New Gold, New Afton, New Approach
When the name of a corporation is New Gold Inc., and one of the key operations of that company is called New Afton, you can be certain that old ideas and old ways of doing business will not hold much water. So it’s fitting that Robert Gallagher, the president and CEO of New Gold, is helping set the standard in the mining industry when it comes to communication and community engagement. Gallagher has been a part of the mining industry for almost 40 years. In that time, he has worked with or led organizations such as Placer Dome Inc., Newmont Mining Corp and Peak Gold. He has also witnessed the industry making shifts in terms of its approaches to people and to the land. One of the areas in which Gallagher, New Gold and New Afton are leading the pack is in Aboriginal and community engagement. In the following interview, Gallagher explains his views on communication and relationships, and how paying attention to both is good for people and good for business.
I’ve heard you speak at mining and exploration conferences about the importance of community when it comes to mining operations. Can you expand on that?
I think the mining industry has to realize that when they go into particularly remote areas—and the people have been there forever and their families have been there forever—they have a long-established way of living. A big mining company comes in and they have huge impacts. When people think of mining, they think of ghost towns and maybe environmental issues and stuff from the past. For most people, when they think of miners, they think of gold panners. So when you go into a community like that, of a few hundred people, and you say you’re going to build a mine and spend $6 billion, the people who have lived there for a long time tend to be concerned.
Our approach is to tell people directly that we are going to have some impacts; that they’re largely going to be positive; that when we’re finished we’re going to clean everything up to the way it was; and that there won’t be any negative impacts on the community. But you’re making these huge promises to them and they don’t know who you are and what you’ve done in the past. So the first thing we do, like at our New Afton and Blackwater projects, is sit down and develop a relationship. Unless they trust you, you’re not going to get very far. So I think what we try really hard to do when we get into an area is meet with the local people and say, “we don’t expect you to approve anything right now because you don’t know who we are, you don’t know us and you don’t know what our history is or what our plans are, but we’re going to have constant communication with you because we want to know what your aspirations are, what your concerns are, and we want to know what you want to modify and change because we want you to realize those aspirations. We want to know what is sacred to you because we don’t want to impact those areas.” It all comes down to a relationship of mutual trust.
That’s the one thing with the New Gold Participation Agreement. Officially, they’re called IBAs—Impact Benefit Agreements. I don’t like that name. A lot of us, including at New Afton, call them Participation Agreements, and they lay out how we’re going to participate with First Nations. There are elements like commitments to training and hiring and economic involvement. Most Participation Agreements have these. But to me, one of the most important things we have is our communication protocol—and that’s who talks to who about what and how often. When the people who are talking can’t come to agreement, what happens? It’s really important that you have constant communication right from the early days, particularly when you’re dealing with community governments because those people can change. All of a sudden, you’ve got to start developing a new relationship with them. And we have our own leadership changes as well, such as who at the mine is leading community relationships. By having a real protocol, you can have a continuity of relationship between the community and the mining company.
Taking that a step further, how does that affect the way business is done? What do you think the impacts are?
It’s interesting in our industry. Most mines are relatively remote and they’re in more Northern regions. New Afton’s different because it’s near Kamloops, but most mines—including Blackwater, which is in central B.C.—tend to be a bit more remote. And as you’re hearing now from the premiers and from the Prime Minister, there’s a real skill shortage in mining. You’re also hearing that in many of the First Nations villages that there’s a lack of employment opportunities. You’re hearing about forestry—the pine beetle infestation in B.C., the downturn in the pulp industry in Eastern Canada—and there are a lot of people in the industry who are out of work. And we are building mines and building relationships, and we need people. We need good people. With so many First Nations people and people in the forest industry out of work, it’s just a natural fit. We can all benefit together.
Can you talk about some of the other social and environmental impacts of your operations, such as New Afton?
The New Afton Mine is called the New Afton because there was an open pit mine, the Afton, which Teck mined from late ’70s to early ’90s. Based on metal prices and the end of the open pit reserves, they decided it was no longer economically feasible and shut it down. We’ve now developed an underground mine there, so our environmental impacts are relatively minor compared to those of the historic open pit mine. Because we were primarily in an area that had already been subject to mining activity, we were in a very fortunate position in terms of the limited disturbance and impact we had, and that which we could control and mitigate.
But again, the real key thing we did early was get the people involved. People were concerned about water: the use of water and acid drainage that’s coming off waste rock disposal. So we have a mitigation plan and a closure plan. We have a joint environmental advisory committee and we have members of the community on that community. They jointly monitor it with us so they can see what the results of it are.
Shifting gears, how are current gold prices affecting business at New Afton?
We’re actually quite fortunate at New Afton that it is a relatively high-grade mine so our margins, even at prices well below where we are today, are quite healthy. We don’t see any impacts in terms of viability for New Afton. With these lower prices, there are fewer funds generated to build mines so we prefer to see higher prices in terms of flexibility in growing our business, but as far as New Afton, we’re fine with these prices.
Have you noticed any negative impacts operating in B.C.?
I think British Columbia gets a bit of a bad rap. People think it’s hard to permit mines in B.C. Then there are concerns with some new environmental acts that the regulators are more lax with permitting mines. And it’s not the case. The technical requirements are unchanged. The issues with permitting mines have mostly been related to community approval of mines. If communities—both Aboriginal and non-Aboriginal—are struggling with the mine (or the pipeline, which is much the same thing), then the mine is hard to get permitted. And that’s the same anywhere.
That’s one of the things tha
t New Gold’s been able to do, just by having that realization that we’ve got to have good old, trust-based, respectful relationships with people—where we start early and start often—and show them the positive impacts as early as you can. With Blackwater, about 70% of what we’ve spent is with local community contractors. At New Afton, about 22% of our workforce is Indigenous. We’re really focusing on maximizing our communications and benefits to local communities. That’s what you have to do to get community buy-in. Some people call it the social license. At the end, if you’ve done the right thing through your operation, if the people that were there when you started and that are still going to be there when you leave can say, “Yeah, they were here for a while and we had a pretty robust economy when they were here but they’re gone, and we’re better off because they were here,” then you’ve done a good job. You’ll have success. You’ll be good for the local people, you’ll be good for the company, and good for the country or the province as a whole.
I like that because, for many companies historically, it has seemed the CSR (corporate social responsibility) has been a checkmark necessary to get permits. This doesn’t sound like a checkbox; it sounds like a philosophy.
I’ve been at the business almost 40 years. My first job as an engineer was in Ontario and they were just coming off a Royal Commission dealing with mine safety out there. Back then, mine safety was kind of a hot topic. It’s natural for us now. In the late ’70s, the environmental situation became more of a concern to people outside of the industry, and people inside the industry reacted and did a few things differently. So now most mining companies are pretty good and they know it’s part of your business. They just know to do the right thing. So the last phase, in the last 10-12 years, it’s social responsibility. So there’s been this kind of trend in my 40 years from safety to environment to social responsibility. I think that social responsibility is getting to be a natural part of business rather than just checking the box.
Investors provide us with capital to build mines in order to give them a return on their investment. We want to give them strong returns. The fact of the matter is, if you get hung up in permits because you don’t have effective or adequate relationships with the people, or they don’t trust you, or they protest against you, it’s going to delay getting your mine built, which is in no one’s best interest. So you might as well figure out how to get along. It is more than checking the box, it is doing good business. Those days when miners could just lay low and do what they wanted, they’re long gone. You can deal with First Nations communities effectively and still generate a strong return for investors.
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