The figure seemed so high, Leonard Rickard double-checked his calculations. Rickard, Aboriginal affairs manager for Detour Gold Corporation, had been asked to determine the value of Aboriginal participation in construction of the company’s Detour Lake gold mine.
To find the answer, Rickard pored over all contracts associated with building the mine, line by line. He discovered – and confirmed upon double-checking – Aboriginal businesses and joint ventures had done more than $400 million worth of the construction work.
Surprised when presented with the information, Rickard’s supervisor also wondered whether this extraordinary level of Aboriginal involvement had really been achieved or if the number reported was just the result of a typo.
“People assumed I meant to say $40 million, something in that area,” Rickard recalls, “but to be able to say we did $400 million was quite amazing … certainly well above what we had anticipated.” It’s also a big share of the $1.5 billion total cost of construction.
The open-pit Detour Lake mine is located 185 kilometres northeast of Cochrane on a site that had been mined previously, most recently by Placer Dome in the late 1990s. It also sits in the shared traditional territory of Moose Cree First Nation, Wahgoshig First Nation, and Taykwa Tagamou Nation.
Detour negotiated a business or impact benefit agreement (IBA) for the mine with each of these communities, and with the Métis Nation of Ontario. “We have a very broad commitment to maximize economic opportunities for our Aboriginal partners, (while being) focused on minimizing the environmental impacts of our mine,” Rickard says.
After 27 months of construction, gold production at the mine started early last year and Detour hopes to achieve full production capacity by the end of 2014. The projected life of the mine is 22 years.
“Detour is on track to becoming Canada’s largest operating gold mine,” noted Brian Davey, executive director of Nishnawbe Aski Development Fund (NADF), while introducing Rickard as a speaker at an NADF mining forum in Timmins last fall.
As with others who listen to Rickard, hearing that the value of Aboriginal participation in Detour’s construction exceeded $400 million caught Davey’s attention. “That was a surprising figure,” he said. “If that’s a signal of the type of success that can come out of some of these agreements, I think we’re definitely heading in the right direction.”
Construction contracts
Aboriginal businesses contributed to nearly every aspect of the Detour Lake mine construction. “We had Aboriginal participation in our camp catering, site services, concrete work … pretty much any areas in our mine construction where contracts were issued,” Rickard says. The result was an Aboriginal business participation rate of 52 per cent in the overall construction.
After Rickard’s talk in Timmins, Davey noted an obstacle Detour likely would have had to overcome to achieve this high rate: “One of the realities that exists right now for local entrepreneurs, in some cases, is that they’re simply too small to be able to compete on large-scale construction bids.”
Rickard explained Detour’s solution: “We’ve encouraged some of our major contractors to sub-contract work, wherever possible, to local entrepreneurs. The most visible example would be in (sub-contracting to) heavy equipment operator businesses. With large-scale construction programs, that’s probably the best fit. Or perhaps with transportation of cargo or fuel – encouraging sub-contracting that way.”
Major components of the Detour Lake construction included the building of a 180-kilometre hydro transmission line, mining facilities, an accommodation complex, and a tailings management area.
For the right to build the transmission line, the three First Nations that have agreements with Detour – Moose Cree, Wahgoshig and Taykwa Tagamou – partnered with Peter Kiewit Infrastucture to form Detour Lake Constructors. Kiewit is one of North America’s largest construction and engineering organizations. PowerTel Utilities Contractors also joined the effort to build the 230-kilovolt Detour line, as a sub-contractor. The group successfully completed the line in 2012 for connection of the mine to the Ontario hydro grid.
“That was sort of the first big project on the construction side that (Taykwa Tagamou) was involved in,” says Merv McLeod, a member of the community’s IBA negotiation team. “What that provided was not only the ownership component of this construction company, but also both Taykwa Tagamou and Moose Cree have fairly substantial forestry operations that do right-of-way clearing, working in the bush … so they were able to put an existing workforce together and do that.”
One significant advantage for Taykwa Tagamou from its IBA, adds McLeod, “is that a few of its companies have gained a lot of experience with developing partnerships, getting them running and making them successful.”
New Post Constructors, which represented Taykwa Tagamou in the transmission line partnership, is one such company, he said.
According to the contractor’s website, New Post Constructors formed in 2010 to focus on securing contracts at the Detour Lake mine. Through various partnerships, the company took on several more projects for Detour: tailings management and dam construction as part of a joint venture called TMA Venture; construction of a truck maintenance and wash facility, plus a mine services building, with Cyrheault Construction; and installation of a mill in a joint venture with Blais Industries.
“They’re still working up there,” McLeod said of New Post Constructors in mid January.
4 Aboriginal partners, 100+ businesses listed
Aboriginal businesses continue to secure contracts with Detour Gold at an impressive rate now that its Detour Lake mine is producing gold. “Approximately three-quarters of our operations contracts are being performed by Aboriginal contractors,” Rickard says.
“We need to acknowledge that capacity does exist within the Aboriginal business community. They’ve done amazingly well and provided a great track record for us.”
Although there are fewer contracting opportunities now than during the mine construction, operations contracts are for a longer period, he points out. “We don’t provide life-of-mine contracts; typically our mine contracts are for anywhere from three to five years. But if all goes well, contractors will be there for the next
21 ½ yrs.”
Through its Aboriginal agreements, Detour made specific commitments for its mine operations to include Aboriginal participation in camp catering and employee transportation contracts.
Taykwa Tagamou formed a joint venture with Tisdale Bus Lines, a family-owned business based in South Porcupine, Ontario, to bus Detour employees and contractors between the mine site and Cochrane six days a week. “For us, it’s a very visible demonstration of the work our community partners are doing in support of the Detour mining operation and, in fact, every single one of our employees,” Rickard says.
Taykwa Tagamou also has a partnership with a national company, Domco Foodservices, to provide camp catering and janitorial services at Detour Lake. It takes about 100 contract employees at a time just to handle the catering, Rickard says. They feed up to 500 employees who stay on site, plus contract workers.
Other current contracts cover camp security, explosives supply and service, and heavy equipment maintenance.
Although Detour doesn’t engage in life-of-mine contracts, “We do have life-of-mine commitments to our Aboriginal partners,” says Rickard. Detour doesn’t set aside contracts for those partners but follows a limited tendering process that’s restricted to First Nation communities and businesses. To win a contract, they have to be cost-competitive and able to demonstrate they can perform the work, as with any regular bidding process.
“Our Aboriginal partners seem to be working very well within those parameters and have been very successful,” Rickard says. “I think it has been a great way of building capacity in Aboriginal communities.”
Aboriginal partners contribute to their own success by maintaining and providing Detour with registries of community businesses. Together, those registries list more than 100 businesses. They typically find out from local business development co-ordinators about upcoming contracts at Detour.
“The community alone determines what constitutes a community business,” notes Rickard.
First Nations, he says, have taken a range of business approaches: partnering with each other, as was the case with the transmission line construction; winning work through their community-owned entities, such as the Moose Band Development Corporation or Wahgoshig Resources Inc.; community-owned businesses joint venturing with Timmins- or Cochrane-based businesses; or First Nation members entering into business relationships with mainstream companies.
“The challenge for us is ‘How do we ensure benefits that accrue from those significant pieces of (contract) work are shared widely?’ ” Rickard says. “It’s something we’ve become much more aware of in the past year. Frankly, we faced some criticism when we’ve gotten feedback on ways to improve working with Aboriginal communities. One of things we’ve become much more conscious of now is that with any contractor, whether or not its First Nations affiliated, we specifically ask that they be able to demonstrate benefits to the community, whether it be sub-contracting, employment or other community benefits.”
Maximizing Aboriginal employment
As of January, Detour employed about 700 people at the Detour Lake mine. Of those, close to 100 were Aboriginal workers from its partner communities. And Aboriginal employees in general represented about 25 per cent of the mine’s workforce.
With the projected mine life of up to 22 years, “There are people working for us who could potentially retire at the Detour Lake mine,” observes Rickard.
“Our commitment is to maximize Aboriginal employment. We want locally based employees – part of our commitment to ensuring this region benefits from the economic benefits of our mine. We’ve committed to working with our Aboriginal partners to identify and recruit potential employees.”
Detour recruiters regularly travel to the company’s partner communities to promote the mine to potential employees. There is a commitment from Detour for “preferential Aboriginal hiring” from those communities. “If an Aboriginal candidate from one of our partner communities meets the minimum requirements for a position and has the necessary experience, he or she will be considered over any other candidate,” Rickard explains.
Once hired, some First Nation employees commute from their home communities for seven days of 12-hour work shifts at Detour Lake, where accommodations and meals are provided, then return home for seven days off. For Moose Cree workers living in Moose Factory, it first means a five-hour train ride to Cochrane, then the 185-kilometre bus ride to the mine.
From McLeod’s perspective, the biggest benefit to Taykwa Tagamou Nation from its IBA with Detour has been jobs. “That’s what brings the ongoing money into the community,” he says. “There’s a number of people working up there.
“With Taykwa Tagamou being about 400 people, we run out of people fairly quick,” McLeod adds. “So, between Detour and other things that are happening … the word is that those who want to work are working.”
Most Taykwa Tagamou members at Detour so far seem to work in support jobs, such as catering and maintaining the residences, which don’t pay as well as the mining jobs, he says. “But still, they’re real jobs.”
A skilled labour shortage not only in the Aboriginal community, but across Ontario and Canada, presents a challenge to recruitment for some jobs, Rickard says. Adding to that challenge in northeastern Ontario is competition for skilled workers from the De Beers Victor diamond mine, several new mines, a revitalized forestry industry, and Ontario Power Generation’s project to upgrade hydro generating stations on the Lower Mattagami River.
“From a community perspective, it provides excellent options,” Rickard realizes.
With the Lower Mattagami project expected to sunset sometime in the next couple of years, Detour has already arranged with Moose Cree First Nation to talk to its members working there – including tradespeople – about future work at Detour Lake.
Another part of Detour’s ongoing efforts to maximize Aboriginal employment has been the leveraging, with its Aboriginal partners, of almost $8 million in training funds. Some of the training has been on-the-job at the mine.
“We don’t have a specific employment targets within any of our units, but there’s a general consensus that we can do more and we should do more,” Rickard says.
Community development
“It’s an exciting time for us,” Rickard said in October at the NADF mining forum in Timmins, two months after commercial production levels had been reached at Detour Lake. “We’ve poured well over 100,000 ounces of gold.”
The Aboriginal partners will share in any commercial success after having received shares in Detour Gold Corporation as part of their agreements, although the value of those shares dropped significantly over the past year along with the price of gold.
At the same time, says Rickard, “While Detour Lake is focused very much on gold production, our story can’t simply be about gold or about making money.
“When we speak to the communities, we’re quite regularly reminded that money can’t buy happiness, … that we must participate actively in other ways,” he explains. “In my own home community (Moose Cree), the feedback I receive is ‘Your mine takes people away from our community … for a week or two weeks at a time. They come back, spend time with their families and they’re gone again.’ Or ‘The contracts don’t operate in the community and the community doesn’t see any physical benefit from the project.’ ”
So, Detour regularly makes significant contributions toward education and cultural programming to directly support the community development of its partners. “A common theme in all of our agreements is support for education and training initiatives,” Rickard says. “Our efforts can range from financial support for community education funds to the endowment of local college scholarships or trusts.”
The education director in Taykwa Tagamou Nation tells McLeod the community no longer has to decline funding to qualified students who want to pursue post-secondary education, since the IBA with Detour ensures there are now enough funds to meet the need. “It’s nice to hear that things are actually being done with (the IBA provisions),” McLeod says, “and it’s actually working the way it’s supposed to.”
As Detour ramps up to full production at its gold mine, it’s also just in the beginning stage of its relationships with Taykwa Tagamou, Wahgoshig, Moose Cree, and Métis Nation of Ontario, says Rickard. “We’re trying to define right now how our long-term relationships will unfold. We all have a role to play. The success at Detour Lake to date could not have been possible without our Aboriginal partners.”
END