Tension over transparency: Impact and benefit agreements with indigenous groups may soon see light of day – by Joel Barde (CIM Magazine – June/July 2016)


An Inuit land-claim organization released a full version of its impact and benefits agreement (IBA) with Baffinland Iron Mines for the Mary River project on May 20.

The Qikiqtani Inuit Association (QIA) – which had previously published a partial version upon signing the agreement in 2013 – said it wants to be transparent with its members, some 14,000 Inuit who live in the Baffin Region of Nunavut.

The full agreement provides a rare look at the financial underpinnings of a modern-day IBA between a miner and a Canadian indigenous group. Keeping IBAs private or partially redacted, however, may soon be a thing of the past.

The Extractive Sector Transparency Measures Act (ESTMA) requires Canadian companies to divulge payments to foreign and domestic governments that exceed $100,000. In June 2017, the legislation will require the same disclosure of payments made to indigenous governments in Canada – a controversial requirement that has detractors from industry and indigenous groups alike.

The full version of the Mary River IBA shows Baffinland has paid the QIA $20 million in direct payments – $5 million upon signing the agreement, $5 million after Baffinland received its water license, and $10 million after construction began.

The QIA will receive a 1.19 per cent royalty on net iron ore sales, and royalty payments will kick in once Baffinland begins producing at 60 per cent of the mine’s production capacity; the $20 million in direct payments will be subtracted from quarterly payments until they have been paid back in full.

Olayuk Akesuk, a community director with the QIA, said the association’s board of directors made the decision to release the full agreement. He said sharing those details publicly is important because “as representatives we need to make sure we are transparent with our people.”

The QIA represents 13 Inuit communities in the Baffin Region, and the IBA sets aside money for training, business development and personal and career counselling for them. Currently, around 18 per cent of the mine’s total work force is Inuit, Akesuk said. He expects that number to grow to 25 per cent by April 2017.

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