Impacts on Indigenous Businesses
In knowing the opportunities and impacts, it is important that communities understand that the viability of the services being offered is highly dependent on three principal variables:
- The level of early exploration activity
Sustained interest by multiple prospectors and companies within a community’s traditional territory or jurisdiction can potentially support a business or businesses servicing the early exploration sector.
- A community’s ability to track and understand the level of early exploration initiatives in their territory
Without this knowledge, Indigenous businesses will be unable to market their services and plan for the expansion and development of early exploration projects.
- The market must be strong
The market for specialized services can be saturated by experienced providers. While an Indigenous community-owned business will typically enjoy some advantages in its traditional territory, new companies seeking to offer geophysical and geochemical surveying within mature mining districts with advanced exploration service sectors, may encounter difficulty penetrating the market. Furthermore, Indigenous businesses offering specialized services will need to demonstrate an adequate level of expertise and experience.
As noted in the three key considerations above, the exploration phase of the mineral development sequence is highly dependent on availability of financing and fluctuating global commodity prices, not to mention uncertainty surrounding the value of the deposit being explored. Therefore, the establishment of businesses solely catering to this sector, is fraught with risk. Indigenous businesses that invest in new equipment and training in order to participate in projects can lose that investment when a project, or group of projects, disappears or is substantially delayed.
Projects may be delayed or cancelled because a company exhausts its exploration budget, or the price of the underlying commodity does not justify continued investment. The fact that junior exploration firms tend to raise exploration dollars annually also makes it difficult for them to commit to long-term contracts. Consequently, impacted communities are often provided with short-term opportunities, which can make financing of equipment purchases difficult.
Community Risk, Mitigation and Strategies
There are several steps Indigenous communities can take to make the most of the economic opportunities associated with mineral exploration, starting with the development of good governance and management models for their community-owned businesses. Exploration companies can help by engaging early and often with communities to build awareness for their projects and keeping the lines of communication open so Indigenous businesses can prepare to bid on contracts and build appropriate training programs.
EARLY ENGAGEMENT
WHAT COMMUNITIES SHOULD DO:
Insist on Early Engagement with Proponents
Communities should develop strategies or engagement protocols to engage proponents at the earliest possible moment in the project cycle. This is an important first step toward building an understanding of future economic opportunities.
WHAT COMPANIES SHOULD DO:
Engage Early and Often with Communities and Indigenous Businesses
Companies must keep communities well informed about project planning on an ongoing basis so they have time to plan to take advantage of opportunities around the project and build a realistic understanding about potential economic benefits.
PARTNERSHIPS
WHAT COMMUNITIES SHOULD DO:
Strategic Alliances
Joint ventures with experienced companies or another community can help development corporations access the market for exploration service and supply, build internal capacity, and train employees.
Exploration Agreements
Exploration agreements can help communities build strategic alliances, prepare competitive bids, build training programs for community members, and establish future revenue sharing agreements should the project proceed to commercial production.
WHAT COMPANIES SHOULD DO:
Monitor Joint Venture Opportunities for Indigenous Businesses
Companies should proactively identify opportunities where Indigenous communities and businesses can partner to build internal capacity and create value.
COMMUNITY CAPACITY
WHAT COMMUNITIES SHOULD DO:
Establish Good Governance Structures & Build Managerial Capacity
Community development corporations should take steps to ensure they are governed appropriately and remain free from interference by political leaders. Establishing an arm’s length board of directors to oversee budgeting and other key processes is an important first step. If necessary, experienced, qualified managers should be hired to oversee finances, investment in capital and human resources, and partnership agreements.
Land Use Plans & Mining Readiness Strategies
A land use plan can increase a community’s capacity to select the projects it wishes to become involved in and avoid conflicts with proponents and the Crown. A community mining readiness strategy based on input from community members, other communities, regional proponents, and other stakeholders can increase region-based preparedness for economic opportunities.
Inventory Community Assets & Skills
An updated inventory of community capital assets, local Indigenous businesses, and community skills can help inform discussions around participation in projects and capacity building with companies and joint venture partners.
Build Training Programs
Communities, joint venture partners, and companies should work with Indigenous Skills and Employment Training (ISET) agreement-holders and educational institutions to design appropriate training programs.
WHAT COMPANIES SHOULD DO:
Understand Community Capacity
Meeting with community members and economic development leaders to learn about community assets, including machinery, facilities, infrastructure, human resources, and portfolio of community- owned businesses is a good way to determine how Indigenous businesses can best contribute to an exploration project or strategic alliance.
Depending on the commodity, its future market outlook may be far from clear. This is more likely to be the case for rare earth elements and minerals that do not have well-known industrial applications or investment history. Finally, the prospects for exploration success are typically slim and projects can fail to reach the development or production stages due to an array of factors, which can negatively impact service providers and related businesses. Communities should be mindful of potential liability they take on as a result of business initiatives they pursue. The figure below illustrates how communities can mitigate risk and implement strategies to reduce such risk. In light of the challenges facing Indigenous businesses, the following five recommendations from the report are steps that governments and industry can take to improve the likelihood that Indigenous businesses can succeed in opportunities associated with mineral development.
Source: Areva Resources Canada Inc. on behalf of Land and People Planning
- Build governance capacity within Indigenous businesses
Federal and provincial governments currently provide funds to Indigenous communities to build consultation capacity, train workers, and assist in the establishment and growth of Indigenous businesses. Both levels of government should invest in funds that can deliver capacity-building programs to Indigenous communities in order to build and maintain appropriate governance structures around community-owned businesses, development corporations and strategic partnerships.
- Support land use planning and traditional use studies
Governments that have not already done so, should provide Indigenous communities with funding to develop land use plans and undertake land use studies, including mapping of valued community resources to support community planning around resource development. This funding can help prepare communities to decide where or when they are best able to support and participate in projects. Funding should also support multi-community planning efforts around regional development in areas with proven mineral resources and potential for the development of shared infrastructure.
- Study industry standards to review strategic partnership agreements
Industry groups, including PDAC, the Mining Association of Canada, as well as provincial and territorial prospectors and mining associations should work with Indigenous organizations to study existing standards in jurisdictions such as Nunavut for reviewing Indigenous joint venture agreements (and other strategic partnerships) to ensure they contribute to Indigenous community capacity-building objectives. Study findings can be used to assist companies and communities that lack existing policies or are developing new policies.
- Build capacity around improved consultation and engagement within the exploration phase of the mineral development sequence
Governments, industry, and communities should respond to the Canadian Minerals and Metals Plan’s recommendation to develop capacity-building programs that support Indigenous participation in the mineral development industry. Support may include development of toolkits that combine existing regulations and existing best practices and standards to improve early engagement efforts and Indigenous community and business efforts to participate in exploration through building awareness of projects, strategic partnerships, and coordination with Tribal Councils and other community affiliations.
- Support Indigenous prospecting initiatives in remote regions
Emulating Québec’s support for the Cree Mineral Exploration Board and Nunavik Exploration Fund, federal, provincial and territorial governments should provide funding to Indigenous authorities and organizations, including First Nation Governments, Tribal Councils, Métis Councils, and Inuit Associations to raise awareness of early exploration opportunities and encourage local prospecting in remote regions in order to attract investment.