As probably many of you know, times are tough right now. Commodity prices are slumping across the.
board, affected by an overall slowing global economy that is being felt throughout Canada.
But, even during a stubborn downturn in global demand for many minerals and metals, it’s no time to get down on mining because mining never goes away.
Minerals and metals are the very foundation of virtually all of the goods we depend on in our daily lives. The world will continue to need mining, and Canada can, and should continue to be an important place where mining happens.
A Look at Market Conditions
So, first, how bad is the market? Global economic growth has been volatile in recent years.
Every time the Bank of Canada, the IMF, World Bank or others make growth projections, it seems they amend them a few months later and always downwards. With few exceptions, the global economy is not doing well at all.
The key economy for the mining sector is China, which today consumes almost 50 per cent of the world’s minerals and metals. And China’s growth rate has been slowing, along with growth rates in other emerging markets, like Brazil, Mexico and several Asian and African countries, that are also falling.
The one major exception is India, whose growth is around 7.5 per cent and, with its 1.3 billion people, is seen as the next China in terms of minerals and metals consumption as the country begins to rapidly industrialize.
A Bedrock of the Canadian Economy
Even in a slump, mining’s contribution to Canada is enormous.
Despite some job losses at some operations, mining and mineral processing are directly employing more than 375,000 Canadians, including well over 10,000 Indigenous Canadians, paying the highest average industrial wage in the country.
Mining remains proportionally the largest employer of indigenous Canadians.
Mining accounts for roughly 20 per cent of the overall value of Canadian exports, valued at nearly $90 billion.
Nationally, we pay an average of $3.8 billion annually in corporate taxes and royalties to federal, provincial and territorial governments.
Mining companies are also paying significant royalties to indigenous communities across the country, indirectly through government resource revenue sharing and, in some cases, directly.
We’re also supporting the second largest mining-supply sector in the world. More than 3,700 companies provide a wide spectrum of services to the Canadian mining industry, with an increasing number of these being indigenous-owned businesses.
A major challenge facing mining in Canada’s north today is its lack of infrastructure. The north is our industry’s future, but the territories and the northern parts of our provinces lack critical infrastructure—roads, electricity, ports, railways—to service mines and get products to market.
This lack of infrastructure is felt by communities, many of them indigenous, located in the north.
According to the Mining Association of Canada’s (MAC) research, it costs about 2 to 2.5 times as much to build and operate a gold and base metal mine in northern Canada, off grid, than in the south.
We should be looking at ways to level the playing field in the north where infrastructure is lacking. Canada needs a strategic collaboration involving industry and governments, federal, provincial, territorial and Indigenous, to get this nation-building infrastructure in place.
This can be done by increasing government investment in new infrastructure, or by using the tax system to offset some of the costs incurred by companies for infrastructure components that also provide a broader public good.
Additionally, there is the issue of indigenous rights and title and how this affects the project certainty.
Much is made of how the constitutionally protected rights of indigenous peoples to be consulted and, if necessary, accommodated for activities on traditional indigenous territories affects project timelines and certainty.
Connected to this is the concept of social license, which in general terms defines the support earned by proponents to proceed with and operate their project.
The big question that gets raised these days is whether indigenous communities have a right to veto developments projects? That is a very complex issue.
The Supreme Court of Canada, in its recent decision on the Tsilhqot’in First Nation’s claim, recognized indigenous title, a first in Canadian law.
It also provided clear guidance on the criteria needed to demonstrate title, and on the rights and obligations that flow from that, in the process also identifying where title was found not to exist.
It is a significant decision that provides us all with much more clarity going forward.
But back to the question of the veto.
The Court clearly recognizes that, in some circumstances, the right to title can be limited by the Crown. So, there is no absolute veto under Canadian law, even in the case where title has been proven.
But, for the Crown to place limits on indigenous title, it has to demonstrate both a compelling public interest for the project as well as ensure that future indigenous generations will not be deprived from the benefit of the land were the project to go ahead – a very significant test.
At its core, the decision continues a balancing act between empowering, and limiting the authority of both indigenous peoples and governments. The Court was very wise.
So what does this mean for proponents? There is the law, and then there is reality. No proponent wants, or should want to build a project that is unwelcome or opposed by local communities. This is, quite frankly, an unsustainable option and one best avoided. And, most communities are open to the opportunities mining brings, and increasingly so.
Let’s look at reality in a different way.
Today, there are more than 250 agreements between mining companies and indigenous communities across the country. It is decidedly rare that projects proceed without impact benefit or other such agreements concluded.
These agreements, which have matured with time and experience, provide significant local benefits and assurances, including:
- Commitments on business procurement and, often, assistance in setting up or enabling aboriginal-owned companies to take advantage of the business opportunities mines provide.
- Agreements with respect to the incorporation of traditional knowledge in mine planning and environmental monitoring and oversight.
- Support for skills training and mentoring.
- Direct economic or financial benefits.
Some of these agreements are transforming communities in very significant ways.
Newgold’s New Afton project in Kamloops is one such example.
The diamond mines in the NWT are others, as is Voisey’s Bay. We are seeing high levels of indigenous participation, as high as 60 per cent in the case of Voisey’s Bay, increasing levels of post-secondary education, and significantly improved economic and social outcomes.
Nonetheless, it is undeniable that the negotiation of these agreements takes time. Trust must be built between the parties, and indigenous communities rightly want to understand the nature of the physical and environmental impacts of the proposed mine prior to it proceeding.
Building and maintaining trust is ongoing; engagement has to be systematic and continuous, embedded in corporate practices and culture. We have to be open about what we do and involve indigenous peoples in parts of our business that matter to them, and offer training that supports such involvement.
Aboriginal communities should also invest in acquiring knowledge of the mining business. Many now have; those that don’t, can reach out and learn from others.
Second, communities should set out their expectations clearly, so that proponents may understand them. Such expectations can be with respect to how consultation is to be conducted, the social and environmental values that must be respected, and expectations for participation in benefits.
Investing in new business endeavours to service and supply the mine and other activities in the region, is also wise.
In October, a new federal government was elected promising reconciliation with indigenous peoples.
I say, “about time.” It’s about time the federal government settled the many unresolved land claims across this country. Land claims, when they have been settled, create healthier conditions that make doing business easier, make partnerships easier to form and make them more enduring.
The new government has promised to accelerate the modern treaty process, to which I say again, “about time.” It’s about time all governments recognized that royalty revenues should be shared with indigenous communities.
Sharing resource revenues will help unleash economic development and will send a profound recognition of who has inhabited the land for millennia, and who will be there when the mines, and the mining companies are gone.
It’s about time governments took a consistent, coordinated approach to its consultation and accommodation obligations.
Government employees should also receive training in consultation.
It’s about time governments invested as they should in education and training for indigenous peoples so that they may fully participate in the economy and bring hope and opportunity for their children.
The new government has promised significant increases in education funding and said they will increase funding for indigenous skills training by $50 million per year. This is good news.
While the mining sector and indigenous peoples in Canada have made great progress together over the past few decades, it is neither right, nor prudent, for governments to sit back and only engage when environmental assessments or permitting obligations compel them to.
Canada’s mining sector, while going through difficult times at present, remains strong and has a bright future, but it is not a future to be taken for granted.
*Pierre Gratton is President and CEO of the Mining Association of Canada. This article is based on portions of a speech Mr. Gratton gave at the recent Canadian Aboriginal Minerals Association’s 23rd Annual Conference in Vancouver. For a full copy of Mr. Gratton’s speech, pleased contact MAC.