thing on another such as the impact of a mining project on the life of an Aboriginal community. in order to determine their effect on the land, resources, and communities. Agency to track how well the parties carry out the terms of the IBA¹²

The LKD in return had to agree that community members would not oppose future mine expansionExpansion: increasing the area or size of a mine or exploration area. Expansion may trigger a new environmental assessmentEnvironmental Assessment: a written report, compiled prior to a production decision that examines the effects that proposed mining activities will have on the natural surroundings.. or other activities by BHP Billiton on the claim block. By signing all the agreements LKD affirmed its support of the mine’s construction and operation, as approved by government.¹³

To LKD, this agreement was the beginning, not the end of negotiations with BHP Billiton. The IBA requires that the parties to the deal review it in five years. LKD leaders will use this review to renegotiate the aspects of the agreement that they are not happy with. Several clauses in the agreement (for example, those concerning compensation payments) are not renegotiable, however.¹⁴

Although its details may not be made public, the Diavik Participation Agreement is similar to the Ekati agreement. One difference is that the Diavik agreement orders that the mine’s entire workforce eventually come from the North.

Like the Ekati IBA, the Snap Lake IBA provides the LKD with benefits like training, education, employment, business opportunities, and compensation. It also sets a target of 40% local employment during the construction of the mine.
 

THE RESULTS

A number of good things have come from these three agreements. There are compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). payments, jobs, and training for the LKD. There is money for community hunts and to buy food, clothing, and other things. There are more businesses and joint venturesJoint Venture: commonly, a business to which two or more parties contribute the essential land, capitalCapital: cash, property, equipment, services, and contracts or leases., and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.). (See the “Summary of Benefits To Date,” below.)

The agreements also have been a source of unhappiness. During negotiations, elders became very anxious for the community. People grew tired of meetings. Young people felt left out of the negotiations. The negotiating teams felt overwhelmed.

As a result, there were serious misunderstandings about the scope of the Ekati IBA. People thought it just concerned some of the diamond pipesDiamond Pipes: The diamond is the hardest natural substance known. It is found in a type of igneous rock known as kimberlite. The vertical shafts of kimberlite that extend deep inside the earth often contain diamonds and may be called “diamond pipes.”, not BHP Billiton’s entire claim. Government recognized and funded only three of the four First Nations party to the negotiation.

Sometimes the problem lay not with the agreement itself, but in how it was implemented. Members of the LKD disagreed over how to use the compensation payments. BHP Billiton did not keep the LKD members as well-informed as it promised. Members also felt the company did not create all the jobs that it promised local people. But the LKD was unsure how to get the company to change its ways.

As the Ekati IBA required, BHP Billiton funded an Independent MonitoringMonitoring: the act of observing something and often keeping a record of it. People monitor mining activities or impactsImpacts: the effect or impression of one thing on another such as the impact of a mining project on the life of an Aboriginal community. in order to determine their effect on the land, resources, and communities. Agency to act as a “watchdog.” This has made Ekati one of the most closely monitored mines in Canada. But people have also wondered how “independent” the agency could be, when the company pays all its bills. When mine impactsImpacts: the effect or impression of one thing on another such as the impact of a mining project on the life of an Aboriginal community. have been greater than projected, BHP Billiton has claimed that the mine did not cause the impacts. BHP Billiton has also reduced its funding of the agency.

(When it negotiated the Diavik Participation Agreement, the LKD tried to correct this monitoring problem. LKD First Nation insisted that the agreement set up a monitoring committee that only had community members. However, the highly technical language of mining information made their work very difficult to do.)

Ekati has not created nearly as many jobs for LKD members as expected. A number of barriers keep community members from getting jobs at the mine or from starting businesses that support the mine. The Local Employment Officer listed five major barriers to LKD employment:

• lack of job readiness
• lack of training in technical skills
• drug and alcohol problems
• lack of local people and agencies to support business developmentBusiness Development: strategies and techniques used to create and grow economic enterprises.
• lack of capitalCapital: cash, property, equipment, services, and contracts or leases. to lend to businesses or to invest in them

Mining companies continue to request permission to work in LKD traditional territory. In 2005, two diamond and two uranium mining companies applied to Mackenzie Valley Land and Water Board for exploration permitsPermits: legally-binding permissions that govern activities that may occur during exploration or mine operation, like quarrying, use or impact on water, building of transmission lines, etc.. LKD responded quickly. Asserting its right of refusal under the Interim Measures Agreement, LKD wrote strong letters to the Board, urging that it reject the four applications. Each was instead referred for environmental assessmentEnvironmental Assessment: a written report, compiled prior to a production decision that examines the effects that proposed mining activities will have on the natural surroundings.. All four companies then withdrew their applications. They said that they did not want to undertake a full environmental assessment to get a “simple” exploration permit.¹⁵

SUMMARY OF BENEFITS TO-DATE

IBAs have enabled the LKD and its First Nation neighbours to embark on a variety of businesses and joint venturesJoint Venture: commonly, a business to which two or more parties contribute the essential land, capitalCapital: cash, property, equipment, services, and contracts or leases., and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.). The tables below summarize the benefits to all four First Nations from the Ekati, Diavik, and Snap Lake agreements. Only a few numbers are specific to the LKD. They show how few of the Diavik and Snap Lake mine jobs (1%) are going to LKD First Nation members.

Contracts with the three mines generated Gross RevenuesGross Revenues: money generated by all of a company's operations, before deductions for expenses, sometimes simply called “the Gross.” of nearly $600 million for northern Aboriginal businesses in 2006 and about the same in 2007. The portion captured by the LKD First Nation is unknown.¹⁶

¹⁷

¹⁸

¹⁹

* Revenues include a number of possibilities, including compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury)., royalties, profit or equityEquity: the dollar value of what a person or organization owns (as opposed to debt, which indicates what a person or organization owes). A person or organization can have an equity interest in something if they have part or full ownership. sharing and/or one time or regular payments. See Module 5.

POSTSCRIPT

Canada is the world’s third largest producer of diamonds. It produces an estimated $1.5 billion worth of diamonds each year. Direct benefits accrue to the federal and territorial governments through royalties and business and personal incomeIncome: money one earns by working or by capitalizing from other people's work. taxes from diamond mines. Indian and Northern Affairs Canada estimates that over the life of the mines in the Northwest Territories, the Ekati, Diavik, and Snap Lake projects will collectively generate royalties of $1.6 billion, federal business taxes of $2.6 billion, territorial taxes of $1.3 billion, and employee and other business income taxes of $4.7 billion (2004 estimated figures). From 2000 to 2008, the territorial government’s total revenues grew from $823 million to $1.47 billion.²⁰

With such substantial revenues, it is worth noting how little financial benefit Lutsel K’e Dene was able to negotiate in their 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 Stage, 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.. It is noted in the document “Dealing Full Force” that the community still does not realize that it can oppose a mine and leverageLeverage: strategic advantage or the power to act effectively. In negotiation, leverage is a measure of which side, at any given moment, has a greater ability to influence the other side. better results for themselves.²¹ As you will see in the next case study, capacity, knowledge, and being organized can lead to far better results.

ENDNOTES

[1] Many of the details in this case study have been taken from Vivian Weitzner, “Dealing Full Force: Lutsel K’e Dene First Nation’s Experience Negotiating with Mining Companies” (Ottawa: The North South Institute, January 2006). 13 August 2009 <http://www.nsi-ins.ca/english/pdf/lk-en.pdf>.

[2] Map based on Virginia Valerie Gibson, “Negotiated Spaces: Work, Home and Relationships In The Dene Diamond Economy,” Thesis submitted to the University of British Columbia, Department of Graduate Studies (Mining Engineering), May 2008, p. 19. 17 August 2009 <http://www.impactandbenefit.com/ubc_2008_spring_gibson_virginia.pdf>.

[3] LKD was an actual signatorySignatory: any person or organization who has signed as a signatory to a document or 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 mineral 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 AgreementsSocio-Economic Participation Agreements (SEPAs): private, confidential contracts between Aboriginal communities and resource developers, like mining companies. SEPAs specify how the communities that will be affected by the development of a resource will also benefit from that development. Many SEPAs include terms about the employment and training of Aboriginal people, compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). payments, protection of the environment, and profit-sharing. SEPAs are often called Impact Benefits Agreements (IBAs) and Cooperation Benefit Agreements (CBAs), and other names. The Aboriginal Mining Guide calls them all SEPAs... to one of these agreements, the IBA. The socio-economic agreement was signed only by BHP Billiton and the Government of the Northwest Territories signed. The environmental agreement was signed by BHP Billiton, the Government of the Northwest Territories, and the Department of Indian and Northern Affairs.

[4] Richard Gleeson, “Looking for moreOre: the naturally-occurring material (rock) from which minerals are extracted through breaking down and processing. : Akaitcho leaders say BHP offering a raw deal,” Northern News Services, October 2, 2000. 16 September 2009 <http://www.nnsl.com/frames/newspapers/2000-10/oct2_00bhp.html>; “Some Deninu Kue members won't get diamond dollars,” cbc.ca, May 3, 2007. 16 September 2009 <http://www.cbc.ca/canada/north/story/2007/05/03/nwt-deninu.html>; and Weitzner, p. 17.

[5] “Info Bulletins: Partnership Agreements – Ekati Diamond Mine - Northwest Territories,” Natural Resources Canada. 14 September 2009 <http://www.nrcan.gc.ca/smm-mms/abor-auto/htm/eka-08-eng.htm>.

[6] “Info Bulletins: Partnership Agreements – Ekati Diamond Mine - Northwest Territories.”

[7] “Info Bulletins: Partnership Agreements – Ekati Diamond Mine - Northwest Territories.”

[8] “Info Bulletins: Partnership Agreements – Ekati Diamond Mine - Northwest Territories.”

[9] “Info Bulletins: Partnership Agreements – Ekati Diamond Mine - Northwest Territories.”

[10] “Info Bulletins: Partnership Agreements – Ekati Diamond Mine - Northwest Territories.”

[11] “Info Bulletins: Partnership Agreements – Ekati Diamond Mine - Northwest Territories.”

[12] “Why was the Agency Created?” Independent Environmental MonitoringMonitoring: the act of observing something and often keeping a record of it. People monitor mining activities or impactsImpacts: the effect or impression of one thing on another such as the impact of a mining project on the life of an Aboriginal community. in order to determine their effect on the land, resources, and communities. Agency. 14 September 2009 <http://www.monitoringagency.net/AbouttheAgency/WhywastheAgencyCreated/tabid/61/Default.aspx>.

[13] Weitzner, p. 29.

[14] Weiztner, p. 10.

[15] Cited in Weitzner, p. 12.

[16] Impact Economics, “2008 NWT Diamonds,” (NWT/Nunavut Chamber of Mines and Mining Association of Canada, October 2008), p. 13 (fig. 9), 35 (fig. 34). 13 August 2009 <http://www.mining.ca/www/media_lib/MAC_Documents/Diamond_Affairs/2009/NWT_Diamonds_2008_Final_v3.pdf>.

[17] Results have been taken from the most recent socio-economic report available, “Annual Report on Northern Employment and Spending: 2007 Operations Phase – Ekati Diamond Mine” (BHP Billiton). 1 May 2009 <http://www.bhpbilliton.com/bbContentRepository/docs/
2007EkatiAnnualReportOnNorthernEmploymentAndSpending.pdf>.

[18] Results have been taken from the most recent full-year socio-economic monitoring reports available. The first full report is from 2003. These results are from the 2007 report, “Diavik Diamond Mine: Socio-Economic Monitoring Report for Operations January to December 2007” (Diavik Diamond Mines, Inc.). 1 May 2009 <http://www.diavik.ca/documents/Diavik_2007_SEMA_Report.pdf>.

[19] Results have been taken from the most recent available socio-economic report, “Naturally Northern: 2007 Snap Lake Mine Socio-Economic Report” (DeBeers Canada, Snap Lake Mine), pp. 5-7, 11, 16, 21-22. 1 May 2009 <http://www.debeerscanada.com/files_2/documents/2007SnapLakeSocioEcReport.pdf>.

[20] “Economic Impact: Generating Revenues,” Diamondfacts.org, 13 August 2009 <http://diamondfacts.org/difference/economic_impact.html> and “2008 NWT Diamonds,” p. 27.

[21] Weitzner, p. 29.

THE NEGOTIATION

In 1992, Falconbridge went to inform the people of Kangiqsujuaq and Salluit of its intention to develop the Raglan oreOre: the naturally-occurring material (rock) from which minerals are extracted through breaking down and processing. bodies, and to ask, “How can we contribute to your community?” It quickly became clear that the company confined its ideas of a “contribution” to little more than basic community projects.

The people were not happy. In an earlier consultation between themselves, the company, the regional government, and several provincial ministries, they had made their concerns clear. They wanted to participate in the development and its economic spin-offs, not just observe it. They did not wish to abandon their traditional pursuits, despite their interest in employment for wages. They were also concerned about the effect mining would have on the environment and on the number of southern people coming to their lands. In 1993 they asked Makivik to intervene on their behalf and negotiate with Falconbridge.³

The Inuit knew they wanted to benefit from the mine. Their position in negotiations was weakened by the fact the Raglan property was not on Inuit land. Still, they had two leverageLeverage: strategic advantage or the power to act effectively. In negotiation, leverage is a measure of which side, at any given moment, has a greater ability to influence the other side. points. First, Falconbridge needed a provincial Environmental AssessmentEnvironmental Assessment: a written report, compiled prior to a production decision that examines the effects that proposed mining activities will have on the natural surroundings. Certificate for Raglan. If the Inuit opposed the mine, Falconbridge’s chances of getting the certificate would be in serious jeopardy. Second, the Inuit had claims pending to the margins of Hudson’s Bay and Hudson Strait. If these claims were recognized, the Inuit would have offshore jurisdiction that would threaten the passage of Falconbridge ships. 

With Makivik’s intervention, a Memorandum of UnderstandingRegarding Negotiation of an Agreementin Respect of the Mining Project Near Deception River⁴ was drawn up. It outlined principles concerning the environment, employment, training, and compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). that would form the basis for negotiation of an IBA with Falconbridge.

After two years of intensive negotiations, the Raglan Agreement was concluded on February 28, 1995. There were six signatoriesSignatory: any person or organization who has signed as a signatory to a document or agreement. to the agreement: Falconbridge, Makivik, the villages of Kangiqsujuaq and Salluit, and the land-holding companies of each village.
 

THE DEAL

The Raglan Agreement has five principal benefits:

1. It awards priority of employment to qualified Inuit residing in Salluit and Kangiqsujuaq, in the region as a whole, and to other Nunavik Inuit.
2. It awards priority in contracts to competitive Inuit enterprises for work required during the mine’s operating phase.
3. It makes compensation and profit-sharing payments to the benefit of Salluit, Kangiqsujuaq, and Nunavik region inhabitants.
4. It establishes the Raglan Committee with one member from each of Salluit, Kangiqsujuaq, and Makivik, and three from Falconbridge. The task of this permanent committee is to oversee implementationImplementation: the carrying out or execution of an agreement, decision, or plan. of the agreement and to review any major environmental issues that may arise.
5. It establishes procedures for monitoringMonitoring: the act of observing something and often keeping a record of it. People monitor mining activities or impactsImpacts: the effect or impression of one thing on another such as the impact of a mining project on the life of an Aboriginal community. in order to determine their effect on the land, resources, and communities. the environment beyond regulatory requirements. The results of this monitoring are to be regularly reported to the Raglan Committee.

Additional highlights of the agreement are:

• A joint committee to oversee training programs.
• An overall compensation package estimated at $60-$100 million over the life of the project. A Guaranteed First Allocation of $10 million is to be paid over the first 15 years of the project (and continue thereafter at $800,000 per year until the end of the project). A Guaranteed Second Allocation of $4,125,000 is to be paid over the first 15 years of the project (and continue thereafter at $275,000 per year to the end of the project.) A Profit Sharing Allocation is to commence in the sixth or seventh year of operation, and will pay the Aboriginal signatoriesSignatory: any person or organization who has signed as a signatory to a document or agreement. 4.5% of Annual Operating Cash FlowAnnual Operating Cash Flow: a measure of a company's financial health. Equals cash receipts minus cash expenditures over a given period of time; or equivalently, net profit plus amounts charged off for depreciation, depletion, and amortization..
• Additional Payments of $50,000 made to Makivik every year for ten years.
• A representative of Makivik appointed to the mine's Board of Directors.
• Detailed projections of the mine’s development are to be submitted. Deviation from the mine’s original specifications will trigger re-negotiation of the agreement.
• The mine’s development may require relocation of Inuit camps and equipment. In that case, separate discussions are to address the necessary compensation or remediation.
• Any party may still claim compensation for damages caused by toxic substancesToxic Substances: poisonous matter (either man-made or natural) which causes sickness, disease and/or death to plants or animals. that result from the mine operations.
• There is a dispute resolutionDispute Resolution: a process by which two or more parties may discuss their disagreements and come to decisions about how to proceed. process to follow, if the parties cannot resolve a dispute by negotiation.

RESULTS

The mine opened in February 1998. It is in full operation and employs about 300 workers. It is currently expected to have a lifespan of 30 years.

Each year 130,000 tonnes of nickel-copper concentrate are produced at Raglan and shipped to Quebec City during the 8-month shipping season. From Quebec City it goes by rail to a smelterSmelter: Where ores are processed (using heat) to produce metalsMetals: one of more than a 100 basic earth elements, grouped under minerals. Includes iron, lead, zinc, and copper.. in Sudbury. It then returns to Quebec City for shipment to Falconbridge's refinery in Norway. (The original 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 Stage, 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. did not permit the company to explore or mine any additional ore-bodies on the Raglan Property. However, the parties later agreed to an amendment that has permitted Falconbridge to exploit several new sites.)

Although there have been problems implementing the Raglan Agreement, the spirit of cooperation between mine management and Inuit people remains strong. There is a genuine willingness to work through issues and resolve them. Inuit generally seem happy to have jobs at the site and are proud to work there.

Everything that happens on-site is passed on to the Raglan Committee, whose Inuit members report back to their communities. In this way communities are kept informed about what is going on. They can also bring their concerns or problems to the Committee.
 

SUMMARY OF BENEFITS TO DATE

CHALLENGES

Three key challenges have emerged in the implementationImplementation: 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 Stage, 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. of the Raglan 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 mineral 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.: employment, family impactsImpacts: the effect or impression of one thing on another such as the impact of a mining project on the life of an Aboriginal community., and on-site issues.

Although the mine aims to have a workforce that is 20% Inuit, no quotaQuota: the share that is due from, due to, or allocated to a person or group. has been set. Employment quotasQuota: the share that is due from, due to, or allocated to a person or group. have their advantages and disadvantages. Makivik believes goodwill on the part of the company is probably the best guarantee of fair treatment.

Although priority is given to Inuit employment, the turnover of Inuit employees is high (70% compared with 15% among non-Inuit employees). Generally, older Inuit are not hired, and most of the jobs are entry level. Inuit say that they feel like second-class citizens at the mine site and that they do not get promoted at the same pace as non-Inuit employees. The presence of Inuit-, French-, and English-speakers on the site creates difficulties in communication.

Improving the quantity and quality of jobs performed by Inuit at Raglan is one of the biggest challenges. A number of issues are at play, including:

• Location and distance. The mine site is 60 km from the closest village, with no connecting road.
• Separation from family and community is very difficult for Inuit workers. Falconbridge has implemented flexible scheduling for them, but more solutions need to be found.
• Testing indicates that Nunavik education standards are up to two years behind southern standards.
• Inuit students and young workers lack the skill base for the technical job training they need for work at Raglan’s very modern operation.
• There are significant cultural differences to bridge when bringing inexperienced Inuit workers into the Raglan operation.

Priority in the award of contracts is supposed to go to local Inuit. Often contracts have been obtained by regional organizations or awarded to private non-Inuit enterprises instead. This is likely to be a reflection of local capacity as well.

Finally, Makivik has conducted studies on the environmental and social impact of the mine. Some results are disturbing:

• In some families, both parents work at the site. Even if their schedules are staggered, it means that child care is required for two weeks straight while the parents or extended family work.
• It is common for employees who return to the community during time-off to abuse alcohol.
• Child neglect and substance abuse affect the entire community, as well as the individuals or families directly involved.
• A water quality study found nickel concentrations of 68 parts/billion, a level exceeding the Quebec standard of 25 parts/billion.

POSTSCRIPT

The Raglan Agreement is considered a successful agreement especially in regards to the financial compensation being realized by the Inuit. Makivik, an experienced corporation, has been able to organize participation of all their communities and negotiate a significant financial compensation for mining activity on their land. (This differs sharply from Lutsel K’e Dene’s earlier agreements.) The Raglan Agreement shows how a representative Aboriginal regional organization can bring together experience and capacity in order to achieve solid long-term benefits for the communities affected by a mine.

Raglan also demonstrates the importance of having a cooperative relationship between the Aboriginal group and the mining company:

“However impressive the Raglan Agreement may be, it’s still just a piece of paper. What really matters is the attitude of the parties – after the Agreement is signed. With Raglan, certainly there have been (and continue to be) problems to solve, but the attitude on both sides has remained very positive, seeking solutions instead of finding obstacles.” ⁶

(Robert Lanari, Project Director, Makivik Corporation)

ENDNOTES

[1] Map based on Claire Vivier, “Falconbridge’s Perspective on Sustainable Development and Mining: The Raglan Experience,” Non-Ferrous Metals and their Contribution to Sustainable Development. 17 August 2009 <http://www.nfmsd.org/wg_production/docs/raglan_presentation.ppt#2>.

[3] Telewiak, p. 65.

[4] Mining and Indigenous Peoples: Case Studies (Ottawa: International Council on Metals and the Environment. July 1999), p. 25. 13 August 2009 <http://www.goodpracticemining.org/documents/jon/ICMM_IndigPeop-CseStd.pdf>.

[5] Find information on the profit-sharing and cumulative year-to-date amounts received by Makivik up until the end of 2008 at “Media Centre: News Releases,” Xstrata. (28 July 2009) <http://www.xstrata.com/media/news>.

[6] Telewiak, p. 72.

THE NEGOTIATION

Negotiations started in early 1995. TH’s negotiating team comprised three outside consultants and four representatives of the First Nation. Two of the latter were responsible for ensuring the wishes of the First Nation community were presented at the negotiating table. In turn they would circulate information to the community about the negotiations. There was also a land claims representative who ensured that the negotiations reflected TH’s environmental and land claims concerns.

TH entered negotiations with clear and tangible goals. They needed Loki to understand that the First Nation wanted to play a significant role in the economic activities that would take place on their traditional lands. Early in negotiations, TH Chief and Council made it clear that protection of the environment was the number one priority.

In a large community meeting, TH members and the negotiating team developed agenda items to be pursued in 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 mineral 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 AgreementsSocio-Economic Participation Agreements (SEPAs): private, confidential contracts between Aboriginal communities and resource developers, like mining companies. SEPAs specify how the communities that will be affected by the development of a resource will also benefit from that development. Many SEPAs include terms about the employment and training of Aboriginal people, compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). payments, protection of the environment, and profit-sharing. SEPAs are often called Impact Benefits Agreements (IBAs) and Cooperation Benefit Agreements (CBAs), and other names. The Aboriginal Mining Guide calls them all SEPAs.. with Loki. TH made a proposal to Loki that called more for a partnership than just an agreement with the company. At the same time, TH launched an in-depth Due DiligenceDue Diligence: a financial and technical investigation to determine whether an investmentInvestment: the purchase of a financial product or other item of value with an expectation of favourable future returns. Generally, “investment” means the deliberate use of money in order to make more money. is sound. Each party to a business agreement uses Due Diligence to ascertain the actual quantity and quality of the assets which the others claim they can contribute. on the company. The Due Diligence included reviewing company and shareholder structure, Board members, a Bankable Feasibility StudyBankable Feasibility Study: a comprehensive analysis of a project's economics that banks and other financial institutions can use to make investment or lending decisions., investmentInvestment: the purchase of a financial product or other item of value with an expectation of favourable future returns. Generally, “investment” means the deliberate use of money in order to make more money. strategies, and financing and geological reports.

As the negotiations proceeded TH realized that the mining company was not willing to negotiate any agenda item that might imply an actual working relationship. For example, Loki refused to discuss the possibility of TH holding in trustTrust: a legal arrangement in which an individual (the trustor) gives fiduciary control of property to a person or institution (the trustee) for the benefit of beneficiaries. the mining company’s reclamation money, even though the arrangement would have been very favorable to the company. TH recognized that getting a significant agreement with the company was going to be more arduous than expected. Thus, they had to re-evaluate their strategy.

The Equity Issue

Like many resource-based companies at that time, Loki did not understand Aboriginal rights. It did not believe that it needed to address the concerns of First Nations in order to proceed with the development of a mine. Negotiations actually broke down when Loki reneged on an earlier agreement to put equity participation on the negotiation agenda.

Additionally Loki was not forthcoming with access to information important to completing the Due Diligence. When Loki would summarize the progress of the negotiations, its write-up did not always reflect what the parties had agreed upon. Loki even lobbied federal, territorial, and municipal politicians for their support in circumventing or placating TH’s “unreasonable” concerns.

TH had always sought to build a relationship of trust and cooperation with Loki so that the company could succeed with the Brewery Creek mine and so that TH members would realize economic benefits .Since the latter aspect was not acceptable to the company, there was no reason Loki should enjoy the former. TH and Loki found themselves at an impasse.

TH informed the Minister of Indian and Northern Affairs Canada (INAC) that the First Nation would not support the development of the mine and would do whatever was necessary to ensure that it would not proceed. TH had also engaged a world class team to help in the environmental assessmentEnvironmental Assessment: a written report, compiled prior to a production decision that examines the effects that proposed mining activities will have on the natural surroundings.. The First Nation was forcing major design modifications to the mine development to make the leaching process more environmentally sound. These actions caused an outcry both in the region and across Yukon. Nonetheless, it brought Loki grudgingly back to the table.

THE DEALMAKER

The benefits that TH originally desired from 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 Stage, 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. included equityEquity: the dollar value of what a person or organization owns (as opposed to debt, which indicates what a person or organization owes). A person or organization can have an equity interest in something if they have part or full ownership. participation and contracting and employment preference. Before talks resumed, TH reconsidered its desire to share in the mine’s equity in light of the Due DiligenceDue Diligence: a financial and technical investigation to determine whether an investmentInvestment: the purchase of a financial product or other item of value with an expectation of favourable future returns. Generally, “investment” means the deliberate use of money in order to make more money. is sound. Each party to a business agreement uses Due Diligence to ascertain the actual quantity and quality of the assets which the others claim they can contribute. and Loki’s approach to the negotiations. TH realized that Loki, a juniorJunior Company: a mining company that has no mining operations. It must rely almost entirely on the capitalCapital: cash, property, equipment, services, and contracts or leases. markets to finance its exploration activities. mining company, was not experienced in mine development. The company was thinking of using untried technology in a northern location.

Brewery Creek was also Loki’s only project, so it was difficult for the company to concede a share of the ownership. Major mining companies usually have several developments of various sizes in play, each operated by a subsidiary corporationCorporation: the most common form of business organization. It pursues set objectives and is empowered with legal rights usually only reserved for individuals, such as to sue and be sued, own property, hire employees, or loan and borrow money.. Because Majors literally have their eggs in more than one basket, it is easier for them to be more flexible in their approach to mining. They can agree to a Joint VentureJoint Venture: commonly, a business to which two or more parties contribute the essential land, capital, and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.) on one project without affecting the control of the parent corporation. This does not apply to Juniors like Loki that may only own one property. That is all they have and a piece of it is a piece of the parent corporation itself. They cannot fathom giving up something so valuable.

Once it understood this about Loki, TH began to realize that equity participation was not so desirable after all. The risk would simply be too great. Instead, TH sought a cash settlement. This proved to be the dealmaker. Loki stopped resisting a deal. The two negotiating teams moved ahead once again to negotiate issues and benefits.
(Subsequently, the Brewery Creek property was purchased by Viceroy, whose attitude to working with First Nations was much more progressive.)

THE DEAL

In April 1995, Loki and TH signed off on a 6-point Heads of AgreementHeads of Agreement: a non-binding summary of the main issues on which the parties intend to base an agreement. – an agreement in principleAgreement in Principle: an agreement which participants are not legally obliged to keep. It is therefore non-binding. that would become the basis for a more detailed and legally binding agreement. The agreement gave Loki the support and stability it needed. One clauseClause: a subdivision (often numbered) of a document, that clarifies, defines, or explains the subject matter. Often called a provisionProvision: an action or item stipulated by an agreement. Often called a clause.. stipulated a cash settlement for quiet enjoymentQuiet Enjoyment: the right to the undisturbed use of property by a tenant or landowner. on the part of Loki. Another clause stipulated preferential contracting treatment for small, owner-operated Aboriginal businesses and in specified cases “sole source” contracting for TH. (That is, these contracts would be earmarked for TH alone to provide.)

In the meantime, TH had been in Joint Venture negotiations with Procon Mining and Tunneling and Viceroy. Once the Heads of Agreement was signed, TH introduced these Joint Venture partners to the Loki negotiating team. The Loki representatives had not expected that the First Nation would be in a position to take advantage of this clause. They were quite shaken by the caliber of TH’s partners. Subsequently, TH won the contract to build an access road to the mine and to construct portions of the leach pad. In turn TH provided Loki with a quarry permit that enabled the company to haul gravel from interim protected TH settlement land.

(That August the memorandum was broadened to include another clause. It required Loki to pay compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). to TH members who could demonstrate that they suffered economic loss or reduction in harvesting opportunities.)

The complete socio-economic development agreement was signed in September 1997. It included employment, scholarships, finder’s fees, preferential contracting treatment, and a framework for exploration and Joint VenturesJoint Venture: commonly, a business to which two or more parties contribute the essential land, capitalCapital: cash, property, equipment, services, and contracts or leases., and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.) on TH settlement land. It also gave TH representation at technical, operational, and environmental management meetings.

THE RESULTS

The mine itself only actually lasted five years out of the predicted eight. Although the First Nation could have been more effective in the implementationImplementation: 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 Agreements, Exploration Cooperation Benefit Agreements, Socio-Economic Participation Agreements., decision, or plan. of some smaller opportunities, it was quite successful in capturing the larger 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. benefits. Through this 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 Stage, 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. and a related Joint VentureJoint Venture: commonly, a business to which two or more parties contribute the essential land, capitalCapital: cash, property, equipment, services, and contracts or leases., and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.), the TH development corporationCorporation: the most common form of business organization. It pursues set objectives and is empowered with legal rights usually only reserved for individuals, such as to sue and be sued, own property, hire employees, or loan and borrow money. (Chief Isaac Inc.), TH acquired two active, successful, and expanding businesses, MacKenzie Petroleum and Kluane Transport. They employ about 45 people regionally and territorially. The cash settlement enabled TH to design and build a state-of-the-art Child Development Centre which provides pre-natal through to 12-year-old programming for the community of Dawson City.

Through the Joint Venture partners many opportunities arose for TH and community contractors who otherwise would not have secured those contracts. In the end Dawson realized that First Nation involvement brought about a more environmentally-sound mining project with greater opportunities for involvement of the whole local population.
 

SUMMARY OF BENEFITS TO DATE

ENDNOTES

[1] Much of the content for this case study is derived from Gary Wilson, “Anatomy of a Joint Venture: One First Nation’s determination has set a new benchmark in northern mining”, in Making Waves, Vol. 7, No. 4 (Winter 1996): 9-13.

[2] The mine has recently changed ownership again. It may re-open to explore other deposits on the property whose extraction is now feasible on account of the rising price of gold.
 

THE NEGOTIATION

The Voisey’s Bay mine negotiations started in 1997. That is when the Innu, the Labradortest description Inuit Association, and the provincial and federal governments signed a Memorandum of UnderstandingMemorandum of Understanding: a document that records an understanding between a community and a mining or exploration companyExploration Company: a company whose principal activity is that of exploration.. The MOUMemorandum of Understanding: a document that records an understanding between a community and a mining or exploration company. The MOU defines principles for working together for mutual benefit. defines principles for working together for mutual benefit. (MOU).

Before a mine is approved, a company is required to set up a panel to carry out an environmental assessmentEnvironmental Assessment: a written report, compiled prior to a production decision that examines the effects that proposed mining activities will have on the natural surroundings.. The panel’s report must be accepted by the federal, provincial, or territorial government. But at Voisey’s Bay, the Innu and Inuit wanted to set limits on resource development in their traditional territories. So their negotiators made sure that the MOU outlined an environmental assessment process that involved their communities as well. All the parties to the MOU appoint the members of the environmental assessment panel. Its report must be submitted to the presidents of the Innu Nation and the Labrador Inuit Association, as well as government. Innu people were themselves to complete the baseline studies of their communities. The environmental assessment had to include traditional knowledgeTraditional Knowledge (TK): the knowledge, observations, and understandings about the natural environment, and about the relationships between living beings and their environment, that Aboriginal people have accumulated over many generations. as well as scientific knowledge.

The environmental assessment process ran from 1997 to 1999. It showed how important it would be for the Innu, Inuit, and mining company to negotiate Impact Benefits Agreements (IBA) in order to deal with issues that were not settled due to outstanding land claims. Ideally both the Innu and Inuit wanted their land claims settled before any mining occurred. The Panel however recommended that participation and compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). would be adequately dealt with through IBAs. Environmental concerns would be dealt with by the development of an environmental co-management agreementManagement Agreement: an explanation of what the Joint VentureJoint Venture: commonly, a business to which two or more parties contribute the essential land, capitalCapital: cash, property, equipment, services, and contracts or leases., and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.) management should report to whom, when and how. These reports will include audits and descriptions of management performance, as well as financial matters related to compensation, performance standards, etc. between the Innu and Inuit and the federal and provincial governments.

Resolving the Environmental Dispute

The negotiation of the IBAs started in 1999. In general, the talks did not go smoothly. Both Aboriginal communities feared the harm that exploration and mining would cause. Inco was reluctant to negotiate compensation for such damage.

The Government of Newfoundland and Labrador decided it might let the mine go ahead before the environmental assessment was complete. The Innu took them to court. They also carried out civil disobedienceCivil Disobedience: refusal to obey civil laws in an effort to bring about change in a situation, governmental policy or legislation, characterized by the use of passive resistance or other non-violent means., drew in the news media, and found political allies to take up the Aboriginal cause. All this public and legal action finally halted the development of the mine. Inco realized that it was clearly in its best interest to partner with Aboriginal people, not fight them. (This victory also helped to speed up the negotiation of Inuit and Innu land claims.)

When the ore could be shipped was another very difficult issue to resolve. Inco wanted to be able to ship year round. The Inuit did not want ice-breaking in winter. A small working group with company and Inuit representatives worked on the issues. It took a number of years to negotiate and build trustTrust: a legal arrangement in which an individual (the trustor) gives fiduciary control of property to a person or institution (the trustee) for the benefit of beneficiaries.. A separate shipping agreement was developed outside of the IBA. However within the IBA it was noted that ratification of the IBA by the Inuit also meant Inuit consent for winter shipping.

IBAs were finally concluded between Inco and the Innu and Inuit separately in 2002. By that time, the Nunatsiavut government had taken the place of the Labrador Inuit Association. A small working group with company and Inuit representatives worked on the issues. It took a number of years to negotiate and build trust. A separate shipping agreement was developed outside of the IBA. However within the IBA it was noted that ratification of the IBA by the Inuit also meant Inuit consent for winter shipping.

IBAs were finally concluded between Inco and the Innu and Inuit separately in 2002. By that time, the Nunatsiavut government had taken the place of the Labrador Inuit Association.² 
 

THE DEAL

These are the main provisions of the IBAs:

• Education and Training. Inco must contribute specific amounts of money to career counselling, Stay-in-School programs, scholarships, and school awards. The company must also participate in a construction training program and a student employment program.

• Employment. Priority goes to hiring Innu and Inuit. Aboriginal people should make up 25-50% of the mine’s workforce. (Inco cannot be forced to meet these targets, however.)

• Workplace Conditions. Advisory committees of Inuit and Innu employees can make recommendations to the mine’s managers. Aboriginal employees shall be able to go on leave for cultural reasons (for example, hunting). Innu and Inuit elders shall be able to make visits to the mine site. Other programs and events will promote understanding between Aboriginal and non-Aboriginal people.
• Business Opportunities. Priority will go to aboriginal companies when the mine purchases goods and services.
• Financial CompensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury).. There are baseline fixed payments to Nunatsiavut Government and Innu Nation over the life of the mine. Additional payments are payable depending on the overall prosperity of the operation. Separate payments are made to the Innu Nation and to the Nunatsiavut Government as compensation for loss of harvesting opportunities.
• Of the royalties Inco pays annually to the Government of Newfoundland and Labradortest description, Nunatsiavut is to receive 3%, and the Innu to receive 5%. These royaltyRoyalty: in mining, a royalty is a tax that mining companies pay to government for the extraction of public resources. In Yukon, mining royalties are a percentage of an amount roughly equivalent to a company’s Annual Operating ProfitAnnual Operating Profit: a business’ Gross RevenuesGross Revenues: money generated by all of a company's operations, before deductions for expenses, sometimes simply called “the Gross.”, minus Variable and Fixed Costs.. details are included in the land claim agreements or agreements in principle between Nunatsiavut and the Innu Nation with the provincial government, not the IBA.
• Environmental Protection. Inco is to fund environmental monitors who are at the mine site at all times. These monitors are employees of the Innu Nation and Nunatsiavut and report directly to them.
• ImplementationImplementation: the carrying out or execution of an agreement, decision, or plan.. Joint committees of Inco, Inuit, and Innu representatives will be appointed to make sure that the provisions of the IBA are properly carried out.
• Dispute resolutionDispute Resolution: a process by which two or more parties may discuss their disagreements and come to decisions about how to proceed.. To date all disputes have been resolved by discussions between leaders of Inco, the Inuit, and the Innu.
   

THE RESULTS

Both the Innu and Inuit decided to create trusts to manage compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). payments from the IBAs. Rules specify when and how the funds can be spent. They can be spent to preserve and enhance Aboriginal languages and culture. They can be spent on programs for youth and on training. Some money is set aside in heritage fundsHeritage Funds: funds set to the side for purposes of funding projects related to heritage, culture, traditional life., because the resources belong to future generations as well as to the Aboriginal people of today.

The rules of the trusts also permit compensation money to be spent on several important tasks at the mine. The responsibilities that Aboriginals have overseeing implementationImplementation: 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 Agreements, Exploration Cooperation Benefit Agreements, Socio-Economic Participation Agreements., decision, or plan., reviewing the project, and consulting with the communities – these are all paid for with compensation money. It also pays for monitors who make sure that the mine follows environmental procedures.

As a result, the compensation payments are being managed in a way that benefits all Innu and Inuit, not just a few.
 

SUMMARY OF BENEFITS TO DATE

³

ENDNOTES

[1] The two geologists who discovered the Voisey Bay nickel deposit were working for Diamond Fields Resources Inc. The International Nickel Company of Canada is now known as Vale Inco.

[2] The chronology of the negotiations is summarized on slide 4 of Tom Padden, “The Voisey’s Bay Project 2002 – 2006” (Expo Labrador, Happy Valley-Goose Bay, NL, June 20, 2006). 17 August 2009 http://expolabrador.com/2006_Presentations/VBNC_Tom_Paddon.pdf. A diagram on Slide 22 also illustrates the linkage between partners, tools, objectives, and the goal of community capacity-building.

[3] Data for this case study come from a number of sources. The three most important are: Aboriginal Engagement in the Mining and Energy Sectors: Case Studies and Lessons Learned, Report to Energy and Mines Ministers (2008), 5 May 2009 http://www.nrcan-rncan.gc.ca/mms-smm/abor-auto/pdf/stu-etu-eng.pdf; 2006 Social Responsibility Report, Voisey’s Bay Nickel Company, Ltd., 5 May 2009 http://vinl.valeinco.com/SocialResponsibility2006/index.htm; and Isabella Pain and Tom Paddon, Negotiating Agreements: Indigenous And Company Experiences: Presentation of the Voisey’s Bay Case Study from Canada (Moscow, 3-4 December 2008), 5 May 2009 http://www2.ohchr.org/english/issues/indigenous/docs/workshops/Vale_Inco...

[4] “Voisey's Bay royalties 'wasted' in past: Innu chief,” CBCnews.ca, 4 July 2007. 17 August 2009 http://www.cbc.ca/canada/newfoundland-labrador/story/2007/07/04/voiseys-innu.html.
 

THE NEGOTIATION

NND and Alexco started negotiating early in 2007, before the sale of Keno Hill Silver District was finalized. Since then, they have come to three agreements: a Memorandum of UnderstandingMemorandum of Understanding: a document that records an understanding between a community and a mining or exploration companyExploration Company: a company whose principal activity is that of exploration.. The MOUMemorandum of Understanding: a document that records an understanding between a community and a mining or exploration company. The MOU defines principles for working together for mutual benefit. defines principles for working together for mutual benefit. (MOU), a Negotiation AgreementNegotiation 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. , and an Exploration Cooperation Benefits AgreementExploration Cooperation Benefits Agreement: an agreement struck between an Aboriginal group and a mining company which outlines benefits that each party may realize during the Exploration Stage. Benefits for the mining company may include the ability to explore for minerals with the support of the Aboriginal community. Benefits for the Aboriginal community may be jobs, financial compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury)., business opportunities, etc. (CBA).

They signed the MOU in March 2007. It outlined how they would cooperate and support any future development in the Keno Hill Silver District, as well as its eventual closure and reclamationClosure and Reclamation Stage: restoration of disturbed and/or mined land to its original contour, use, or condition.. It also explained how any agreement would be monitored, that is, what the parties to the agreement would do to ensure everyone kept the commitments they made.

Then, in August 2007, NND suspended negotiations. NND claimed that the federal and provincial governments were not consulting the First Nation properly about the sale of Keno Hill to Alexco. According to a recent decision of the Supreme Court of the Yukon (Little Salmon/Carmacks First Nation vs Government of Yukon), the CrownCrown: the Crown refers to the sovereign or to the power and authority of the monarchy. In Canada, the powers and authority of the sovereign have been delegated to the Governor General of Canada. could not approve the transfer of rights within the traditional territories of self-governing First Nations without "government to government dialogue" first. NND settled its land claim in 1993 and is self-governing.

Simon Mervyn, Chief of NND said that the Yukon government had only carried out "courtesy consultations" with the First Nation concerning the sale. The government, he said, “paid lip service to our rights” while cooperating eagerly with Alexco. “Our First Nations people have used these lands for generations,” he said. “We intend to be fully involved in the decision making process regarding their reclamation and redevelopment."²

In response, Alexco stated that it understood and sympathized with NND grievances. Alexco said it would help the government and NND discuss the Keno Hill sale meaningfully.

In the meantime, market traders on the stock exchange reacted to the stall in negotiations. The company's stocks plummeted in value from about $5.50 per share to about $3.50.

Seeing the impact of NND’s actions, Alexco hurried to get negotiations going again. By September 2007, Alexco and NND had concluded a Negotiation Agreement.³ It outlined two further types of agreement that Alexco and the NND would negotiate. One, an Exploration Cooperation Benefits Agreement, would concern activities already underway in Keno Hill, like exploration and protection of the environment from the old mines. The second, a Comprehensive Cooperation Benefits AgreementComprehensive Cooperation Benefits Agreement: this may be the name of an agreement that is essentially the same as a Socio-Economic Participation AgreementSocio-Economic Participation Agreements (SEPAs): private, confidential contracts between Aboriginal communities and resource developers, like mining companies. SEPAs specify how the communities that will be affected by the development of a resource will also benefit from that development. Many SEPAs include terms about the employment and training of Aboriginal people, compensation payments, protection of the environment, and profit-sharing. SEPAs are often called Impact Benefits Agreements (IBAs) and Cooperation Benefit Agreements (CBAs), and other names. The Aboriginal Mining Guide calls them all SEPAs.., would be negotiated if Alexco decided to develop the Bellekeno mine. Under the Negotiation Agreement, Alexco provides NND with money to help cover its negotiation expenses.
 

Building Relationships

From the beginning of the Exploration CBA negotiations, NND wanted three main things: protection for the land and environment; employment opportunities for its citizens; and business opportunities for local Aboriginal entrepreneurs. It also wanted to make sure the Exploration CBA was a sound basis for the Comprehensive CBA, if Bellekeno were to go into production.

As Alexco and NND negotiated, they realized that there could be many more “Bellekenos” in the future. It seemed wise to write a process that these other negotiations could also follow. This Cooperative Engagement Process outlines principles to guide the actions of mining companies that have mineralMineral: A naturally-occurring, homogeneous substance that has a definite chemical composition and (usually) a crystalline structure. interests within NND traditional territory. This document also outlines how NND will manage any activities within its traditional territory.

NND’s business arm is NaCho Nyäk Dun Development CorporationCorporation: the most common form of business organization. It pursues set objectives and is empowered with legal rights usually only reserved for individuals, such as to sue and be sued, own property, hire employees, or loan and borrow money.. One of its staff members, Tom Lie, was spokesperson for NND in the negotiations. He emphasized to Alexco that NND had settled a land claim. Alexco was therefore negotiating with a government and must behave accordingly. Alexco’s senior CEO should get to know the NND Chief and Council personally so that the discussion would truly proceed among leaders.

Repeatedly both NND and Alexco have noted how much the negotiation process is about building relationships and trustTrust: a legal arrangement in which an individual (the trustor) gives fiduciary control of property to a person or institution (the trustee) for the benefit of beneficiaries., not just business deals. First and foremost, mining companies want certainty about the terms under which a mine may go forward. First and foremost, First Nations want benefits from the mine.

In May 2008 Alexco and NND signed the Exploration CBA.
 

THE DEAL

Bellekeno is a good example of how a series of agreements can be built, one on top of the other. Both the MOUMemorandum of Understanding: a document that records an understanding between a community and a mining or exploration companyExploration Company: a company whose principal activity is that of exploration.. The MOU defines principles for working together for mutual benefit. and the Negotiation AgreementNegotiation 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. formed the foundation for the Exploration CBA.

The Negotiation Agreement confirmed NND's support in principle for Alexco’s current activities in the district. It provided “project certaintyProject Certainty: the likelihood that a project will be able to meet its intended outcomes.,” that is, it assured Alexco that NND would support the development of mines in the Keno Hill Silver District. It established how NND and Alexco would work together as a team while the company continued its exploration and reclamation work in the area. The Negotiation Agreement also stated that Alexco and NND would collaborate to ensure NND’s meaningful participation in all the regulatory processes related to mining development in the district (environmental assessmentsAssessments: the process of gathering and documenting information about a mine’s viability and impactsImpacts: the effect or impression of one thing on another such as the impact of a mining project on the life of an Aboriginal community.. and water licensesLicenses: documents that must be obtained in order to apply for or carry out certain activities., for example).

The Exploration CBA explains in detail how Alexco and NND will collaborate in regulatory processes. It also establishes the foundation on which Alexco and NND will be able to conclude Comprehensive CBAs as the development of the Keno Hill proceeds.

Provisions of the Exploration CBA

The Exploration CBA does five main things:

• It assures NND support for the development of mineralMineral: A naturally-occurring, homogeneous substance that has a definite chemical composition and (usually) a crystalline structure. deposits in Keno Hill Silver District (“project certainty”).
• It describes a new Cooperative Engagement Process. This process ensures the full participation of NND in all environmental approvals, current and future, that relate to mining in the Keno Hill Silver District.
• It commits Alexco and NND to work together to find the contractors and partners for trucking, catering, and many other 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. services.
• It lists 18-20 important tasks, which party to the agreement is responsible for each task, and when it will get done.
• It outlines the financial support Alexco will provide so that NND can participate more fully in mine development. Alexco will pay for certain NND scholarships. It will pay for the technical support NND members require to take part in some regulatory processes (baseline studies and reports on traditional knowledgeTraditional Knowledge (TK): the knowledge, observations, and understandings about the natural environment, and about the relationships between living beings and their environment, that Aboriginal people have accumulated over many generations. , for example). Alexco will also pay for an NND Mining Coordinator who will keep the First Nation up to date on what's happening with Alexco's mining projects. This Coordinator will pass on information about job and contract opportunities as well.⁴

There are important differences between this Exploration CBA and other agreements between mining companies and Aboriginal communities. NND and Alexco are proud of these differences.

One difference is the absence of employment and contracting quotasQuota: the share that is due from, due to, or allocated to a person or group. that reserve specific amounts of work and business for Aboriginal people. Instead, the Exploration CBA expresses Alexco’s intention to employ more NND workers and contractors over time as they become more skilled and competitive. Alexco aims to develop this NND capacity with a series of partnerships, each of which is more advanced than the one previous. The first partnerships involve contracts for hauling water, transporting employees, and catering. Later contracts will require still more experience, skill, and equipment, like drillingDrilling: the primary means of bringing rock samples to the surface. Often called “diamond drilling” since the bit used is made of diamond. Drilling is a major expense, costing $50 or more per metre. or laboratory services. By this means, NND members will be able to keep winning contracts in Keno Hill Silver District well into the future. In that way, even after Bellekeno mine closes, NND will still receive benefits from it.
 

RESULTS

The negotiation of three agreements in less than two years was no easy task for NND or Alexco. Wisely, both parties used the negotiation process to create mutual respect and trustTrust: a legal arrangement in which an individual (the trustor) gives fiduciary control of property to a person or institution (the trustee) for the benefit of beneficiaries.. Alexco worked hard to understand and address NND concerns and wishes. The fact that NND had a settled land claim also affirmed its importance in all decisions made about the future of the district.

Many agreements fail because of poor implementationImplementation: the carrying out or execution of an agreement, decision, or plan.. The parties agree on what should occur, but they do not specify who is responsible for each task, and how to make sure each task is completed. In the case of Keno Hill, the MOUMemorandum of Understanding: a document that records an understanding between a community and a mining or exploration companyExploration Company: a company whose principal activity is that of exploration.. The MOU defines principles for working together for mutual benefit. described from the get-go how the implementation of agreements was to be carried out and monitored. The Exploration CBA, by including 18-20 commitments, displayed the same determination on both sides to make implementation happen. MonitoringMonitoring: the act of observing something and often keeping a record of it. People monitor mining activities or impactsImpacts: the effect or impression of one thing on another such as the impact of a mining project on the life of an Aboriginal community. in order to determine their effect on the land, resources, and communities. of the Exploration CBA occurs weekly or bi-weekly, and the monitoring committee meets monthly. This gets problems identified and dealt with swiftly. leverageLeverage: strategic advantage or the power to act effectively. In negotiation, leverage is a measure of which side, at any given moment, has a greater ability to influence the other side. in any way to improve the Negotiation AgreementNegotiation 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 mineral 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. or the Exploration CBA.

The position of Mining Coordinator has not been filled to date. Although this position was nice in theory, both parties realized that there was no need for a full-time person yet. The Mining Coordinator will instead become a member of NND staff. He or she will have responsibilities for many types of project development as well as the monitoring of the Exploration CBA. If the Bellekino mine moves to production, Alexco will hire its own liaison officer who will work directly with this Coordinator.

Profit sharing or other compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). is not part of any of the agreements at present.

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. opportunities have begun to develop. Alexco has negotiated a catering contract with ESS/NND, a Joint VentureJoint Venture: commonly, a business to which two or more parties contribute the essential land, capitalCapital: cash, property, equipment, services, and contracts or leases., and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.) between Compass Canada and NaCho Nyäk Dun Development CorporationCorporation: the most common form of business organization. It pursues set objectives and is empowered with legal rights usually only reserved for individuals, such as to sue and be sued, own property, hire employees, or loan and borrow money.. The Joint Venture must order supplies and prepare and serve three meals per day to people working on the Bellekeno project.⁵

Alexco is also negotiating with NaCho Nyäk Dun Development Corporation to transport personnel the 36 km between Mayo and Elsa, near Keno Hill. Settling this contract is a high priority matter. The corporation may first use a 15-passenger bus to do the job. But the service may expand to meeting charter aircraft at the airport. If the opportunities arise, still more schedules could be arranged to serve more people and more destinations.
 

SUMMARY OF BENEFITS TO DATE

The Exploration CBA was concluded only recently. There are no benefits to report in addition to those described above. NND continues to court juniorJunior Company: a mining company that has no mining operations. It must rely almost entirely on the capitalCapital: cash, property, equipment, services, and contracts or leases. markets to finance its exploration activities. mining companies with interests in its traditional territory.

POSTSCRIPT

This case study shows the type of negotiation that is occurring in Yukon between exploration companiesExploration Company: a company whose principal activity is that of exploration. and First Nations. A key ingredient missing in the Keno Hill agreements to date is revenue.

It has been argued that it is unwise to negotiate revenue during 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. of a mine. It is said to reduce the attractiveness of the project to potential investors. Indeed, when NND stood its ground over the government’s failure to consult with it appropriately, Alexco’s stock prices fell. But this fall in price actually served to speed up the mining project. Clearly, the temporary “unattractiveness” of the project to potential investors increased NND’s “leverageLeverage: strategic advantage or the power to act effectively. In negotiation, leverage is a measure of which side, at any given moment, has a greater ability to influence the other side.” or influence in negotiations. It is not clear whether NND used this leverage in any way to improve the Negotiation AgreementNegotiation Agreement: an early agreement in the mining process, likely to occur in the Exploration Stage, 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. or the Exploration CBA.

ENDNOTES

[1] Information cited from Rose Raglan, “Mining News: Keno Hill still promises silver payday,” North of 60 Mining News, Vol. 13, No. 30 (July 27, 2008). 17 August 2009 http://www.petroleumnews.com/pntruncate/843790406.shtml.

[2] See “First Nation of Na-Cho Nyak Dun Suspends All Keno Hill Regulatory Talks,” NationTalk, 17 August 2007. 17 August 2009 http://www.nationtalk.ca/modules/news/article.php?storyid=2687

[3] http://nationtalk.ca/modules/news/article.php?storyid=3418

[4] “Alexco Resource Corp. and First Nation of the Na-Cho Nyak Dun Conclude Negotiation Agreement,” NationTalk, 25 September 2007. 17 August 2009 http://www.cbc.ca/canada/north/story/2008/05/26/alexco-nndfn.html

[5] See “Bellekeno Preliminary Economic Assessment Technical Report: Keno Hill Silver District” (Vancouver, B.C.: SRK Consulting, June 2008). 17 August 2009 http://www.alexcoresource.com/i/pdf/2008-06-30_Bellekeno_Tech_Report_PEA.pdf.