Six Footings for New Aboriginal / Extractive Industry Partnerships

First Nation construction worker putting in footings - modular mining exploration camp, Aroland First Nation, Ontario. Photo by Laura Taylor, Shared Value Solutions Ltd.
Miners Talk Aboriginal Partnership at CIM2014 in Vancouver:
Six Footings for New Aboriginal / Extractive Industry Partnerships

By Qasim Saddique, Scott MacKay and Don Richardson, Shared Value Solutions Ltd.

 

We were pleased to play a role in the mining industry’s annual conference this year, CIM2014 in Vancouver, British Columbia.

It was an exciting event attended by the industry’s major producers, suppliers, consultant and academics - 6,000 convention participants from over 49 countries. Qasim Saddique from Shared Value Solutions attended the event as a speaker to present a paper on equitable partnership between Canada’s Aboriginal people and the mining industry on project development that exists in Aboriginal traditional territory. This presentation was part of the conference’s Ethics in Mining Symposium held in partnership with CBERN (Canadian Business Ethics Research Network).

Qasim’s paper focuses on the work we do with Aboriginal clients who are looking at economic opportunities in a land where they have lived since time immemorial. They no longer want to be bystanders in their own land. As we often sum it up, Aboriginal communities are looking for “a real say and a fair share” with respect to resource and infrastructure development on their lands. Qasim’s presentation received some good feedback from industry members recognizing that the mining, oil and gas, and power sectors are now more likely to consider economic partnerships with Aboriginal communities to help ensure project development.

While the idea for developing equitable partnerships is not new, our take on this subject is relatively new: we approach Aboriginal / extractive industry partnerships from a strategic project development lens. Qasim’s findings reveal see six footings for new Aboriginal / extractive industry partnerships:

  1. The partnership is based on mutual interests and not just mutual trust – mutual trust develops, and is strengthened over time, by building on mutual interests;
  2. The partnership is planned from day-one to yield community economic benefits, but starts with a focus on protecting the lands, waters and way of life of Aboriginal community members and future generations;
  3. Aboriginal communities benefit significantly from the economic opportunity the project represents – not just jobs, but new major revenue streams, new infrastructure, and enhanced socio-economic development;
  4. The company makes a strategic choice to develop a unique competitive advantage to become a company of choice for Aboriginal communities who can significantly aid and help advance a permitting process that can stall or derail a project;
  5. The company realizes a competitive advantage that is very hard for competitors to replicate - Michael Porter of Harvard Business School calls this approach “Creating Share Value”, and;
  6. The Aboriginal community is a full decision-maker in project decisions.

We are involved with several such partnership initiatives that are moving forward on these footings - in the energy and transmission spaces, and in the mining sector. We look forward to sharing knowledge about those partnerships in the future. We also look forward to working with additional Aboriginal communities and industry partners to build more strong projects on these footings.

These footings represent a big shift where equity in a project is no longer thought of as a “hand out”, but instead as a strategic asset for project development and risk management. As the industry is evolving, funding sources are also evolving and many traditional and non-traditional sources of finance are willing to support an equity position for Aboriginal communities because of the returns they promise by de-risking project development. Governments, like Ontario’s with its Aboriginal Loan Guarantee Program for Aboriginal participation in new transmission and renewable energy projects, are also supporting Aboriginal economic opportunities by helping reduce the cost of capital and increase access to financing for Aboriginal community participation. As Oliver McLaren of the law firm Olthius, Kleer Townshend notes, government guarantees and other creative financial mechanisms that serve to benefit Aboriginal communities "certainly needn’t be limited to the renewable energy sector".

It’s only a matter of time that we will see similar financial assurance arrangements across the extractive sector where projects like the Ring of Fire in Ontario are dependent on meaningful Aboriginal participation. The next step for project development teams is to think about budgeting for expenses related to effective partnership in the project planning phase so that Aboriginal participation becomes a driving force for the project and not a second thought that comes up when the project ends up in a regulatory knot. And governments need to build on the success of programs like Ontario’s Aboriginal Loan Guarantee Program.

Projects that move forward on strong footings are projects that attract investors. Investors are recognizing that project development and operations risks are minimized when Aboriginal communities are fully involved in project decisions that include minimizing environmental risks and negative socio-economic impacts. New Aboriginal – Extractive Industry partnerships are the future in Canada and CIM is to be congratulated for advancing these discussions.

 

About Shared Value Solutions Ltd.

At Shared Value Solutions Ltd. we bring the best environmental peer review, strategic advice, community engagement and traditional knowledge, land use, and socio-economic research expertise to address your challenges and opportunities.