I THINK MINING

   Some things just take a long time to come to fruition.  Some say it has taken one hundred years to reach the historic announcements these past days that the BC Provincial government will share tax revenues on two new mines with the First Nations on whose traditional lands the mines are located.  Here is the most informative of a large number of uninformative news reports on this happening:

The provincial government has signed two revenue-sharing agreements with two first nation communities in the last two days for specific mining projects within the areas the groups claim as traditional territory.   On Wednesday in Victoria, the province unveiled an agreement to share mineral-tax revenues generated by Terrane Metals Corp.’s Mt. Milligan copper and gold mine being developed northwest of Prince George with the McLeod Lake Indian Band.   That follows from a similar deal signed Tuesday regarding the sharing of mineral-tax revenue from New Gold Inc.’s New Afton gold mine being developed just outside of Kamloops with the Stk’emlupsemc community of the Secwepemc Nation.    Randy Hawse, the government’s Minister of State for mining, characterized the arrangements as economic and community development agreements to support community development in keeping with the province’s New Relationship with first nations and meets the goals of its Transformative Change Accord.

The Association for Mineral Exploration British Columbia (AMEBC) applauds these agreements in these words:

“The best indicator of success for mineral explorers is the construction and development of new mines,” said AME BC President and CEO Gavin C. Dirom. “While short on detail, these agreements increase certainty that First Nations will directly benefit from the tax revenues that government receives from these mines. Resource revenue sharing from forestry tax revenues has existed since 2003, and we are pleased that the government has developed the means to distribute future taxes from the New Afton and Mt. Milligan projects to local First Nations.”

The McLeod Lake Indian Band, or the Tse’Khene Nation (People of the Rock) have a website at this link.  When I checked there was no comment on this event.   Same for the website of the Secwepemc Bands of the Shuswap Nation.  Maybe they have not gotten around to updating yet, leaving it to the Vancouver and Toronto press to broadcast the news.  Thus it is difficult to fully probe the meaning or import of these agreements.

Although sometime after, I found these statements reported:

In a news release, Randy Hawes, BC’s minister of state for mining, said, the agreement “sends a signal to the mining industry that B.C. is a stable and progressive place to invest. B.C. wants to work with other First Nations to develop mining projects that meet some of the highest environmental standards in the world for the benefit of all British Columbians.”

Chief Shane Gottsfriedson of the Tk’emlups First Nation said, “With this agreement we are building and strengthening our government-to-government relationships on venture that benefit us all.”

Chief Rick Deneault of the Skeetchestn First Nation said the New Afton agreement “will bring other economic opportunities and employment for our communities and stability for future generations.”

In a statement, the Association for Mineral Exploration British Columbia Vice President Laureen Whyte said, “This is a game changer for our sector and the First Nations in whose traditional territories we operate. I hope that the First Nations in BC now will look at mineral exploration as an opportunity to help enable them to build stronger, healthier communities, and strengthen their cultural foundations.”

   The legal theory behind the rights of the First Nations to receive tax revenues is complex.  The simplest explanation I have heard goes thus: The First Nations entered into valid treaties with the British Crown.  Thus two sovereign nations were making a valid treaty.  Those treaties, or their derivatives, are still in effect.  Thus the traditional lands of the First Nations on which mines may be developed, are still subject to treaty provisions.  In this case taxation.  Thus the BC government must share the tax revenue from the mines. 

To me this is eminently reasonable and fair.  More: it is the law, a proper enforcement of old treaties.  I am sure the details would and have delighted lawyers for a long time, but as a potential investor in BC mining, it is good to know new mines are coming on stream and with these first two agreements in place, maybe many more will come on stream too, and we will see more and more mining in BC.   That will be good for all, First Nations, Vancouver yuppies, mining consultants, investors, and the many others who benefit from mining done well.

And that is where we hope the Nations entering into these agreements will now focus their attention: make sure the mining is done with proper respect for the land.  The technologies exist; you just need a bit of pressure on the miners to implement them.   No more Giant Mine, no more Faro, and no more Britannia Beach.  For if htere is then the First Nations may have to cough up their share of excessive taxpayer money to clean up the mess left behind.

   On a closing personal note: I will know all is lost if we hear the Nations talk of sustainable mining and/or corporate social responsibility.  Let us hope we get only the truth: this is our land; we are deriving tax revenue therefrom; and we are making sure the mining is done well, for the benefit of all now and in the long-term.

PS>  Not everybody is happy.  Here is a copy of a rumination that shows the envy that arises when some get rich and others stay poor:
British Columbia’s first agreements to share mining revenue with three First Nations are being hailed as “game changers” and “the new standard for participation.”

These are indeed important agreements to be celebrated, and the leaders of the Stk’emlupsemc and Tk’emlups First Nations and the McLeod Lake Indian Band who negotiated the Economic Development Agreements should be commended for their efforts and the benefits they are bringing to their communities. First Nations communities and their members deserve to benefit from an industry that generates more than $300 million a year in tax revenues and royalties in British Columbia.

However, the agreements touted by the Government as “historic”, should not necessarily represent the new standard.

In fact, there is a serious flaw in the system.

Bands Rewarded for Supporting Projects

Bands who don’t support a project, or who don’t have the resources required to negotiate an agreement, run the risk of being denied a share of the economic benefits of projects operating in their territories, while Bands who support projects are rewarded with lucrative agreements.

Last week’s announcements provide a case in point.

The McLeod Lake Indian Band will be getting a share of provincial revenues generated by Terrane Metals’ Mt. Milligan mine project, which lies just inside the western boundary of the Band’s recognized consultation territory. Although they have raised concerns, McLeod Lake has generally supported the project. Not surprising, as many of the Band’s members hard hit by slowdowns in the lumber industry stand to benefit through employment and contracting opportunities as the mine is built.

However, the Nak’azdli Nation is not party to a revenue sharing agreement, even though they too will be impacted significantly by the project. Why is this? Perhaps because the Nak’azdli leadership is not supportive of the Mt. Milligan project, citing concerns over negative environmental, social, health and cultural impacts. Further, although the company estimates that the project will employ 600 people during construction, and create 300 permanent positions during operations, a
2009 socio-economic impacts and opportunities review showed that in reality fewer than 10 Nak’azdli members will have the experience and education required to even apply for the majority of project’s jobs.

Clearly there is the potential for the Province to employ a double-standard whereby First Nations who support projects are invited to negotiate revenue-sharing agreements, while those who oppose or voice concerns of a project’s impacts are left out of the talks.

Worse still, there is a danger that revenue sharing agreements could become the Province’s sole negotiating carrot, rather than focusing on constructive and proactive engagement. This sort of negotiating magic bullet could seem very appealing to members of the government’s overburdened and under-resourced public sector.
And in an absolute worst-case scenario, these agreements can be used to drive a wedge in public opinion, fanning the flames that First Nations are out to extort money by delaying or opposing projects.
This appeared to be the case last month, when BC’s Minister of Energy and Mines suggested he would publicly disclose the value of a revenue agreement that would have been available to the Tsilhqot’in National Government had they supported the Prosperity Mine.

Sharing Revenue Fairly Can Help Build Positive Relationships

To be absolutely clear, the revenue sharing agreements announced in August are important and the First Nations deserve the recognition and revenue these agreements will bring. But as I’ve said before, money typically is not the primary objective for First Nations concerned about negative impacts of development in the territories that have sustained them for generations. Factors such as cultural sustainability, social fabric, health, access to traditional foods and medicines, safety and education will almost always be of greater concern than money.

Unfortunately, most of Canada’s First Nations communities are in desperate need of funding and economic opportunities, and turning down a revenue sharing agreement may appear too great a risk – economically, politically or socially – for many community leaders.

There’s something unfair about this.

If the Province is serious about sharing the economic benefits of mining and other resource development with First Nations, then it should do so in a way that is fair to all First Nations. Here are some high level approaches that should be part of the process:

1) The province should seek to negotiate revenue sharing
agreements with all impacted First Nations, not just those who express support for a project;

2) The revenue sharing formula should be based on the level of
impacts on the First Nation members, with the greatest possible level of participation of the First Nations members;

3) Social and cultural impacts should be considered along with
environmental, health and economic impacts, and should be determined
- as much as possible – by the First Nations themselves.

Sharing tax revenue has no negative impact on companies, and in fact can go a long way towards improving relations and negotiations between the Provincial and First Nations governments, creating greater harmony and building strong and sustainable communities.