STRATEGIC ISSUE #2: BENEFITS

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 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 a mining company might capture five types of benefit for an Aboriginal community:

The agreement might supply a share in the profit from mining. Profit is the money left over from the sale of a product or service after all the costs of producing and supplying it has been paid.

It might supply opportunities to gain management experience. That may mean making the actual decisions about how a division, department, or business is run. It can also mean a paid, advisory position on a board that oversees the managers of a mine.

It might supply opportunities for a wide range of jobs. They will vary in terms of the skills they require; the hours, effort, and danger they involve; and the money they pay. Many of these jobs are not with the mining company itself, but with businesses that have won contracts to supply services to the mine.

It might supply training for many of these jobs.

A SEPA might supply compensationCompensation: something (such as money) given or received as payment or reparation (as for a service or loss or injury). for use of traditional territory or for the effect that the mine has on the community’s environment and way of life. (Compensation is not a benefit that 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.) offer.)

There is a lot of disagreement over which benefits are the best to get. Are jobs and training the most important, or are management and profits? The relative importance of the five types of benefit is a crucial issue for communities who want to build their capacity.

On the one hand, let's face it - people want jobs, so they can earn incomeIncome: money one earns by working or by capitalizing from other people's work.. They apply pressure to their leaders to make more jobs available. If there is a choice to be made between creating a job and ensuring a profit, unemployed people will prefer the decision that favors their immediate interests - jobs. Understandably, profits will seem pretty remote to people who just need to make a living. The politician who chooses profits over jobs is likely to get a hard time when elections next come round.

On the other hand, in many Aboriginal communities, jobs come and jobs go. The trees are cut, the quarry is dug, or the pipeline is laid, and the jobs that came with each project are over. The income those jobs generated for the workers has been spent on family needs or will be shortly.

Yet the community as a whole has not grown wealthier. No assets, like buildings, roads, skills, or savings - have been created that the community can apply to another project of its own choosing. A strategy that gives top priority to getting jobs from a mining development is not sufficient if greater community capacity is the ultimate goal.

For that, profits are needed that the community can reinvest in businesses and in infrastructureInfrastructure: the basic facilities, equipment, roads, transmission lines, sewage, water, and other installations needed to support the functioning of a mine. that businesses require. Still, neither profits nor jobs will do much good without management. Management brings together the people and resources required for a project, organizes them, and applies them in order to achieve good results on schedule. One of the most important of those resources is information, including financial data. Making use of information to solve problems and improve performance is a key function of management. It takes years of experience to build up the knowledge needed to manage projects effectively. Training, as you can imagine, is an essential way to accelerate that learning process for managers or for any other complex type of job.

Compensation can help build community capacity, too. Tr’ondëk Hwëch’in negotiated compensation for individual members whose livelihoods would be harmed by the Brewery Creek gold mine. But lump sums of money were also to be set aside for the First Nation to spend on apprenticeships and scholarships. (See *Case Study #3: Brewery Creek Mine, p. Intro-30.)

So no one type of benefit can serve the community well unless the others are captured, too. But which type should get priority? Are all equally important, perhaps? No. If your community wants to increase its self-relianceSelf-Reliance: the capacity of a community to plan and build an economic future that suits the values, priorities, and needs of its members. by stick-handling a steady process of capacity-building, mining benefits have the following priority:

Jobs result from sustainable businesses, that is, businesses which can pay their own way over the short and long term. Businesses cannot be sustained if they do not make a profit. They cannot support self reliance if they do not make a profit.

When it comes to building capacity, jobs are a short term benefit. They generate the income that households require to put food on the table, clothes on children’s backs, and gas in the tank. Training enables people to gather the skills to do their jobs better and to qualify for more complex jobs. But jobs do not increase the money available to the community for reinvestment. For that, profits are required from businesses that are so skillfully designed and managed that they cover their costs, and have money left over. Profit and management are long term benefits that the community can use, over time, to create a lot more short-term benefits on its own.

Again, all four types of benefit are required when increasing a community’s capacity. In fact, leaders may find it necessary to raise the priority of jobs and training to keep electors patient so they can catch a glimpse of what long-term benefits can achieve.

In a mining negotiation it is important to keep all this in mind. As the *Raglan Mine (p. Intro-21) and *NWT Diamond Mines (p. Intro-10) case studies demonstrate, there are many different stages to mining and mining projects come in many different sizes. Some mines last a few years and others go on for decades. Each mine presents different opportunities to capture benefits and each mine is subject to different risks.

An Aboriginal community has to clarify those opportunities and those risks, and then figure out what to negotiate for. The advice of the Aboriginal Mining Guide is this: pay close attention to the opportunities a mine creates to access profits.

Upstream and Downstream Benefits

Before we leave this strategic issue, it is important to make another distinction between benefits.

There are two parts to the mining industry: upstream and downstream. Upstream refers to exploring for ore and extracting it. Downstream refers to all the additional work that makes it possible to explore for the ore and extract it. Trucking, catering, housekeeping, and vehicle maintenance are some examples.

Opportunities for many types of benefit arise both upstream and downstream.

Upstream opportunities in mining are well-known for the rich benefits they create. Extracting and shipping ore from a mine can make a great number of well-paid jobs and as job training programs available to Aboriginal community members. Profits are more difficult to achieve from the upstream. Profits generally require a share in the mine’s ownership, which is costly and risky. The machines, equipment, and skills involved in upstream work require millions, sometimes over a billion dollars in investment before the mine even opens. Changes in the price of a mineralMineral: A naturally-occurring, homogeneous substance that has a definite chemical composition and (usually) a crystalline structure. on international markets can rapidly turn a profitable mine into an unprofitable one. (Notably, communities in Nunavik have managed to negotiate a share of profits from the Raglan Mine without sharing in its ownership. See *Case Study #2, p. Intro-21.)

There are plenty of opportunities and benefits available downstream in the mining industry, however. They still involve investment and risk. But they can be captured if the community has negotiated effectively with a good Joint Venture partner.

Look at Diagram 1-2, depicting some of the benefits created by a mine. The mine itself offers a wide range of benefits, but so does each of the business opportunities created by the mine's demand for goods and services. The trucking company, for one, can generate profits and opportunities to develop management skills and influence, as well as jobs and training. The trucking company could also create downstreams of its own, like owner operator trucking sub-contracts and mechanical servicing contracts.