Foreign Affairs Committee on Nov. 17th, 2011

[Ross Gallinger]

There's opportunity in terms of the skills aspect, both for training on the site as well as for training in businesses to support the mine site. There are two aspects in there. It's not only just the training for jobs within the mine site and the ability to transfer that knowledge to go to other places, but it is also to develop their own businesses within the community, which supplements the traditional aspect in that area of agriculture. There are actually two main drivers there: artisanal small-scale mining, which is highly destructive of the environment, and agriculture. Those two processes are totally incompatible there, so increasing livelihood aspects is probably the fundamental driver. Whether to develop skills for the mine site or trying to develop services for the mine in terms of constructing certain things, a number of small projects were done.

A number of women's groups, as well, have been involved in everything from trying to develop mosquito nets, handicrafts, etc., for the community, for the mine site, and for others.

But looking at those projects in terms of livelihood components when they have idle time associated with it—in the dry season, when there's nothing to do in between the crop aspects—all these things are to engage people, to get them out of the current cycle and looking for other opportunities, so that they're not at risk if there are issues with extreme droughts, etc., in their agricultural aspect and to try to stop them from going into artisanal small-scale mining as well, which is very hazardous and very destructive.

[The Chair, Conservative, Dean Allison]

That's all the time we have. We'll come back. I think we'll have time, Mr. Van Kesteren, in the next round.

We're going to move over to Madam Laverdière.

Madam Sims? Okay. Thanks.

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

Thank you very much.

Thanks for your informative presentation.

I have a couple of questions.

I've had the privilege of visiting South America at different times and I've also heard speakers at different gatherings who come and talk to us about some of the harm Canadian mining companies are doing in South America. Bolivia is a country that often comes to mind.

At the mine I saw in Peru, certainly there was a lot of conflict between the community at the time and the company itself. And as you said, that could be due to the fact that a lot wasn't done ahead. But a lot of the concerns I kept hearing were environmental concerns. What kind of an environmental assessment do we do before we go into an area and actually start mining?

[Ross Gallinger]

I'm fairly familiar with Peru because I've been in the country many times and have been involved with projects there. There are two aspects that a company has to go through in entering into a developing country. We'll use Peru as a good case.

If you're looking at financing your operation--because an operation can be anywhere from $500 million to billions of dollars in investment--you will probably have to get money from the banks. Most banks are connected to the Equator Principles, which require you to follow International Finance Commission guidelines on development. One of the processes is the requirement for an environmental impact assessment. It gives you the scope of what needs to be looked at in terms of water, air, and land aspects. It determines what your activities will be and how you will ensure that there's no significant environmental impact. Even Peru has that kind of process for the development of an environmental impact assessment.

What's also included is a social impact assessment of the potential social effects and how they are going to be mitigated. What follows is a requirement for an environmental management plan. That involves monitoring and dealing with incidents, correcting those incidents should they come up, and monitoring programs. Those things are required under Peruvian law and as part of the monitoring process for loan agreements. So on the upfront part of any kind of design there is that kind of environmental analysis to determine that there will be no significant environmental impact.

There may be incidents that need to be corrected and resolved. We have incidents in Canada with mines, and we correct and resolve them and help the environment repair itself. A great case study, if you ever want to look at an operation in Peru, is on the Oxfam Australia website. It's on the Tintaya operation, and going from a national operation to private development issues around environment and community development. There's a great video on there that categorizes the whole thing. There are interviews with community members, company members, the government, and NGOs.

It's a great case study that talks about issues around environment and how they were resolved. It's a good example of how dialogue really works to resolve those issues. What's very interesting is that in ten years of that dialogue process, they say they've only fixed 90% of the issues they started out with. So it can take very long in that dialogue process to get to where everybody is finally satisfied with what's been going on.

[Jean-François Larose, NDP, Repentigny, QC]

I still have a quick question to ask you; I will try to be very brief.

Thank you very much for your presentation. It was excellent. I really appreciate seeing such enthusiasm, but I have a few concerns.

My first concern is that, often, when there are good intentions, nothing comes of them. When times get rough, projects like that are put on the back burner.

You were saying that progress has been made over the past five years. We have gone from consultations to encouraging regions to be much more proactive. Has the company calculated and quantified that? Are there real benefits? Is there a potential will to add it to your constitution, so that it is even stronger?

In a difficult economic situation, as I said, things get scrapped. You said that involvement is important. There has to be some continuity and stability. Doing things like that has to do with a very demanding complexity. Those things cannot simply be swept aside at the first opportunity.

[Ross Gallinger]

In community development aspects, when you raise expectations and you make commitments, you need to live up to those commitments. If you don't live up to those commitments, then you're going to be faced with controversy with those communities. As anyone who has an agreement with a partner knows, if the partner decides to back away from the table, that's not going to make you very happy. It's been my experience that controversy can happen when you've changed those...or the expectations are a mismatch, and we see controversy in terms of reaction in that regard.

In terms of the kind of global benefit of this sector as well, ICMM has some great case studies of countries--Ghana, Chile, etc.--and how the whole private-sector aspect of mining has contributed to the well-being of the country itself. Botswana is a great example of how the country has really benefited and invested their mineral wealth, to the point where they are now sort of a have-not in terms of looking at aid aspects. So there are some really good case examples out there, and available in literature, to describe that.

In terms of specific aspects of gathering the benefits per se, unfortunately, our industry is really trying to talk a lot more about that. We've been very silent about the aspects that the industry has done in terms of community development and the contributions to that, because the industry has said that this is just part of business and we don't really want to advertise that all that much. People want to know more about it, so there's been much more information in terms of reports and much more thorough reporting on corporate social responsibility aspects, to really get that information out and to try to get the economic components more in terms of quantifiable numbers instead of quality.

[The Chair, Conservative, Dean Allison]

Thank you.

Mr. Van Kesteren, and this may be the last question, because we're running out of time.

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

Thank you.

We spend a lot of time talking about social responsibility in corporations, and I think that's good. I think there are checks and balances, and you mentioned some. There are plenty here. We keep your feet to the fire, and the IMF.... There are plenty of checks and balances.

To quote Adam Smith, and I'll paraphrase, it's not for the benefit of the butcher that the baker gets up at five o'clock in the morning. Let's face it, you're out there to make a profit, and that's all right, that's okay. I think you have a lot of competition. When you visit Africa, you'll see these beautiful stadiums that the Chinese built. They obviously have a way of winning the hearts and the minds of people too.

This study is not to find out whether you're being a good boy out there or not. I think there are a lot of people who always want to do that. I think we're doing the right thing. We can always do better.

What we need to know is why in so many parts of the world, and we're directing our study on Africa, they're stuck in perpetual poverty. Why is it that after 40 years of aid we can't seem to help these people? That's our heart's desire. Everybody wants the same thing. We want these people to experience the benefits of society where people can make a living and families can grow and develop.

What's going on? What are we doing wrong? You've got a chance to say “you've been battering me; now I'm going to tell you what you guys are doing wrong.” Why is it that South Korea is in the state it is today? Are we doing something wrong in our aid? Can we do something better to work alongside building economies, through generating wealth through what you talked about? That's my question.

[Ross Gallinger]

Let's go back to the Tanzanian example that I gave you earlier. We've seen tons of water projects where development NGOs have come in saying “I'll drill you a well”, etc., and you go back to those two years later and they're non-functional, because the community was not involved.

This is the biggest issue with anyone. I can talk to my children about trying to be entrepreneurs, but they need to have that kind of capacity experience to be able to really leverage them out. If I'm going to do everything for my kids, then they're going to expect that any time they need something they will come to me. When I start to say “Let's work together on this, but here is really what you need to do on this and you need to latch onto it”....

Capacity building is the biggest thing we wrestle with. In an industry full of engineers who love to build things, they'd rather build schools and medical facilities, because they can point to those. When we talk about building capacity, they can't see that, but you will see it in terms of the activities that go on. When we empower people, we see wonderful things. When I see entrepreneurs in micro-finance aspects with their access to capital to build businesses, the lack of default on those loans and the return that they get is amazing.

This is all part of being an entrepreneur and of the business aspect. In Iamgold, we went through this process of teaching our employees to be entrepreneurs, not just to come to work for a job, but also how they could contribute as part of the business and start to get that kind of thinking so they could take that home for themselves and think of other aspects. That's where the gap is. That's where business can come in if we can work together as partners, and if we don't say we'll do it for them, but we actually say, “You're going to take on this project, you're going to learn from it, and it will be your project at the end of the day”.

Again, the Tanzanian experience was incredible, because you would talk to the group that was put together, and it was their project. They were very proud of it. The project was theirs. They talked about everything they did. They were very thankful to the company, because they helped to finance a bit of that and were very encouraging for others.

The government actually tried to take credit for the project. The community said no, that the government couldn't take credit for it. They said “We're the ones who did that aspect”. Through that aspect, through the development of that water project itself, I saw them starting to think about what other projects they could do and what other income sources they could build as a consequence.

That's all part of what we need to look at here: to stop doing things that way and literally partner in this process, going together. It's that concept of creating shared value, of working together on that part so that people actually own it. They have that experience on the business side of things that can leverage forward, and I think that's what we see in terms of countries that do it well. We see governments in there working on that component of it, not doing it for them.

[The Chair, Conservative, Dean Allison]

Thank you very much.

Mr. Gallinger, thank you very much for taking the time to be here today. It was very informative. We appreciate your perspective over a couple of different industries as well. It has added to the insight.

[Ross Gallinger]

Thank you very much.

I do have a binder of the backup material that is the basis for this. If the committee would like it, I'm happy to provide that.

[The Chair, Conservative, Dean Allison]

Sure. If you can leave it with the clerk, that would be fantastic.

Just before we adjourn, I want to mention that we're having an informal meeting next with the OECD, and they've requested the subcommittee, so that's vice-chairs. Other people are welcome to stick around, but it is an informal meeting, so if you have other obligations.... Please feel free to stay or to leave, whatever you'd like to do.

Thank you very much.

The meeting is adjourned.