Natural Resources Committee on Nov. 3rd, 2016

[Lesley Williams, Senior Manager, Aboriginal and Regulatory Affairs, Prospectors and Developers Association of Canada]

Good morning, Mr. Chair and committee members. Thank you very much for the opportunity to speak with you today.

My name is Lesley Williams. I'm the senior manager of aboriginal and regulatory affairs at the Prospectors and Developers Association of Canada.

With me is my colleague Michael Fox. He serves as the co-chair of the PDAC's aboriginal affairs committee in a voluntary capacity. He's also the president of his own company, Indigenous and Community Engagement Inc.

The PDAC is the national voice of the mineral exploration and development community. With over 8,000 members around the world, our mission is to promote a globally responsible, vibrant, and sustainable minerals industry. We encourage leading practices in technical, operational, environmental, safety, and social performance. The annual PDAC convention is regarded as the premier international event for the minerals industry. It has attracted more than 25,000 people from 125 countries in recent years.

Most of the association's policy efforts and initiatives are focused on ensuring Canada remains the best place in the world to explore for mineral and metal deposits. On behalf of our members in the mineral industry at large, we work on numerous issues that focus on five main priority areas, one of which is aboriginal affairs, the topic of our presentation to you today.

The aboriginal affairs program at the PDAC was established in 2004. This was largely in response to the changing legal and social landscape driven by the duty-to-consult framework and the recognition that local community support and involvement was key to project success.

The work of the PDAC's aboriginal affairs program centres on supporting co-operation and understanding between companies and communities. We focus on achieving two key goals. The first is improving efforts by our members to build positive, mutually beneficial relationships with the communities in whose traditional territories they are working. Second is to enhance the participation by aboriginal people in the minerals industry.

Turning to your study, specifically the focus on the opportunities for aboriginal people, our remarks today will cover the evolving landscape related to aboriginal communities and the mineral industry in Canada, engagement in aboriginal participation in the sector, some of the challenges that still remain, and what is next in the ever-evolving landscape.

[Michael Fox, President, Indigenous Community Engagement Inc., and Co-Chair, Aboriginal Affairs Committee, Prospectors and Developers Association of Canada]

In recent decades, the nexus between companies and aboriginal communities has transformed and continues to evolve, as relationships have been built and aboriginal communities have a more active role in mineral development.

These changes were accelerated by legal, political, and social shifts, including the inclusion and protection of aboriginal rights in Canada's Constitution and subsequent aboriginal rights jurisprudence, more socially minded industry actors, formalized relationships through company-community agreements, and strengthened capacity of aboriginal communities to participate in project development and the mineral sector at large.

All of these elements have paved the way toward a balanced, mutually beneficial environment. The minerals industry has a long history of building strong relationships and partnerships, and generating economic opportunities for aboriginal communities within the context of a challenging and evolving landscape, characterized by historical legacies, land tenure disputes, poor socio-economic conditions in many communities, and complex crown-aboriginal relations.

While some of industry's advancements were precipitated by legal and policy changes, the nature and scope of these actions have extended beyond meeting legal requirements. Industry recognizes that it is critical to develop and maintain robust, open, and trusting relationships with aboriginal communities affected by, or with an interest in, mineral exploration and mining activities.

Companies engage with affected communities in order to share information and work together on issues related to environmental mitigation and cultural protection, as well as those related to benefits and opportunities.

The minerals industry encourages efforts to facilitate the full participation of aboriginal people in the economic opportunities generated by mineral development. These opportunities exist throughout the mineral development sequence from exploration to mine development and closure. They differ in scope and breadth, depending on the stage of the project, the state of the market, and the type of project.

The industry supports participation through training, business development, local procurement, employment, and financial arrangements. In addition, the minerals industry often makes social investments through different initiatives and partnerships that improve quality of life in aboriginal communities and support participation in the resource economy.

As a result of its efforts, the industry has become the largest private sector employer on a proportional basis of aboriginal people in Canada. One great example is New Gold's project in British Columbia, where 25% of the employees are aboriginal. Similar numbers exist for the company's exploration project northwest of Fort Frances in northwestern Ontario. Furthermore, more than 50% of the workforce of the diamond mines in the Northwest Territories is aboriginal. Overall, aboriginal employment in the mining and mineral processing industry increased by 12% from 2007 to 2015.

A key mechanism through which economic opportunities have been created is company-community agreements. There has been a significant number of agreements signed between mineral companies and aboriginal communities, with nearly 500 agreements signed since 1974. The majority, 376, have been signed within the last decade. These agreements are generally voluntary, and they are increasingly recognized internationally as a leading practice.

Each agreement is unique. The content of agreements varies depending on a number of factors, particularly with the type and stage of a project, as well as the potential impacts of a project on communities. Company-community agreements contain provisions related to employment, preferential contracting and joint ventures, capacity funding, environmental measures and monitoring, traditional land use and knowledge provisions, training programs, shares and warrant opportunities, infrastructure opportunities, financial provisions, confidentiality clauses, and dispute resolutions and implementation mechanisms.

Agreements have generated numerous benefits for affected communities. Goldcorp's Musselwhite project in Ontario, for example, supports training and capacity building, procures millions of dollars a year in goods and services from aboriginal businesses, such as Windigo Catering, and has a nearly 25% aboriginal workforce.

Cameco Corporation in Saskatchewan has become Canada's largest industrial employer of aboriginal people and it strongly supports business development. More than 70% of the services Cameco uses at its operations in the region are procured from aboriginal-owned companies in northern Saskatchewan, amounting to more than three billion dollars' worth of business over the past decade.

Agreements and the benefits they provide are truly a testament to the strength of commitment by the industry to developing mutually beneficial partnerships and to the interest of many communities in the economic development opportunities generated by the minerals sector.

I also want to briefly mention that governments in Canada have made a contribution to the shifting landscape. This has largely been driven by the legal framework and policy decisions, including the protection of aboriginal and treaty rights through the duty-to-consult framework, the settlement of land claims, the government resource revenue-sharing mechanisms, and the inclusion of aboriginal people in permitting procedures and environmental assessments.

While we may have a lot to celebrate, challenges still remain. Mineral companies in aboriginal communities in Canada continue to encounter a number of challenges in their engagement with one another but also independently as a result of other factors. These issues can impact the ability to develop successful projects and are a barrier to fully realizing and maximizing fully mutual benefits.

PDAC conducted national round tables and some of the key challenges identified include the following: awareness gaps between companies and communities; skill gaps and capacity issues in communities; crown-aboriginal legacy issues; socio-economic conditions; health, education, and social issues; land tenure uncertainties; jurisdictional issues and unsettled land claims; government resource revenue sharing; resource benefit sharing; and the duty-to-consult challenges across Canada.

As the landscape is ever-evolving, where do we go from here? Industry must continue to engage and work with communities, generate partnerships, and provide benefits to communities. It is also critical that governments refine duty-to-consult processes and address some key issues, including identifying impacted communities, consultation costs, delegation to proponents, and adequacy.

Efforts to improve crown consultation will lead to increased involvement of aboriginal communities in the decision-making process and will generate more certainty and efficiency for industry. We encourage governments to focus on improving socio-economic conditions for aboriginal communities, because a number of barriers such as poverty, poor housing conditions, and educational and essential skills gaps limit the ability for members of the community to participate in the mineral industry in a more meaningful manner. Improvements in these areas can be achieved through foundational social investments that contribute to improved health and educational outcomes for aboriginal communities, targeted funds for skilled training, and entrepreneurs to assist aboriginal people in securing employment and seizing business-development opportunities.

In addition, we recommend improved government resource revenue-sharing mechanisms through which federal-provincial-territorial governments share a portion of the revenues generated by mining with the impact that aboriginal communities can contribute to enhancing aboriginal participation in the sector.

In conclusion, PDAC is supportive of the government's commitment to renew its relationship with aboriginal people and to promote economic development and job creation. The industry strongly believes that collaborative efforts by all parties—government, industry, and aboriginal communities— will lead to stable, positive business environments for mineral exploration and development, maximize benefits for all parties, and enhance aboriginal participation in the mineral and metals industry.

Thank you, meegwetch, for the opportunity to speak with you today.

[The Chair, Liberal, James Maloney]

Thank you very much.

Mr. Serré, you're up first.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Chair, and my thanks to all the witnesses for coming in today.

Mr. Morrison, can you provide to the clerk, to the committee, your R and D and commercialization report on the hover barges? We've talked with Mr. Nolan about the winter roads and some of the challenges with them. Can you provide the clerk with that report?

[Douglas Morrison]

Sure, we can do that.

[Marc Serré, Liberal, Nickel Belt, ON]

Perfect. Your proposal on the clean-mining environmental, $50 million, can you provide that to the clerk too? It would be shared, so that way we could spend more time on creating jobs and the clusters aspect.

[Douglas Morrison]

Sure.

[Marc Serré, Liberal, Nickel Belt, ON]

PDAC, thank you so much. Can you also provide the clerk with the best impact agreement you've seen, best practices? Can you provide that to the clerk, the best one you have? You seem to have a good handle on that as well.

Mr. Morrison, my question is directed to you. When you talked about clusters, ecosystems, you said that for every mining job there are three or four jobs created. You mentioned four clusters in Canada. Can you name the areas of those four clusters?

[Douglas Morrison]

I said the largest of them all is in Ontario, split between the north and the south. There is another cluster in Saskatchewan, because of the specialized minerals, such as potash and uranium. In Alberta, between Edmonton and Calgary, there is the oil sands cluster that supports the whole industry. There's another cluster in Vancouver, B.C., with UBC and the other organizations there to support largely open-pit mining. We have open-pit mining elsewhere, but there are more open-pit mines in B.C. than in Ontario. There are deep underground mines in Ontario, specialized minerals in Saskatchewan, oil sands in Alberta, and open-pit mines in B.C.

[Marc Serré, Liberal, Nickel Belt, ON]

We heard earlier about the Canadian mining innovation centre looking for dollars on the innovation side. Also, we heard COSIA is playing a major role in commercialization. I want you to expand on that.

You mentioned you have a lot of R and D projects and there is the commercialization of them. Could you expand on the need in your organization and the federal role we could play in ensuring that we do more commercialization, like COSIA does, in the mining industry?

[Douglas Morrison]

Throughout my career in Sudbury and elsewhere, I've been involved in research projects, continuously in Sudbury. The fact is that we have 30 years of research in the Sudbury basin on our deep mines, and very little of that has actually moved off into industry to be commercialized. It's because we don't have the mechanisms. It's not just finishing up with the research report, and then somehow it magically becomes a product. It doesn't. You go from a bench scale, as Peter Hollings described this morning, to pilot scale, to operational scale, to full-scale field trial, then to commercialization of that field-trial result.

The money that you have to spend to make those things happen, especially in a heavy industry like mining, is getting bigger and bigger all the time. One of the issues for us is the funding ratios for government funds versus industry funds. Right now it's dollar to dollar. You can see that the cost of innovation is very much larger when you move up through building physical machines and plants to do things more efficiently. That's much more expensive than large-scale trials and academic studies, yet the ratio we have to work with is still 1:1, exactly the same as for research.

Innovation is much more costly and much more risky than research, but the funding mechanisms are the same. You're essentially smothering or strangling innovation. Once excellent research has been done, it can't then move through the system to get to industry with the current format.

[Marc Serré, Liberal, Nickel Belt, ON]

That's where we need some work like Australia's doing—

[Douglas Morrison]

Well, no, Australia has not actually done a better job. Australia has done a far better job of pouring large amounts of money into research. They're only just now beginning to recognize they actually don't, for all that money that went into research, have any more innovation. In fact, they probably have less than we do.

They're beginning to look at our model here in Ontario now, and actually they're introducing a new program called METS Ignited, which is exactly the same as CEMI. Their problem is that they're actually based at a university still, so they're still trying to funnel everything through the university system. CEMI and organizations like ours are independent of the university system, so we're working on a business footing exactly the same as the companies we're trying to work with. Our objectives are exactly the same as our client organizations'. We live or die by commercial success, not by academic government grant funding.

[Marc Serré, Liberal, Nickel Belt, ON]

We could spend a whole day, really, talking about the expertise and the world class that we have.

You mentioned exports in your presentation. What role can we play in the federal government to help increase our exports, and by doing that, increase jobs here in Canada?

[Douglas Morrison]

We already have very good relationships with EDC. We know the structures that EDC can put in place for us once we have products. The fact is that, to a large degree, our service and supply sector has been relatively complacent because more than 80% of their revenue comes from local Canadian mines. That gives us a huge opportunity to globalize the services that we currently provide, but these are oftentimes local businesses that need to have exposure to the global mining sector.

Because of the companies that work on our projects, we actually bring them in touch with Rio Tinto now in a way that they would never have approached Rio Tinto or BHP Billiton in Australia. It's the innovation component that begins to link ideas to newer business and business expansion through international trade.

[Bora Ugurgel, Managing Director, Ultra-Deep Mining Network, Centre for Excellence in Mining Innovation]

I will add to this. The ultra-deep mining network is a $35-million network that is funded with $50 million of federal funds through the networks of centres of excellence. We are a five-year network, and we are in the third year of operations. About two months ago we found out that one of our network members started selling the results of their research projects to South Africa. One of the deepest mines in the world is now purchasing Canadian know-how. The network is around, creating the know-how, so that small to medium enterprises have the tools to be able to export in the first place. That's why you need to invest in organizations like CEMI, or through the business-led networks of centres of excellence, in creating the tools so that we can stay competitive and become competitive in the international markets.

[Marc Serré, Liberal, Nickel Belt, ON]

PDAC, just quickly—

[The Chair, Liberal, James Maloney]

Very, very quickly.

[Marc Serré, Liberal, Nickel Belt, ON]

I know you're going to give us a best practice on the AIP agreements, but also can you elaborate on the next steps? The Ring of Fire, for example, is talking with the first nations community about villages, not just roads, not just the mining. We need to have a village and social, counselling, and housing agreements that the impact agreements haven't in the past dealt with. I'd like for you to share your best practices, what's happened in the past.

However, moving forward, we need to have it at a different level. What role can PDAC play there?

[Michael Fox]

I think there is a trend of companies looking beyond project agreements. I think the end goal is to improve the quality of life of aboriginal communities. There are different ways of doing that than just straight-up project direct agreements for jobs or contracts or even royalties. I know that when I was negotiating with an American company looking at a mining project, they were looking at, instead of a signing bonus, having a seniors' complex, and after year one of production, they would look at 10 houses. After year two they would look at maybe 20 houses, and in year three they would look at a youth recreational facility. People are thinking differently. We're probably in our third generation of impact and benefits agreements. They change over time as communities become more involved with them.

[The Chair, Liberal, James Maloney]

Thank you. I'm going to have to stop you there.

Mr. Strahl.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you, Mr. Chair, and thank you to all of the witnesses for your presentations.

I want to continue with the PDAC folks on the aboriginal affairs component of mining. It's difficult to have an industry-wide standard. I think some companies are very good at it, and some are learning, I would say. We've seen in British Columbia some great examples of companies that get it, that understand the key to working in the traditional territories of aboriginal communities is partnerships and relationships. We've seen for others that it's simply a line item. They have to tick a box, and they put a dollar value on how much they're willing to spend to fulfill their legal obligations. I think the challenge you have and that governments have as well is to help industry see that engagement with aboriginal communities shouldn't be seen as an obligation but as an opportunity. We're trying to figure out the best way to encourage that from the regulatory side.

We had Bob Rae here on the Ring of Fire project, and we talked about the duty to consult. We've heard from some companies that very much believe that they should be engaging directly with the proponent. We've seen from court cases in British Columbia very recently on the northern gateway pipeline, for instance, that the courts have said that the crown has the duty to consult and you can't simply delegate it.

Perhaps, Ms. Williams, Mr. Fox, you can talk about the challenges and what you believe the industry standards should be in terms of fulfilling that duty to consult. How do we get around the different approaches of different communities and different companies? I don't think it's clearly defined. The courts have introduced the duty to consult and accommodate where necessary, but governments, companies, and aboriginal communities are still trying to figure out what it actually means. You deal with this every day, so what is your recommendation to, in this case, the government? How does the government do a better job of equipping both aboriginal communities and industry to meet that duty, which the courts have continually upheld?

[Michael Fox]

From the PDAC's perspective, we encourage our members to engage early and often and effectively with aboriginal peoples and to respect their protected constitutional rights, and we urge governments to fulfill their obligations towards aboriginal people in Canada.

That's easy to say, and I think you're correct. You have good actors and bad actors out there. I don't know what percentage are bad actors, maybe 10%, who get the news bites, and then the rest are good performers who don't get any air time out there. I think Natural Resources Canada tracks all these agreements, and there are over 300 across Canada that demonstrate that things actually do work.

When it comes to the frameworks in Canada, they really are different because companies have different projects in different jurisdictions, and a lot of times, it's not clear. All the court cases provide some clarity but you still have this functional ambiguity, especially around two kinds of capacity.

Who has the duty to provide capacity for communities? There are two types of capacity when it comes to indigenous communities. One is the capacity to understand the project; what is the phenomenon in front of them? If I ask anyone in this room whether they can do a community impact assessment, I don't know your expertise, but I don't know anybody in this room who can do that. However, you're expecting communities to understand a project. That's exactly what's being asked of them. One is the capacity to understand the project.

The other capacity is the capacity to participate in a process and that process is the regulatory process and the environmental assessment process. I can tell you first-hand that I was a negotiator for one of the communities in the Ring of Fire, and when the Canadian Environmental Assessment Agency was to provide resources for capacity to participate in the process, it would have taken $27,000 for two mines. Not only could Environment Canada staff not come up because they had no travel dollars to come up.... I see the challenge, going forward. You're talking about the future in any of these sectors—oil and gas, mining, and nuclear. Who is providing the capacity and also participating in the project?

Right now, if you talk to the Department of Fisheries, do they engage with communities when they're making decisions? Does Environment Canada staff go into the communities? I can tell you right now that they actually had to find rides to go up to the Ring of Fire, because there are no travel budgets.

The burden goes back onto the companies, so one issue is who has that duty to provide capacity. The other one is the duty to accommodate. That's a substantial duty and that's with the crown, but they're not the ones cutting the cheques, are they?

These two items, the capacity and the duty to accommodate, actually provide that functional ambiguity. Not only that, but the policy frameworks across Canada are all different in terms of who actually does the engagement, the consultation. In Ontario, they delegate to the industry. In Manitoba, the crown does it. Who provides capacity dollars? In Alberta, they said they'll do it and they'll decide what kind of capacity. In Quebec, they divide it but it's not clear whether what they're providing is going to meet the needs of the communities with regard to the capacity requirements.

So it's different. It's a very good question and it's a challenge for us as a national organization, which we try to keep track of in our aboriginal affairs program.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Fox.

Mr. Cannings.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you, all, for being here today.

I'd like to follow up right away on what Mr. Fox was saying about capacity and the inclusion in environmental assessments, etc.

Before I got this position, I was an ecologist. I did some environmental assessments in British Columbia, not with mining projects but with other, fairly small projects. A lot of them involved indigenous communities in my region. Capacity was always a huge part of that, whether it was the capacity of the Indian band to actually, as you say, do the work in understanding the projects and reacting to them, or the capacity to provide the manpower to go out and help in the field with the assessments.

You raised a lot of questions there, and I just wanted to know your recommendations, for the short term and the long term, about what the federal government could be doing to increase that capacity, whether it has to do with education at all levels or with what they could do in the short term. Education is obviously a more long-term investment. Can you comment on that?