Socio-Economic Procurement in Resource Extraction

November 19, 2019

This is one of a series of articles, based on a report commissioned by the Canadian Council for Public-Private Partnerships (CCPPP).

Impact and Benefit Agreements (IBAs) have been in place in Canada's North for decades.

Like a Community Benefits Agreement (CBA), an IBA is a legally binding agreement developed through consultation and negotiation with the relevant Indigenous bands. They outline any negative impacts that may result from resource exploitation, any mitigation efforts, and how the community will benefit via employment, economic development, or other initiatives. Note that the Crown has a “duty to consult” with Aboriginals affected by projects on or near their lands. While this legal duty does not apply to the private sector, resource companies see such practices as being in their best CSR interest.

Canada’s First Nations and Inuit have developed a research and resource network to advance their ability to negotiate IBAs with mining corporations. This includes a repository of agreements. The Gordon Foundation supported an IBA toolkit, which has many parallels with the issues facing CBAs.

Another process that could become a standard feature of public infrastructure agreements comes from northern resource development. Of $1 billion for infrastructure to reach the Ring of Fire in Ontario’s north, the Government of Ontario set aside $6.9 million to negotiate with Matawa First Nations. Similarly, funds might be earmarked for the use of a community to prepare itself for public infrastructure investment negotiations.

Mining corporations have become leaders in engaging local small- and medium-sized enterprises (SMEs), which helps miners support the local communities, promotes sustainable development, and enhances the firm’s standing in the local area. Many mining companies know that working with local communities is essential for their “social license to operate” – the goodwill that enables them to work.

Diavik Diamond Mines Inc., a Rio Tinto subsidiary based in Yellowknife, is one example of successful local collaborating. Early in the project development, Diavik committed to providing significant training, employment, and business opportunities to residents of the Northwest Territories and the West Kitikmeot region of Nunavut. Diavik formalized these commitments in 1999 in a socio-economic monitoring agreement (SEMA), which it entered into with five local Aboriginal groups and the Government of the Northwest Territories.

Restor-Action Nunavik Fund

Many former mineral exploration sites located in northern Quebec needed cleanup and reclamation. This created an opportunity to establish partnerships with regional stakeholders so the cleanup work could proceed, and it created employment opportunities for the local population. The Restor-Action Nunavik Fund was created with funding from the Government of Quebec and participating mining companies.

This initiative, which also involves the Kativik Regional Government, was instrumental in the reclamation of several mine sites and in the creation of jobs in the local communities. The Fund contributes to community readiness by reinforcing the capacities of local populations.

The participation of local communities in the cleanup of abandoned mine sites also helps foster confidence among the community in the development of mineral resources. The Fund has become a reference point in the rehabilitation of abandoned mine sites in Canada and has inspired similar initiatives in other regions of Quebec and in other provinces.