Foreign Affairs Committee on Feb. 29th, 2012

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you both for appearing here with us today.

Mr. LeBlanc sounded like he was quoting Dr. DeSoto when he was here. I don't know if you were here at the time but he showed the importance.... I think he factored in two main issues. Number one was that we expect the governments we're dealing with to be at the same level as we are, and of course, we've gone through this process for a millennium. If you think about England and where we've obtained the parliamentary procedure, for instance, that's just not possible. We try to have the same rules and that's just something that hinders us so much. Property rights was the other thing that he noted as so important in moving these things forward.

Dr. Bebbington, you mentioned something about mineral extraction, and I don't know if I want to talk about that but I'm curious. You said that we should slow things down. When you say that, I think about, for instance, slowing our extraction down. There are probably many people who thought the United States had gone a little bit too far with oil extraction back in the early 1900s, and today we're finding out that there's a whole lot more oil. And that seems to be the history of the world too.

I remember when we first were elected in 2006, peak oil was the big issue, and all of a sudden they were talking at that time of natural gas running out by the end of the century, if we were that lucky to have that. Now they talk about 400 or possibly 500 years, so we keep finding these new resources and we have complications, and that seems to be the history of the world.

I think everybody would agree mining has been a great source of revenue—labour, trade, and then especially building infrastructure. I think about British Columbia when I see those roads. Well, most of those roads were probably built to get to the trees, and once that was established, then of course villages and towns opened up and commerce started to expand from there.

I know you probably want to mention it but before you do, I want Mr. Bergeron maybe to tell us what you've seen as spinoff. And I know many of us have been to Africa. When I was in Ghana, I saw a number of spinoffs from some of the projects that the NGOs were working with and how that started to improve the economy.

Can you tell us about maybe some of the spinoffs? We talk about the $80 billion, but what about the people who supply your mines and the jobs that are established there, and maybe the new roads that open new frontiers? Are you seeing some of that where there are areas that they can farm and maybe grow coffee? Can you maybe just tell the committee about that a bit?

[Brent Bergeron]

Absolutely. We saw an important development activity, for instance, at our mine in Guatemala. It was very interesting to us simply because we just completed an economic impact study from the start of the mine to last year, and we tried to see exactly what kinds of spinoffs there were. One of the most important ones was due to the fact that, at one point, a lot of the workers in the area where we operate the mine actually were seasonal workers. They would either go to Mexico, because it's close to the border with Mexico, or they would go to other places in Guatemala to work in agricultural jobs.

We've seen an increase in terms of enrolment in primary schools in the area of about 82%. That's simply due to the fact that a lot of people who are now employed at the mine have permanent jobs in the area. They don't need to take their kids out of school to be able to bring them with them when they do go over to these other jobs. Those have been significant impacts for us, just seeing an enrolment. We've also contributed to the fact that we've built some of the schools where these kids are going.

When we started operating the mine in Guatemala there were no health facilities there at all, so we started handling a lot of the health cases in the area at our mine operation. It started to grow so quickly that we were worried about the number of people who were coming in to the mine, so we built clinics outside the mining area. Now people have access to them. Our biggest challenge there was actually trying to work with the national government, the ministry of health, to take over the actual running of these clinics. Now we have another hospital open, and people have access to health care in the area, so that is an important part.

On the other part, which I think is extremely important, we have seen the creation of businesses in the area that have started by supplying to the mining operation. Now we've also seen them start supplying to other operations in the area. It's not mining operations, because we're the only one there in that area, but they've become more aggressive in terms of looking at other business opportunities. That has worked out pretty well for them also.

[The Chair, Conservative, Dean Allison]

Thank you.

Thank you, Mr. Van Kesteren.

We're now going to move to Ms. Sims for five minutes.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

I want to just follow up a little bit on what Mr. Bergeron was saying just now. Absolutely, you have these hospitals and you have these clinics all going right now. But once your mine closes down, which it will eventually, after you leave will you continue to fund those clinics and make sure that they are operational?

[Brent Bergeron]

Our objective is to create an environment whereby the ministries or the local municipal government officials take responsibility for these types of operations. Goldcorp believes that it's sustainable in the long run, as long as there are funds committed to making sure that they continue to be run. We at Goldcorp, in some cases, in some parts of the world where we have actually closed mines, are still participating with the different foundations of some of the businesses that are operating in those areas. We believe that to make them sustainable Goldcorp needs to remove themselves from it, but if there is an engine working in the area in terms of economic development, we believe that these should be sustainable.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you for that answer. It goes back to a belief that I'm beginning to develop more and more, which is when you have infrastructure, whether it's education, social infrastructure, hospitals, or whatever, maybe it's best if companies are not directly involved in running them. Because if we want to build capacity and look at long-term sustainability, then right from the beginning, if the resources are supplied and capacity building occurs in the communities, those can be sustained, whereas in the current system they're often not.

My question now is to Mr. Bebbington. Should companies be in the business of providing schooling and other social infrastructures? Or are there other more effective ways of ensuring that long-term sustainability?

[Prof. Anthony Bebbington]

At the margin, I would say there are other more effective ways of ensuring it.

[Jinny Sims, NDP, Newton—North Delta, BC]

But what would those look like?

[Prof. Anthony Bebbington]

Those would look like.... I think there are two issues of particular significance. One you were just talking about, which is the question of organizational capacities and management capacities, and building up those capacities. In many cases, they exist already. The other is the financial capacity to continue generating the revenue to support those institutions. That's what takes me back to questions of economic diversification, as well as patrimonial financing, which is not a replacement for economic diversification, but I think it's part of a long-term strategy.

Patrimonial financing means resources not being controlled by the company but going into endowments that would generate a revenue in perpetuity to support certain services and certain activities. Economic diversification means broadening a tax base that can continue generating revenue that's not based upon natural resource extraction and can be used to finance these activities. Then, the organizational capacity building, or the human capacity building, is the nuts and bolts of managing these systems—not just isolated projects, but systems of health care, systems of education provision—into the long term.

[The Chair, Conservative, Dean Allison]

Ms. Groguhé.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

Thanks to both of you for your comments. I definitely have a question for you.

Mr. Bebbington, you talked about legitimacy. I find this notion important and I think that, as far as the populations are concerned, the importance given by people to such legitimacy would no doubt come from the fact of being able to measure the impact that businesses have in the area of development.

Is it possible to evaluate and measure this impact and provide clear and accurate information about the results obtained in terms of sustainable development for the populations?

[Prof. Anthony Bebbington]

I hope this is an adequate answer.

I think legitimacy can come from various sources. One is performance, so that's quality of impact and generating that information on impact. One can gain legitimacy by performing well. Another general source is around issues of accountability and transparency. Legitimacy can be given to those who act in ways that seem accountable and transparent. I think there are issues about measuring performance, about measuring impact, and there are issues around accountability and transparency.

Legitimacy also—and this is what I was trying to say with my couple of examples—comes as a consequence of forms of corporate behaviour that are not really captured, necessarily, by the language of corporate social responsibility, but rather, by consistent behaviour. So if you say you're in the business of promoting development, then do that and don't pursue other activities that could be conceived as pulling in an opposite direction.

Then I think, fourthly, that systems give legitimacy as well. When the populace feels there is a system of regulation that they can believe in and that they know will hold to account, in this case, corporate actors, but also a variety of actors, then actually I think they're more likely—and certainly this is the centre of debates in Peru right now—to apportion legitimacy to corporate actors because they know they're going to be regulated.

So I think legitimacy comes from performance, accountability, behaviour, and systems.

[The Chair, Conservative, Dean Allison]

Thank you very much. We're over time, but we'll get a chance to come back.

Mr. Bruinooge, welcome to the committee. You have the floor.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

Thank you, Mr. Chair.

It's just a pleasure to hear your testimony today.

Mr. Bergeron, before I get to my questions, I was just going to maybe follow up on some of the points you were making earlier in relation to Dodd-Frank, and some of the other new international approaches to regulation that seemingly are creeping into the discourse.

Having just lived through the previous Parliament, where I attempted to be as active as possible in preventing what I thought was a somewhat punitive measure for mining companies, which was an attempt to hold them to standards that exist in Canada yet might not occur in other jurisdictions, I'm glad, first, that our government isn't pursuing those policies. Second, I am just glad to see that Goldcorp maintains its corporate presence in Canada. As somebody from the west and from an aboriginal population, I know that your company has very strong relationships with the indigenous population. Those industries are so important to the ability of the aboriginal communities to develop economic benefits for themselves and to become a key part of the Canadian economy.

My question, actually, is going to be somewhat related to that. I know, again from my own experience, that your relationships with indigenous groups in Canada are quite strong. I know that internationally that is the case also. When you're interacting with indigenous groups in a region where you share responsibilities, such as perhaps at your mine in Argentina—I think you have a partnership with another company—how do you provide some congruence between their policies in relation to indigenous relations and yours? Do you have an internal mechanism that you follow?

[Brent Bergeron]

Yes, we do, actually. In many cases in our partnerships with other companies, the operations of the mine are normally determined by who has the larger percentage in terms of ownership. We have another case similar to this in the Dominican Republic, where Barrick is the operator and the largest shareholder.

We monitor the situation very carefully. We have discussions with the companies in terms of how Goldcorp operates. We try, quite a bit, to be more symbiotic in terms of the policies that we have here in Canada with different aboriginal groups, and those in the projects we have in Latin America. Sometimes it's not necessarily that we impose a condition on them, but it's more that we try to let them know about the positive experience we've had in other places that may be able to alleviate some of the problems they are currently having with other groups.

There's quite a bit of sharing of experience and information that is done between partners and partnerships, and we try to ensure that the relationships are going as smoothly as they can.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

In relation to your interactions with the various indigenous groups in South America, in particular, have you seen significant economic benefits accrued, similar to what we see in Canada?

[Brent Bergeron]

The situation in Latin America can be different from area to area, and it is quite different from here in Canada. If we take a look at our mine in Guatemala, a lot of the people in the communities where we operate are aboriginal people. Therefore, they are considered to be part of the local community, and we try to consult with them on an ongoing basis. We do it in two ways. We consult with them in terms of their local governments, both municipal and provincial. We also consult with them at the mine operation itself. We bring people to the mine operation, we explain a lot of the technical issues they don't understand regarding how a mine operates, and then we actually discuss with them community grievance mechanisms.

For instance, I was in Guatemala a couple of weeks ago, where we had a blockade of a road. It was a protest, and we didn't now what the protest was about. Basically, it was a family who wanted us to hire their sons to work at the mine. So sometimes it's cultural.

We need to get closer to these people and actually allow them to know that there are other ways of approaching us, and it's not necessary to grab our attention by doing these types of activities.

[The Chair, Conservative, Dean Allison]

Thanks very much.

We'll move on to round three, and we'll start with Ms. Grewal.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Thank you, Chair, and thanks everyone for your time and your presentations.

My question is for Mr. Bergeron.

You might have heard about IAMGOLD. It's a pilot project with a gold extraction company in Burkina Faso. The goal of the project is to train about 10,000 people within those 13 communities to foster economic growth. Girls between the ages of 13 and 18 will receive training, job skills, etc.

Do you have similar types of goals as IAMGOLD?

[Brent Bergeron]

We get involved in a lot of projects both inside our mining operation and outside our mining operation. Some of them are specifically targeted to different groups. I can give you a very good example that we're extremely proud of.

In Mexico at our Peñasquito mine, 43% of the drivers of the large machinery are women. We have found that they're better drivers, because they're not as aggressive with the machinery and the machinery lasts longer. It has been very good for us, because not only do we include them in non-traditional jobs, but we also train them. We have extensive training programs where they're able to come in and not feel any type of peer pressure from working in a non-traditional type of employment.

We are looking at other opportunities in other countries, but we haven't worked with government organizations yet. We would like to do similar types of projects.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

In addition to capacity building for education, what do you think these extractive industries can bring to the table for the alleviation of poverty?

[Brent Bergeron]

When our president came out with the term “sustainable prosperity” it was because we were seeing the mining sector go into areas where there would be some people were benefiting from the mine, and some other people who were perceived as not benefiting from the mine.

We want to try to include a larger group of people, therefore we look at activities that could specifically target hunger, health, and poverty in the areas. We try to make sure that sustainable prosperity for us meant that a larger group of people were benefiting from the mining operation in the area. So those would all be part of our CSR activities that we implement.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Talking about the Marlin Mine in Guatemala, a study demonstrated that extractive projects improve the quality of and access to health services, increase economic opportunities through micro-loans, promote environmental awareness, and allow developing local communities to have greater capacity.

Can you update the committee on some of the outcomes of this initiative?

[Brent Bergeron]

We continue with our initiatives at Marlin. We'd like to do a lot more, and we believe there is a lot more that we can do. It comes back to the theme of why we're here today. We want to be able to partner with more organizations and expand the number of social activities we are doing in the community.

In 2010, Goldcorp spent $600 million in CSR activities outside of our mining operations. My goal, or my concern, with that amount is to make sure we are getting the most benefit from that. I believe we can only do that by partnering with other organizations to expand that even more.

[The Chair, Conservative, Dean Allison]

Do you have another quick question?