Mining and Indigenous Peoples. Our Future.- by Pierre Gratton (November 23, 2015)

http://mining.ca/

Pierre Gratton is the head of the Mining Association of Canada. He gave this speech to the Canadian Aboriginal Minerals Association in Vancouver on November 23, 2015.

First, I’d like to thank Elder Barb Charlie for her welcome and to the Coast Salish First Nation on whose traditional territory we are meeting today.

It’s a pleasure to be here at CAMA. I’ve been asked to provide an overview of the mining sector’s current economic prospects, which I will do. I would also like to reflect on what this means for mining industry/Aboriginal relationships going forward, and how we see our part on the road to reconciliation.

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 before I get into just how bad it is, I want to remind everyone that 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.

So today, I will leave you with three main points.

1)Yes, the industry is in the midst of a significant downturn.

2)Despite it, Canada’s mining sector continues to make enormous contributions to our social and economic well-being.

3)It is during a downturn that we need to focus on future opportunities, to take steps now to position the sector for success when the cycle turns again, as we know it will.

In the dot.com era, mining was abandoned, dismissed as a “sunset” industry whose time was over, as governments across Canada chased high-tech, looking to establish silicon valleys across the country. The dot.com bubble burst just when the full force of China’s expanding economy was starting to be felt in the commodities world.

Because we weren’t paying attention at the time, policy makers spent a good part of the past decade playing catch-up, looking at ways to capitalize on the resource boom that had arrived.

We don’t want to make that mistake again. We should be thinking ahead to the next upswing and taking steps now to make sure we are in a strong position to take advantage of it when it comes. And this includes investing in mining/Aboriginal relationships.

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 our sector is China, which today consumes almost 50 percent of the world’s minerals and metals. And China’s growth rate has been slowing.

Growth rates in other emerging markets, like Brazil, Mexico and several Asian and African countries, are also falling. The one major exception is India, whose growth is around 7.5% 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.

Declining or weaker than expected economic growth rates combined with increased supply of commodities due to investments over the past decade, have pushed prices downward. While, for some time, the story was mixed across commodities, trends have recently emerged to paint a gloomy picture pretty much across the board.

Declining commodity prices and falling interest in high risk capital among investors has made it especially tough for mineral exploration financing, with global exploration budgets falling by 26 percent in 2014. Across the country, exploration has fallen, although Canada remains today the largest recipient of exploration spending in the world. Sounds pretty grim, but even so, some perspective is needed.

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 over 375,000 Canadians, including well over 10,000 Aboriginal Canadians, paying the highest average industrial wage in the country. Mining remains proportionally the largest employer of indigenous Canadians.

Mining accounts for roughly 20% 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 Aboriginal communities across the country, indirectly through government resource revenue sharing and, in some cases, directly. In Yukon, for example, because the Capstone project is situated on land owned by the Selkirk First Nation, 100% of the royalties
accrue to the First Nation development corporation and the Selkirk First Nation citizens.

We’re sitting as a top five global producer of 14 minerals
and metals.

We’re 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.

And so the point I’m making is that while it’s tough out
there, the industry remains strong; a bedrock of the
Canadian economy. Long experienced in the ups and
downs of this sector, the sector is focused on controlling
costs and preparing for the next upturn.

The prevailing view remains that the Canadian mining
industry’s economic prospects will be strong over the
medium and long term. We continue to identify a
substantial amount of potential new project investment in
Canada. While this potential for mining growth is now
more dependent on market realities, some projects
continue to move forward and others will proceed with
development when demand returns.

The fundamentals that drove the super cycle are still
largely in place. China’s growth, while slower, is still

significant and over a much larger base. Consumption of
minerals and metals remains significant and is expected to
accelerate over the long term as other emerging
economies, particularly India, take their place behind
China. And the weaker Canadian dollar that has
accompanied declining commodity prices, particularly oil,
is providing a bit of a buffer for Canadian mining
operations. This is helping companies weather the
downturn a bit better than the decline in commodity prices
might suggest.

It is in light of mining’s overall strength and importance to
Canada that we need to stay focused and ensure that
Canada is recognized as the best place to find and
develop mines, whose products the world needs.

Learning Lessons

To prepare for the next upswing, we should look at the
fundamentals that drive mineral investment.

A global study by McKinsey a year or so ago ranked
Canada very near the top across a wide range of
indicators measuring investor attractiveness. We know
what many of these are: political stability, skilled
workforce, respect for the rule of law, low corruption, etc.
But the same study also showed that Canada is one of the
most expensive places to build mines. There are a few
reasons for this.

Cheap power used to be a Canadian advantage, but it is
becoming less so.

The availability of skilled labour – or the lack thereof – has
driven up labour costs in recent years. Innovation and
investments in skills training to enhance productivity to
counteract rising labour costs are crucial. We are
encouraged by the new federal government’s commitment
to invest in mining innovation.

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 our 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 Aboriginal rights and title
and how this affects the project certainty. Much is made
of how the constitutionally protected rights of Aboriginal
peoples to be consulted and, if necessary, accommodated
for activities on traditional Aboriginal 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 – as you all know – a very
complex issue for all of us involved.

The Supreme Court of Canada, in its recent decision on
the Tsilhqot’in First Nation’s claim, recognized Aboriginal
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 Aboriginal

title, it has to demonstrate both a compelling public
interest for the project as well as ensure that future
Aboriginal generations will not be deprived from the
benefit of the land where 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 Aboriginal 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
well over 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:

1. Employment targets or guarantees

2. Commitments on business procurement and, often,
assistance in setting up or enabling aboriginalowned
companies to take advantage of the
business opportunities mines provide.

3. Agreements with respect to the incorporation of
traditional knowledge in mine planning and
environmental monitoring and oversight.

4. Support for skills training and mentoring.

5. Direct economic or financial benefits.

Some of these agreements are transforming communities
in very significant ways. New Afton, here in BC, is one
such example. The diamond mines in the NWT are
others, as is Voisey’s Bay. We are seeing high levels of
Aboriginal participation, as high as 60 percent 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. And
time is money, and both time and the uncertainty whether
the negotiations will succeed is real for project proponents
and can affect project economics or even the viability of
the project itself. The status of negotiations also influences
the behaviour of regulators, who become more risk averse
when proponent/community relationships are visibly
strained. While it may be true that some projects, for
environmental or other reasons, should not proceed, in
general a failure is a lost opportunity for communities, lost
jobs, lost tax revenues for governments to pay for social

services, lost export revenue, etc. A failed project is a
failure for Canada.

Failed mining projects are infrequent. But prolonged
negotiations and uncertainty are not. So, what do we do?
I think the answers are multi-fold, and that we all have a
role to play.

First, companies have to invest in relationship-building.
It’s not enough to turn up. Cultural awareness training for
employees is critical, as is ensuring employees
responsible for community engagement have the right
skills. Suncor, one of MAC’s member companies, has
been offering such training to its employees for four years
now. This training covers the history of Aboriginal
peoples, including residential schools, treaty and
Aboriginal rights and a discussion of Aboriginal-Crown
relationships. Their training also addresses issues such
as bias, misperceptions, assumptions, and how being
aware of the history and experiences of Aboriginal people
in Canada will help build reconciliation and better
relationships between Indigenous and non-Indigenous
Canadians. They’ve even now launched an online (webbased)
training course called Aboriginal Awareness at
Suncor. Suncor is filling in the gaps of our public
education system.

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.

At MAC, through our Towards Sustainable Mining
initiative, we have put in place a mandatory system that
requires our members to measure and report on their
Aboriginal engagement practices. It’s all available on our
website, where you can see how advanced mine sites are
in implementing robust community engagement.

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. The
Kamloops Indian Band is one great example. The Wabun
Tribal Council and its member bands in Ontario have
successfully negotiated several agreements with mining
companies. Numerous resources are now available to
assist communities in this area.

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. Grand Chief Matthew Coon Come just
mentioned the Cree Nation’s mining policy, which is an
example of what I am referring to.

To optimize long term benefits from mining, successful
communities also think long term. Some establish
investments that support their students’ long term
educational goals. Investing in new business endeavours
to service and supply the mine and other activities in the
region, is also wise. Denendeh Development Corporation
in the NWT is a leading example.

There is an important third party I have yet to mention,
however, and that is government. After all, the duty to
consult and accommodate is the Crown’s, even though
they frequently delegate certain aspects to proponents. I
don’t know how many times I have heard of both
proponents and communities frustrated by government
delays or by inconsistent and uncoordinated approaches
to consultation by the Crown on environmental
assessments and permitting. As well, proponents can
bear the consequences of poor Crown-community
relationships that go back decades or longer, stemming
from unresolved land claims, unsettled or un-respected
treaties or simply years of poor treatment.

Last month, a new federal government was elected
promising reconciliation with indigenous peoples. I would
just like to say some words about reconciliation from the
mining industry’s perspective.

I say “about time.”

It’s about time the federal government stopped dragging
its feet and 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. We just have to look at what
has happened in the settled areas in the Yukon and NWT
for proof.

In my final address in 2011 to the Vancouver Board of
Trade as CEO of the Mining Association of BC, I called
upon both the BC and federal governments to stop
ragging the puck and recommit to the BC Treaty process.

We have seen what modern treaties enable. Now that the
Nisga’a have self-government, our industry is not only
welcome but encouraged to explore. Their expectations
are clear and we know what to do. We, in industry, want
clear rules — it matters less whose rules they may be.

Because it is our experience that when Aboriginal
Canadians are granted self-government, are given the
rights to which they are entitled, that they become very
actively interested in the opportunities mining can bring.

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 Aboriginal 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 Aboriginal 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 Aboriginal skills training
by $50 million per year. This is good news and something
we at MAC have been calling for.

And, putting mining aside, let me also say something
about the issue of murdered and missing Aboriginal
women.

When Aboriginal Canadians cry out, in unity, for an
enquiry into a horrific tragedy such as this, how can we
ignore it?

It is no stretch to say that as long as these issues fester, it
is harder for everyone to advance.
So, in solidarity with indigenous Canadians, I want to say,
“about time.”

All of these actions are needed. 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. Douglas Eyford, in his
important report on energy that could just as easily been
about mining, Forging Partnerships, Building Relationship,
says as much.

Conclusion

So, to conclude, 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. I have touched on a couple of critical areas that,
in my view, can help prepare us for when the bull markets
return. As the new Liberal regime in Ottawa prepares its
policy agenda, it is my hope that it is one that recognizes
the crucial role that resource development plays in the
Canadian economy writ large and in the day-to-day lives
of northerners and Aboriginals, and takes critical steps to
support it. Investing in northern infrastructure and
committing to reconciliation with indigenous peoples are
two areas that can help make a big difference in securing
a prosperous future for Aboriginal peoples and for our
country.

Thank you.

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