mining and indigenous peoples

Mining andIndigenous Peoples:

CASE STUDIES

INTERNATIONAL COUNCIL ONMETALS AND THE ENVIRONMENT

The International Council on Metals and the Environment (ICME) has published this document as part of its ongoing efforts to provide informationon environmental, health and related matters affecting the metals mining

and producing industry. The contents of ICME publications range from general and technical information to discussions of policy and regulatory issues. The topics examined may be of interest not only to industry but also to others, including policy makers, regulators, educators and the public at large. ICME hopes that these publications provide insight into what are sometimes difficult and complex issues.

Although the views expressed are those of the authors, ICME welcomes questions and comments on the perspectives and information contained in its publications. ICMEalso appreciates suggestions regarding other issues of public importance for possiblefuture publications.

Founded in 1991, ICME is a non-governmental organization that promotes the development and implementation of sound environmental and health policies andpractices in the production, use, recycling and disposal of non-ferrous and preciousmetals. In addition to publications, ICME’s extensive information program includesa Web site and a quarterly newsletter with a worldwide distribution.

The International Council on Metals and the Environment294 Albert Street, Suite 506Ottawa, OntarioCANADA K1P 6E6Tel.: +1 613 235-4263Fax: +1 613 [email protected]

Mining and Indigenous Peoples: Case Studies, July 1999.

ISBN 1-895720-31-1

Cover: All images are taken from the case studies. The photos, from left to right, are courtesy of Hamersley Iron Pty Limited, the Northwest Alaska Native Association, Placer Dome Inc., WMC Limited, Falconbridge Limitedand WMC Limited, respectively. The painting, entitled Pilbara Travelling Grounds, is courtesy of the artist, June Djiagween, an Aboriginal woman from the Pilbara region of Western Australia. Ms. Djiagween has won widespread acclaim for her art, including the Cossack Art Awards in 1996, 1997 and 1998 for the overall bestPilbara Aboriginal Artist. Ms. Djiagween worked for Hamersley Iron, a subsidiary of Rio Tinto, from 1996 to1998, gaining an Engineering trade certificate as a fabricator. In 1998, she received Australia’s national Award for Outstanding Woman of the Year Studying in a Non-traditional Area.

Mining andIndigenous Peoples:

CASE STUDIES

INTERNATIONAL COUNCIL ONMETALS AND THE ENVIRONMENT

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iPreface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iiiOverview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .v

Case Study A

The Aboriginal Training and Liaison Unit . . . . . . . . . . . . . . . . . . .1Hamersley Iron Pty Limited

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1RIO TINTO GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2THE PILBARA REGION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2THE NEED FOR CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3ACTION PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Operator Work Skills Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5Apprenticeships and Traineeships . . . . . . . . . . . . . . . . . . . . . . . . . . .6Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Business Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Contract Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Cross-Cultural Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Community Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Aboriginal Culture and Heritage . . . . . . . . . . . . . . . . . . . . . . . . . . . .8The Yandi Land Use Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

LESSONS AND BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Case Study B

The Musselwhite Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Placer Dome/TVX Gold

BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11PLACER DOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11THE PROJECT FRAMEWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12THE MUSSELWHITE GENERAL AGREEMENT . . . . . . . . . . . . . . . . . . . . . .14

The Negotiation Process—Culture, Experience and the Legacy of Past Practices . . . . . . . . . . . . . . . . . . . . . . . . . . .15

ACHIEVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16Business Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

CHALLENGES TO IMPLEMENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .17ELEMENTS CONTRIBUTING TO A SUCCESSFUL AGREEMENT . . . . . . . . . . .18LESSONS LEARNED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Case Study C

The Raglan Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21Falconbridge/Société minière Raglan du Québec ltée

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21HISTORY OF NUNAVIK AND MAKIVIK CORPORATION . . . . . . . . . . . . . . . .23

Contents

iForeword

The management of community issues is becoming an increasingly importantfactor in determining the contribution of industry operations to the sustainabledevelopment objectives of society. Today, corporations are being called upon toassume greater responsibility for the economic, environmental and social impactsof their activities and to work with stakeholder groups to ensure that communityneeds are also met. As well, many governments, insurers and financial institutionsare expecting transparency in the way companies manage their social responsibilities.

Nowhere is this more evident than in the mining industry. Because mining represents a long-term investment, often in remote areas, the way a companymanages its relationship with local—often Indigenous—communities will be a critical factor in the success of its activities. Mining companies not only represent a major source of income and employment, but they are also often keycontributors of infrastructure and services, particularly in the areas of health andeducation. Close relations with the local community are important to enhancingcommunity capacity to deliver social services, to promote growth of the localeconomy and to allow the traditional cultures and lifestyles of Indigenous peoplesto flourish and develop, even after mine closure.

The interface between mining companies and Indigenous communities involves a number of complex issues. There is no one uniform model that can be applied.Approaches to these issues must be tailored to local circumstances and cultures,which are likely to vary among communities, even within the same country.ICME has produced this collection of case studies to illustrate the approachestaken by five mining companies in their relations with Indigenous communities.It is hoped that their experiences will prove beneficial to the industry worldwide.

ICME would like to acknowledge the important contribution that Mr. RogerHill has made to this publication. Mr. Hill is a principal of Hill Sloan Associates,an economics and management consulting firm that specializes in corporate best practice. He is acknowledged as a leading expert on the interface between corporations and Indigenous peoples and has written or co-authored a number of publications in this field, including Corporate Aboriginal Relations: Best PracticeCase Studies. Mr. Hill not only wrote the overview section of the present casestudies, but he also developed a framework to guide their preparation. As well, he critically reviewed each of the case studies to ensure a uniform standard of quality.

Special thanks must also go to Mr. Hans Matthews, who has had a great deal ofexperience in explaining Indigenous concerns to the mining industry. In addi-tion, ICME wishes to thank the companies that contributed to the case studies,as well as Wylie Thomas, a former research officer at ICME, whose hard workand dedication contributed greatly to this project.

Gary NashSecretary GeneralICME

Foreword

iiiPreface

Mining companies and Indigenous communities have undergone significantchange. For the latter, this change began several hundreds of years ago, whilefor the mining industry, the change has been sudden, occurring mostly duringthe past few decades. What is this change? It is social and economic change? In many cases, a social and economic degradation has occurred in Indigenoussociety since commercial mining began in traditional Indigenous territories.Some from industry have argued that this change has not occurred or, in theextreme, many did not notice it because they were not aware of—or chose to ignore—the existence of Indigenous peoples near their operations. Morerecently, however, mining company leaders are freely admitting that in the past,the industry has had, in many situations, a devastating effect on the Indigenouscommunities. They want to change this trend.

Today, many mining companies are getting more involved in helping establish apositive social and economic environment in Indigenous communities aroundthe world. Within the past few decades, there has been a growing number ofmining companies that believe they can complement the aspirations and needsof the community. Through their operations, they have begun to work in tandem with Indigenous communities to help them establish and maintain ahealthy community. Mining company leaders admit that they must change theway they conduct their business and must be more socially responsible. Thepresent publication, Mining and Indigenous Peoples: Case Studies, does much to facilitate the awareness of the trend toward enhancing the Indigenous community component of the social, economic and environmental responsibilityof the present and future global mining industry.

Though there are many examples to illustrate how industry and communitieshave worked together, this volume expresses the pride some companies have in their relationship with neighbouring communities. From the companies’ perspective, this relationship has awarded the company with security of investment and security of access to mineral resources. More importantly, theyhave also seen significant, positive social and economic benefits going to thelocal community, and hence a positive change in the community. These companies do not view Indigenous peoples as obstacles to resource developmentbut, rather, as partners in resource development. They have evolved from theold way of mere piecemeal community participation in their operations to anew way of including the community in decision making, business developmentand joint lands management. For these companies, the paradigm has shiftedfrom Indigenous participation in mining to mining company participation inthe Indigenous community.

Preface

vOverview

This set of case studies documents a number of mining projects in which mining companies haveestablished mutually beneficial relationships withIndigenous communities. The five case studies wereselected to illustrate that positive relations are takingplace in a wide range of jurisdictions. They are: RioTinto’s Hamersley Iron projects in Australia;Cominco’s Red Dog mine in Alaska, United States;WMC’s Tampakan project in the Philippines; PlacerDome’s Musselwhite mine and Falconbridge’s Raglanmine in Canada.

The case studies demonstrate that we have entered anew era—one characterized by a recognition on thepart of corporate leaders that it makes good businesssense to work with Indigenous stakeholders, torespond to local concerns and to create opportunitiesthat meet the aspirations of Indigenous people.

There are a number of reasons why mining companiesare paying much more attention to relations withIndigenous communities:

• As new areas of exploration are opened up, miningcompanies are coming into increasing contact withIndigenous communities.

• More and more countries are acknowledgingIndigenous peoples’ rights and title to traditionalterritories.

• High-profile failures have made mining companiessensitive to the project risks and corporate risks thatcan arise from an inability to obtain Indigenouscommunity support.

• Mining companies are becoming more responsive to stakeholder expectations for corporate socialresponsibility, recognizing that Indigenous communities are particularly vulnerable to social,cultural and economic disruption from mining projects.

DRIVERS FOR CHANGEThe case studies point to three factors that are drivingmining companies to embrace proactive relations withIndigenous people: legislative requirements, strategicbusiness considerations, and the expectations anddemands of Indigenous people.

The case studies clearly illustrate the importance ofnational or sub-national legislation that recognizes therights of Indigenous people or gives them the abilityto influence the timing and scope of mining projectsand, in some cases, the right to determine whether or not a mining project can proceed. This legislationcan include:

• Constitutional recognition of ancestral domain forIndigenous cultural communities;

• Prior consent requirements for the opening ofancestral domain lands and for royalty payments to affected Indigenous communities;

• Land claim settlements that award Indigenous people ownership of mineral deposits and/or specialrights of land ownership and land use, includinghunting, fishing and trapping; and,

• Court decisions and legislation that allowIndigenous people to re-establish title overIndigenous lands.

There is also a growing corporate recognition of thebusiness benefits that flow from proactive and positiverelations with Indigenous communities. For example:

• By engaging in consultation with Indigenous peopleearly in the project, mining companies are able toidentify risk factors earlier and develop programs toaddress those factors, thereby lowering the risk ofthe project as early as possible.

• Indigenous peoples relations programs or comprehensive socio-economic agreements can

Overview

by Roger Hill, Hill Sloan Associates Inc.

vi Mining and Indigenous Peoples: Case Studies

be instrumental in obtaining and maintaining necessary support for project approvals and ongoingoperations.

• One company also found that assisting Indigenouspeople in obtaining greater security of title providesgreater security to the project, since it preempts theability of squatters or settlers to override theIndigenous peoples’ interests.

As an outgrowth of their greater leverage over miningprojects, Indigenous people expect to participate morefully in the project benefits and to have more attentionpaid to their concerns. In addition, they have greateraccess to information and expertise through non-governmental organizations (NGOs), developmentagencies and the Internet to help them define theirexpectations. The case studies demonstrate that priorities vary from community to community, but a clear pattern emerges:

• Indigenous people want more involvement in allphases of the project.

• They want to participate directly in the flow ofbenefits from the project.

• They want more involvement in environmentalissues, since these are intimately linked to their culture, values and traditional life styles.

RESPONDING TO INDIGENOUS PEOPLES’CONCERNS AND ASPIRATIONSAs demonstrated by the case studies, successful relationships between mining companies andIndigenous people are directly linked to the process of consultation and negotiation which ensures that the fears and aspirations of Indigenous people areheard and accommodated during the development and operation of the project.

ConsultationThe case studies highlight the importance of community consultations. Community consultation is used to learn about the needs, concerns and aspirations of the Indigenous communities, to ensurecommunity participation in formulating developmentprograms and improving living standards, and toensure that those immediately affected by the miningactivities understand the consequences of the company’s presence in the area. The early and ongoinginvolvement of local communities creates a climate of

trust, keeps expectations realistic and creates a sense ofownership by all over the process.

The approach to consultation varies from project toproject and consultation techniques may vary over theproject cycle. The case studies demonstrate that mostcompanies initiated consultation directly with affectedcommunities. Some relied on local Indigenous organizations to carry out consultations through aprocess of village meetings which sought consensus on mine development. Other companies have used a “problem census” approach, using independent professionals who conducted workshops and focus discussion groups within the communities to enableIndigenous people to identify their principal needs and issues of concern. Negotiated agreements oftenincorporate ongoing consultation and joint decision-making mechanisms.

To be effective, consultation should be inclusive of all relevant stakeholder groups. If an initial focus onIndigenous stakeholders has resulted in resentment in other communities, the process of consultation iswidened to include other stakeholders in the region.

Enhancement and MitigationIn response to the concerns and aspirations raised byIndigenous communities, mining companies havetaken proactive steps to minimize negative social andeconomic impacts and to ensure that local Indigenouspeople benefit from opportunities created.

• Given the nature of traditional livelihoods, environmental issues are often of particular concern. In response, mining companies havedesigned projects to minimize liquid effluent, waterconsumption and air emissions while controllingacid mine rock drainage and providing for progressive reclamation of tailings.

• Where the pre-eminent concern of the Indigenouspeople is to protect their interest in their traditionalterritory and to secure title to that land, miningcompanies have placed priority on helping themobtain formal government recognition of theirclaims.

• When Indigenous communities have been concerned about the effect of the mine’s presenceon their culture and values, companies have utilizeda fly-in workforce which prevents a major influx of

viiOverview

migrants and preserves the region’s indigenous culture. Strict drug and alcohol policies are alsoimplemented to help limit social problems. Flexiblerotation schedules and leave policies allowIndigenous employees to continue to participate in their traditional way of life.

• In situations where skill levels need to be improvedin order for local Indigenous people to participatefully in employment opportunities from the mine,companies are making major commitments to training and related programs. These can includeextensive on-site training programs, such as apprenticeship training and technical training, as well as participation in co-op education, engineering scholarships and school-to-work partnerships.

• As well, proactive measures are introduced to provide Indigenous people with business skills andsupport to help them establish business enterprises.

Negotiated AgreementsIn four of the case studies, significant aspects of therelations between the mining companies and theIndigenous communities are defined through formalnegotiated agreements: the Cominco–NANAAgreement (Red Dog), the Raglan Agreement between Falconbridge and Makivik Corporation, the Musselwhite Agreements between Placer Dome,First Nations groups and government stakeholders,and WMC’s Agreements with the Bla’an cultural communities (Tampakan).

Key elements covered in most of these agreements are:

• preferential employment opportunities for localIndigenous people;

• education and training commitments;• financial compensation;• preferential business opportunities; and• environmental commitments.

Particularly noteworthy is the emphasis thatIndigenous communities have placed on ensuring that the agreements contain specific arrangements for establishing advisory committees to monitor environmental issues.

BENEFITS TO INDIGENOUS COMMUNITIESThe case studies demonstrate clearly that the development of mining projects can provide a widerange of tangible benefits to Indigenous communities.The principal economic benefits are employment,business and financial benefits. Other benefits includesocial services, education, training, community development and community renewal.

• Some of the negotiated agreements include specificmeasures to promote the employment of localIndigenous people at all levels of the project as wellas to promote local hiring targets.

• In addition, certain companies encourage all oftheir major contractors to open up opportunitiesfor employment of Indigenous people with relevantqualifications and experience.

• Mining developments are contributing to regionalemployment and economic development throughcontracts for the supply of goods and services to themine. The case studies demonstrate that Indigenouspeoples’ businesses and joint ventures provide awide range of products and services, includingaccommodation and food, drilling, administrativesupport, lubricants, explosives, transportation andtrucking, engineering, mechanical and electrical,janitorial, mine construction, land rehabilitation,railway line maintenance, painting, gardening, sitemaintenance and even open pit mining.

• Three of the case studies provide illustrations of thedirect financial benefits that can flow to Indigenouscommunities from mining developments. Thesemay involve guaranteed financial returns throughadvanced net smelter return royalties and net proceeds royalties; financial contributions to local municipalities in lieu of taxes to support educational and economic development opportunitiesfor area residents; compensation payments throughguaranteed payments and profit sharing; and royaltypayments based on the mine’s gross output.

• By offering educational support and training programs to Indigenous people affected by theiroperations, mining companies are providing themwith skills that are valuable not only to the mineoperation but to the community as well. They mayalso be transferable to other work environments.

viii Mining and Indigenous Peoples: Case Studies

• Mining development can contribute to communityrenewal and foster improved infrastructure and living conditions. Assistance ranges from the provision of earth-moving equipment and operatorsfor road works to the conducting of training courseson management and community governance. Thecompany may support community-run coursesdesigned to improve the knowledge, skills and self-esteem of community members. In response toIndigenous peoples’ concerns about the growinglack of interest among younger people in traditionalvalues and beliefs, the company may provide assistance to communities in matters such as themaintenance of traditional ceremonial grounds and burial sites; transport for elders to conduct traditional activities; the recording and mapping of traditional stories, place names and heritage sites;and even the management of sites outside its operations areas.

• One company documents its community development commitments involving health andeducation services, housing, water supplies andimproved roads.

One important result of these companies’ initiatives is that Indigenous people are gaining new knowledgeand skills and are being provided with choices andopportunities for the future. They are increasingly participating in the economic development of theirtraditional lands and can see a positive future for their children.

LESSONS LEARNEDThe five case organizations all make it clear that thereis still much to learn and much to improve in theirinitiatives to develop successful relationships withIndigenous communities. While the lessons learned are often specific to the company and its project experience, a number of observations have broaderapplication.

1. Respect for Indigenous Peoples’ RightsSuccessful relationships are anchored in a basic respect for Indigenous peoples’ rights and their interests in the land.

2. The Importance of Corporate CommitmentForging relationships of mutual understanding andrespect is more easily achieved if supported by a clear corporate policy commitment, such as an Indigenous peoples’ policy or a community policy.

The commitment by senior management is also important. Since community relations revolve around developing a reputation based on trust, the support of senior management as well as appropriate resourcing are essential for success in what is a fundamentally long-term process. The highest levels of the company must understand that developing relationships and gaining the participation of Indigenous people will cost moneyand take time and goodwill.

3. The Role of Third PartiesThe role of third parties can be both positive andnegative. For example, the involvement of trustedfacilitators can aid the process of negotiating anagreement. All of the case studies make clear thatlocal and national government agencies (and whereappropriate, international development agencies)have an important role to play in areas such aseducation, training and social services, since mining companies do not have the in-house capacity to deliver community programs on a sustained long-term basis. However, on the negative side, some advocacy groups can make it difficult for mining companies to develop a relationship with local communities. In these circumstances, it is important that mining companies actively engage with the advocacygroups and encourage them to be more effectiveby building the capacity of the local community to interact with resource companies in the developments that affect it.

4. Developing Effective ProgramsFor Indigenous peoples’ programs to be effective,they must be developed to meet the needs ofIndigenous stakeholders; they should be operateddirectly by the company (not outsourced) in orderto build and gain community trust; and theyshould be developed to result in positive outcomes—training simply to “stack the numbers”is not a long-term option.

ixOverview

5. Involving the Wider CommunityThe company must approach and work with boththe Indigenous and non-Indigenous communityconcurrently, otherwise some groups may feel disaffected by the attention given to others.Defining the community as only one interestgroup may disenfranchise other key groups.

6. Cross-Cultural UnderstandingThe company and the community, although partners in negotiated agreements, are very different entities, and this can lead to frictionunless the differences are understood by bothsides. The community usually operates throughconsensus decision making that places importanceon taking the time to build understanding amongits members. On the other hand, the companyoperates through a hierarchical decision-makingmodel that values quick decision making andresponsiveness. The community often does notunderstand the cyclical nature of the mining business. The two partners may be operating fromdifferent value structures.

In addition, the management of issues and their recognition as issues are often culturally embedded. As such, it is necessary for the company to consult with communities in identifying issues, adapt its problem-solvingapproach to the cultural context, and make accommodations between two very different time frames for conducting business.

7. The Limits to Formal AgreementsMining companies are finding that legal agreements cannot anticipate all aspects of anevolving relationship. If possible, agreementsshould provide mechanisms to deal with unforeseen problems as they crop up. However, it is open-mindedness and flexibility on the part of all parties and a willingness to make thingswork that are essential to resolving disputes. It isimportant also to keep expectations realistic byengaging communities in dialogue at all stages andby keeping channels of communication open, thusensuring timely feedback.

8. Importance of Respect, Understanding and ConsultationCompanies are recognizing that the keys to building and maintaining successful relationshipswith Indigenous people are respect, communications,continuous consultation and flexibility.

LOOKING FORWARDThe measurable progress that has been made by theseand other leading mining companies in the 1990s provides a good base for enhanced relations betweenthe industry and Indigenous people over the nextdecade. However, much more needs to be done. Thebenchmarks set out in these case studies are more theexception than the norm in the mining industry. In addition, expectations are building for mining companies to take a much more comprehensiveapproach to sustainable development. A key challengewill be for them to integrate principles of sustainabledevelopment into their relations with Indigenous people in such a way as to contribute to meaningfuloutcomes for Indigenous communities.

Roger Hill is one of the principals of Hill SloanAssociates, an economics and management consultingfirm that specializes in corporate best practice. Heholds an MA in Economics from CambridgeUniversity. Prior to becoming a consultant, he wasDirector of Trade Policy and Director of Labour Policyfor the Government of Ontario, Canada. He alsoserved as a special advisor to the Canadian Departmentof Foreign Affairs on US Trade Relations. He hasserved on the Steering Committee for the World Bank’sReview of Social and Environmental Assessment andCorporate Social Responsibility.

Mr. Hill has written numerous case books and articlesand co-authored the book Corporate AboriginalRelations: Best Practice Case Studies, which is used bycorporations, communities and governments aroundthe world. He can be reached by e-mail at:[email protected].

1The Aboriginal Training and Liaison Unit

INTRODUCTIONIn the vast and remote Pilbara region of northwestAustralia, Hamersley Iron Pty Limited has broken newground in developing a positive and effective workingrelationship with local Aboriginal people. Through anapproach that places heavy emphasis on consultation,cooperation and respect, Hamersley and localAboriginal people are working together to ensuremutual long-term benefits from the company’s opera-tions in the region. In the process, Hamersley is estab-lishing new standards in this critical area of relationsbetween mining companies and Indigenous people.

Hamersley Iron Pty Limited is a member of the RioTinto Group of companies formed in 1995 by the uni-fication of The RTZ Corporation PLC and CRALimited. It is one of Australia’s largest producers ofiron ore and a major supplier to the Pacific Rim andEuropean steel industries. Hamersley’s operations arelocated in the sparsely populated Pilbara region ofWestern Australia, about 1100 kilometres north ofPerth, where iron ore is mined, processed and exportedfrom six mines along a company railway to its owndual port facilities. In 1998, Hamersley shipped 53.1 million tonnes of ore. Approximately one third

of the ore exported by Hamersley goes to the Japanesemarket. This ore is supplied from the company’sMount Tom Price, Paraburdoo, Marandoo, Brockmanand Yandicoogina mines. Hamersley’s Channar mine(Hamersley 60 percent) is a joint venture with thePeople’s Republic of China. Hamersley’s latest mine—Yandicoogina—began production in early 1999, sever-al months ahead of schedule and well under budget. Inits 33 years of operation, the company has exportedmore than a thousand million tonnes of ore.

Hamersley Iron is an important economic force in theregion, employing some 2000 people in WesternAustralia. For reasons which are described below, thelocal Aboriginal people had not, until recently, sharedas well as other groups in the prosperity generated bythe company’s mines. Nor had they been adequatelyinvolved in decisions and activities affecting their tra-ditional lands, culture and heritage.

In 1992, after difficulties over Aboriginal issues hadcaused a two-year delay in the start-up of itsMarandoo mine, Hamersley recognized there was aneed to find a better way of working with the

Case Study A

The Aboriginal Training andLiaison Unit

A Hamersley Iron trainladen with iron ore

leaves the train load-outarea at the Yandi mine,

bound for the port ofDampier.

The Aboriginal Training andLiaison Unit

Hamersley Iron Pty LimitedPILBARA REGION, WESTERN AUSTRALIA, AUSTRALIA

2 Mining and Indigenous Peoples: Case Studies

Aboriginal community. An Aboriginal Training andLiaison Unit (ATAL) was established as a means ofincreasing Aboriginal participation in the companyand mining industry, in general, and of supportingAboriginal people in the preservation of their traditionsand culture through consultation and cooperation.

ATAL develops and manages a range of programsdesigned to help Aboriginal people achieve self-suffi-ciency and independence while maintaining their traditional links with the land. There are a number of training programs to equip local people with theskills necessary for working in the mining industry and to encourage the development of local Aboriginalbusinesses. Other programs are designed to fosterimproved education, cross-cultural development andthe protection of Aboriginal heritage and culture.

Through its consistently consultative approach, ATALhas succeeded in establishing an effective working relationship with local Aboriginal communities. A significant example of this is the signing in 1997 of a historic land use and access agreement betweenHamersley Iron and the Gumala Aboriginal Corpora-tion, representing the Banyjima, Yinhawangka andNyiyaparli language groups, as part of the Yandicooginamine development plan. The agreement, the first of itskind in Australia, will provide local Aboriginal peoplewith benefits of more than A$60 million over a periodof 20 years, in the form of long-lasting communitydevelopment, training, employment and businessdevelopment.

RIO TINTO GROUPHamersley Iron’s parent company, Rio Tinto Group, is the world’s leading mining company. The Group’scompanies operate in 40 countries around the globe,employing some 51 000 people and supplying a rangeof minerals and metals that includes precious and basemetals, diamonds, salt, talc and coal. In 1997, theGroup generated sales of US$9.2 thousand millionand net earnings of more than US$1.2 thousand million.

Rio Tinto takes a long-term and responsible approachto all aspects of its business, believing that its competi-tiveness and success depend not only on its employeesand the quality and diversity of its assets, but also onits record as a good neighbour and partner around the

world. This commitment is expressed in Rio Tinto’sstatement of business practice, The Way We Work,which details the procedures and policies to be giveneffect by all of its operations. The Group’s employ-ment and community policies commit operations tomaking a positive contribution to local communitiesthrough a relationship based on mutual respect, activepartnership and long-term commitment. As a memberof the Rio Tinto Group, Hamersley subscribes to theseprinciples and gives them expression through, amongother things, ATAL’s policies and programs.

THE PILBARA REGIONHamersley’s large-scale, sophisticated operations areconducted across the challenging landscape of thePilbara, a region of more than half a million squarekilometres characterized by aridity and climaticextremes. The region is one of great beauty and diver-sity—from flat red plains and salt lakes to spectacularmountains and gorges. Summer temperatures peak atmore than 40oC for periods of up to 100 days at atime. In winter, the weather can be quite cool. It is anarea of rich natural resources that accounts for a majorshare of Western Australia’s mineral production, pre-dominantly iron, oil and gas, gold and salt. In addi-tion, the region is home to a pastoral industry basedon beef cattle and sheep.

According to known archaeological evidence, humanpresence in the region dates back approximately 20 000 years, and for thousands of years beforeEuropean settlement, the Pilbara was home toAboriginal people who had adapted to the harsh environment.

Around 1860, European settlers introduced pastoralactivities, and Aboriginal people undertook much ofthe work on the cattle and sheep stations whichextended over hundreds of thousands of hectares,reflecting the relatively low carrying capacity of theland. For a number of reasons, including the modern-ization of the pastoral industry, the inland Aboriginalpopulation declined as many people resettled in coastaltowns such as Onslow and Roebourne. It was not untilthe Commonwealth (federal) government removed its30-year embargo on exporting iron ore in 1960 thatthe Pilbara population began to grow substantially. Acombination of large natural resources and vast capitalinvestment made possible a viable new iron ore export-ing industry. In 1966, Hamersley began exporting ore.


The discovery of natural gas off the Pilbara coastbrought further development and expansion. Thedecade to 1975 saw about A$1.8 thousand millioninvested in mines, railways, ports, power supplies andnew towns. Hamersley alone spent A$800 million, ofwhich A$500 million was spent on industrial andsocial infrastructure, including three new towns. Thestate government of Western Australia shared in devel-oping the township of Karratha, the regional centre,which today has a population of approximately 11 000.

The region’s non-Indigenous population has increasedtenfold since the 1960s. Whereas once there were onlyremote pastoral homesteads surrounded by vast hold-ings and employing relatively few people, now thereare thriving modern townships with thousands of peo-ple, as well as mines, railways and ports, all sustainedby iron ore development. Today, the region has a pop-ulation of 45 000, the majority of which is distributedunevenly throughout the western third of the region.Community infrastructure has grown to support thepopulation, encompassing schools, utilities, shoppingcomplexes, community facilities, hospitals, hotels, airports, service stations, sealed roads, television and radio.

There remains, however, a stark con-trast between these thriving, affluentmining towns and the welfare-depen-dent towns of Roebourne and Onslowwith their predominantly Aboriginalpopulations. Although the developmentof mining towns potentially meant vastemployment opportunities for the localpopulation, this generally did notoccur. The emphasis was on gettingmulti-million dollar projects into pro-duction in the shortest time frame, and a skilled workforce was brought in from around Australia and oftenfrom overseas.

The reality was that members of theAboriginal population, which had onlyrecently come to grips with relocationfrom the stations, were thrown intoturmoil again. Aboriginal residents,removed from their traditional lands,largely unemployed and welfare-depen-dent, felt deserted by the old industry.

Problems such as alcohol addiction arose, thus leadingto continuing social disadvantage.

A recent reaction to this situation in the coastal townshas been the “homeland movement” manifest amongolder members of the communities. These groups aremoving back to small communities on their traditionallands to reinstate their lore and customs, and to escapethe social and cultural disruption of the coastal communities.

THE NEED FOR CHANGEHamersley’s early role in the region included con-tributing to the social and cultural life of its town-ships. As the management of the towns became the responsibility of emerging local governments,Hamersley’s commitment continued in a supportingrole in cultural, educational, social and sporting activities.

During this same period, Aboriginal communities weremoving to a new awareness of their aspirations andbeginning to communicate their expectations andbeliefs about the development occurring in the region.

The rugged Hamersley Ranges, in the Pilbara region of WesternAustralia. Hamersley’s six mines are situated in the Pilbara.


Their new-found voice and its effect on the existingrelations between mining companies and Aboriginalcommunities were already under notice by Hamersleyand its parent, Rio Tinto. The experience of RioTinto, with its involvement in many resource develop-ments across wide areas of remote Australia, confirmedthe need for a fresh approach to dealing withAboriginal people. This was reinforced by Hamersley’sown experience during its exploration activities in thePilbara region, when, for the first time, representativesof an Aboriginal group approached the company todiscuss its field activities on traditional land. Prior tothis, company contact with Aboriginal people hadbeen confined to formal her-itage procedures, such as thesite surveys required byWestern Australia’s AboriginalHeritage Act. This unprece-dented approach by Aborigi-nal people opened the wayfor the development of a newconsultation process, whichcontinues to this day andinvolves regular meetingswith Aboriginal people andongoing contact with theircommunities to monitor and

discuss matters connectedwith Hamersley’s activities ontraditional lands.

Eventually, it was the difficul-ty experienced by Hamersleyin seeking approvals for thedevelopment of its major newMarandoo mine, in 1992, thatprompted the company’s deci-sion to formalize its approachto Aboriginal affairs. Conflictwith Aboriginal people over anumber of issues had delayedthe establishment of the minefor two years, and it was clearthat relations needed to be puton a more effective footing.

Thus, in 1992, Hamersleyestablished the AboriginalTraining and Liaison Unit(ATAL) at a cost of $A3 mil-

lion in capital equipment and an operating budgetwhich now exceeds $A3.5 million annually. ATAL pro-vides the focus and specialized support and resourcesneeded to develop and manage the programs thatenable Aboriginal people to participate in and benefitfrom the company’s operations.

In developing its range of programs, ATAL has soughtguidance from the Aboriginal communities to ensurethe programs meet the needs of Aboriginal people.Initially, this involved a “problem census,” which usedindependent professionals to conduct workshops andfocus discussion groups within the communities to

enable Aboriginal people toidentify their principal needsand issues of concern. Theresearch clearly identified anumber of issues that havebecome the basis for ATAL’sdevelopment programs.Concerns centred around communication betweenHamersley and the communi-ty, living conditions in thecommunities, job training andemployment opportunities,assistance with new businessATAL worker Mervyn Smith.

Pilbara Travelling Grounds, 1998, acrylic painting by Aboriginal artist June Djiagween.

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development, and a growing lack of interest amongyounger Aboriginal people in traditional values andbeliefs. The problem census also revealed a number of health and social issues outside of Hamersley’sprovince; for example, substance abuse and inappro-priate health services.

This research led the way to establishing positive aimsand directions for ATAL, including:

• increasing job training, employment and businessopportunities to enable greater participation byAboriginal people in the Hamersley workforce andin the mining industry in general;

• enabling the development of Aboriginal communi-ties through the fostering of improved infrastruc-ture and living conditions; and,

• ensuring the protection and preservation ofAboriginal heritage and culture.

With these clear objectives and the support of thecommunities, ATAL has developed a wide range ofprojects, called “action programs,” to address the prob-lems identified both during and after the problem cen-sus. The first program, begun in 1992, was a skillstraining program on mobile equipment operation,which qualified graduates for job vacancies on anequal footing with other applicants. New programshave been added continuously and the range nowincorporates apprenticeships and traineeships; a busi-ness development program to assist with new businessventures; a cross-cultural training program withinHamersley’s workforce, the Aboriginal communities,and the wider community; an education programdeveloped in cooperation with education authorities toencourage Aboriginal youth to remain longer in theschool system; pastoral worker traineeships onHamersley-owned pastoral properties; a communitydevelopment program; and a heritage programdesigned to protect Aboriginal sites from disturbanceduring exploration and mining. Each of these differentATAL programs incorporates a number of specializedactivities, courses and training modules.

The guiding principle for all ATAL programs is to provide the skills, support and resources that enableAboriginal people to achieve independence and self-sufficiency while maintaining their traditional links

with the land. Hamersley believes that Aboriginal people should benefit from the development in theregion. The company recognizes that local communitiesare a valuable human resource and that, given genuinetraining and employment opportunities, localAboriginal people can be skilled and valuable employees.

ACTION PROGRAMSGuided by Rio Tinto’s corporate policy developmentand wide experience at other sites around the world,ATAL has ensured that each of its action programs is“homegrown” to meet the specific needs of the localAboriginal communities and has achievable objectiveswithin the particular economic and social climate of the Pilbara. Care has been taken to acknowledgediverse groups and individual aspirations and attitudes.

Operator Work Skills TrainingThis core ATAL program trains Aboriginal men tooperate heavy machinery, providing them with theskills base needed for employment in Hamersley’soperations and in other industries. The traineeshipemphasizes practical on-the-job training rather thanclassroom instruction and the people selected for the course are engaged as Hamersley employees on 18-month contracts. The program, which has nationalaccreditation, was developed in-house and is designedto meet both Hamersley and industry standards.Trainees graduate as skilled operators with a soundknowledge of company policies and procedures and animproved ability to manage their workplace and socialresponsibilities. They are well equipped to compete for

Hamersley workers Robert Lee (left) and Malcolm Lee.


Aboriginal children in the Roebourne area. Initiatedby Hamersley, it is a collaborative project involvinggovernment education authorities, other resource companies in the region, the Aboriginal community at the town of Roebourne, and other organizations.

The program is designed to encourage the support offamilies, community elders, teachers, industry andother agencies. It enables participating students toattend special enrichment centres outside schoolhours, where they receive the guidance and support ofmentors and tutors from local high schools. Since theprogram began, there has been a dramatic improve-ment in school attendance and achievement by thestudents and enthusiastic support and commitmentfrom the parents and community elders.

Business DevelopmentThe ATAL Business Development program supportsAboriginal people in the establishment of businessenterprises by providing them with business develop-ment skills and support. Aboriginal communities thathave identified business opportunities are given adviceand support to assist with the setting up and operationof each new venture. ATAL ensures that each proposedinitiative is commercially viable and has a sound busi-ness plan, and that the people involved have theopportunity to develop necessary skills and receiveongoing support through mentoring. The program hasresulted in a number of innovative and successful busi-nesses by Aboriginal people—ventures such as waste

recycling, seed collection, weed sprayingand fence building on pastoral properties.

Three enterprises in particular serve toillustrate the diversity and scope of theBusiness Development program:

• Ieramugadu Gardening Services:Workers from the Ieramugadu commu-nity at Roebourne provide gardeningand maintenance services toHamersley’s Dampier OperationsDivision. Through assistance with busi-ness planning and marketing, ATAL ishelping them widen the range of ser-vices offered, expand the business andprovide more employment opportuni-

ties for Aboriginal people. The business currentlyemploys 12 people.

• Cross-Cultural Businesses: With ATAL’s assistance,Aboriginal communities in Tom Price andRoebourne have formed two companies to developand market a range of cross-cultural training cours-es to Hamersley Iron, other companies and thewider tourism market. Ten people work in the corebusiness, but when courses are being given theremay be up to 20 community people involved.

• Gumala Enterprises Pty Ltd (GEPL): This is thebusiness arm of the Gumala Aboriginal Corpora-tion, the entity which manages the interests of theAboriginal people involved in the YandicooginaLand Use Agreement. GEPL operates three joint-venture businesses established with assistance fromATAL to provide services for the development ofHamersley Iron’s A$700 million iron ore mine atYandicoogina. The three businesses—an earth-moving contractor, equipment hire company and camp management company—now employ 30 people and have widened their operations to service other mining developments in the region.(GEPL’s operations are described later in more detail.)

Contract ServicesIt is Hamersley’s objective to ensure that Aboriginalpeople have the opportunity to compete on equalterms for employment, both within Hamersley opera-tions and within the companies providing contract services to its projects. For this reason, all contractors

Gumala Enterprises workers at the Yandicoogina mine. GumalaEnterprises is the business arm of the Gumala Aboriginal Corporation.


operations proceed without unnecessary delays andconflicts.

The Yandi Land Use Agreement In March 1997, Hamersley Iron and GumalaAboriginal Corporation (GAC) signed the ground-breaking Yandi Land Use Agreement, which paved theway for the development of Hamersley’s sixth mine atYandicoogina. The agreement provides the Banyjima,Yinhawangka and Nyiyaparli language groups—thethree Aboriginal groups living in and around the Yandimine—with specific long-term community benefitsfrom the project. Over the life of the mine, which isexpected to be 20 years, Hamersley will make contri-butions of more than A$60 million to fund communi-ty development, training, employment and businessdevelopment for the local Aboriginal people.

The interests of the Aboriginal groups are being man-aged by GAC. GAC is governed by a representativeboard of Aboriginal people from the three groups andan Aboriginal chairman. These people are in electedpositions. Trust monies are managed by a Trust boardmade up of Aboriginal people, Hamersley people andindustry representatives.

In addition to the funding contributions for commu-nity development and other programs, Hamersley’sATAL unit has helped GAC establish three new joint-

venture businesses to provide services to Hamersley forthe development of the Yandi mine. All three arejoint-venture arrangements between private companiesand Gumala Enterprises Pty Ltd (GEPL), the businessarm of GAC. Gumala Contracting is a joint businessventure with Hamersley Iron to carry out earthworksat the mine; Gumala Hire is owned jointly withCockburn Wreckair, a major Western Australian equip-ment hire company, and provides hire equipment andfuel supplies to contractors working at the mine; P&OGumala, a joint venture with P&O Catering &Services, provides camp accommodation and associat-ed services to Yandi.

These businesses, which currently provide employmentopportunities for up to 30 Aboriginal people, arealready expanding their activities beyond the Yandimine to service other mining developments in theregion.

LESSONS AND BENEFITSAn inclusive consultative approach is critical to devel-oping community ownership of the process and pro-grams, while minimizing criticism of division andpaternalism. Programs must meet the Aboriginal stake-holders’ needs without raising unrealistic expectations.Being inclusive also minimizes the risk of becomingembroiled in community politics.

Construction work on the train link during the development

phase of Hamersley’s new Yandi mine.


In Hamersley’s case, it was important that programswere operated within the company to enable the devel-opment of a positive working relationship with thecommunity based on trust. Outsourcing the programswould have allowed external groups to gain this bene-fit, and community perceptions of Hamersley as aloofand untrustworthy might have prevailed.

The community relations area must be well supportedby company management and must be appropriatelyresourced. The community relations work revolvesaround developing a reputation based on trust, andonly committed, genuine people can achieve this overthe long term.

Training programs must result in positive outcomes. In the case of the Operator Work Skills Training pro-gram, this means genuine, merit-based employmentopportunities. Training simply for the sake of it or“stacking the numbers” is not a long-term option.Employing and retaining Aboriginal employees is facilitated by the provision of two-way cross-cultural

training programs; one culture must understand andrespect the other.

Community relations work in Australia is very fluidand the ability to react quickly and with flexibility isimportant. Hamersley conducts regular meetings andsurveys to ensure that action programs retain relevanceto the Aboriginal stakeholders.

Both the Aboriginal community and Hamersley bene-fit from the new relationship and the variety of pro-grams being conducted. Aboriginal people are gainingnew knowledge and skills and are being provided withchoice and opportunities for their future. They areparticipating increasingly in the economic develop-ment of their traditional lands and can see a positivefuture for their children. Hamersley is a majorexporter of iron ore and realizes that growth opportu-nities through new mines in the Pilbara will beenhanced by the support of Aboriginal stakeholdersand a growing local workforce.

ATAL worker Shaun Wainwright.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Peter EgglestonGeneral Manager–External & Community

AffairsHamersley Iron Pty LimitedLevel 22152–158 St. George’s TerracePerth, WA 6000Australia

Tel: (+61.8) 9327-2444Fax: (+61.8) 9327-2459Email: [email protected]

Or visit the following web site:

Rio Tinto: www.riotinto.com

All photos courtesy of Hamersley Iron Pty Limited except where otherwise stated.

11The Musselwhite Agreements

BACKGROUNDThe Musselwhite gold mine, jointly owned by twoCanadian companies, Placer Dome Inc. (68 percent)and TVX Gold Inc. (32 percent), is located on theshores of Lake Opapimiskan in northwestern Ontario,Canada, about 500 kilometres north of Thunder Bayand the Trans-Canada Highway, which links the coun-try from east to west.

The region is remote and sparsely populated, inhabitedlargely by Indigenous peoples of the Oji-Cree languagegroup. Most of the area is accessible only by air andwinter roads, and until 1995, when an all-weatherroad was built to the mine site, the nearest road ended45 kilometres to the south. Communities are locatedalong riverfronts and lakefronts and are linked duringthe winter months by a network of roads built on thefrozen rivers.

Social and economic conditions are difficult. Formalunemployment hovers between 80 and 90 percent,mitigated by some municipal-level government jobsand seasonal work such as guiding tourists and fire-fighting. There is some understanding of the life skillsof a wage economy, but the small communities of 100to 800 people sustain little economic activity beyond

small grocery or general stores. Hunting remains anactivity of important cultural and economic signifi-cance for the local people. As in the past, life is domi-nated by climate, with annual temperatures rangingfrom +40º C in the summer to –40º C in the winter.

Production at the Musselwhite mine began in 1997,following eight years of negotiations and consultationwith neighbouring communities and various govern-ment agencies, and is expected to yield 2 107 000ounces of gold over its lifetime of 10.6 years. The pro-ject generated 500 jobs during its construction phaseand created 312 new jobs when it began operations,on a fly-in, fly-out basis.

PLACER DOMEPlacer Dome, the mine operator and main venturepartner, is the world’s fifth largest gold producer andat year-end 1998 had in its employ some 8400 people.As a company with operations on four continents,Placer Dome is committed to being a responsiblemember of the global community and to implement-ing a policy of mining and sustainability. In 1997, thecompany formally adopted a Sustainability Policy toguide it in its daily activities and decision making. For

Case Study B

Musselwhite mine site viewed from Opapimiskan Lake.

The Musselwhite AgreementsPlacer Dome/TVX Gold

NORTHERN ONTARIO, CANADA


Placer Dome, sustainability means the exploration,design, construction, operation and closure of minesin a manner that respects and responds to the social,environmental and economic needs of present genera-tions and anticipates those of future generations in thecommunities and countries where it operates. ItsSustainability Policy identifies five basic principles:

• Corporate Commitment: To establish an effectivemanagement system based on ethical conduct and acommitment to continuously improve performance;integrate sustainability as an essential element inthe duties of all employees; and encourage theadoption of sustainability principles by joint-venture partners;

• Public Responsibility: To communicate with stake-holders and work towards consensus based on hon-est discussion and a mutual understanding ofconcerns and needs;

• Social Progress: To contribute to the quality of life ofemployees, local communities and host countries,while respecting their cultures, needs and priorities;

• Environmental Stewardship: To protect humanhealth, reduce the impact of the company’s activi-ties on the ecosystem and return sites to a statecompatible with a healthy environment; and,

• Economic Benefits: To integrate activities with theeconomic development objectives of local commu-nities and host countries in which the companyoperates.

Placer Dome is also committed to recognizing in allphases of company activities the unique historical, lin-guistic and cultural status of Aboriginal peoples and toworking with local communities to ensure that theyshare in the benefits of the company’s mining activitiesand that spiritual sites, traditional pursuits and theenvironment are protected. It is in this spirit that thecompany entered into negotiations with stakeholdersof the Musselwhite mining project, which eventuallyled to the signing of a comprehensive agreement in1992.

THE PROJECT FRAMEWORKA major challenge facing the company in its effort todevelop the Musselwhite site was the number of FirstNations (Indigenous communities) potentially affectedby the mine, and their complex interrelationships andinterests. The North Caribou First Nation, on whosetraditional land the mine is situated, is one of six com-munities that make up the Windigo First NationsCouncil (WFNC). Development of the mine wasclearly going to have a significant impact on their tra-ditional resources, including fishing, hunting, trappingand berry picking, and on cultural and spiritual siteson the property. Cat Lake First Nation, also a memberof WFNC, located more than 80 kilometres from themine site, joined in the negotiations because it wasfamiliar with the opportunities of mine developmentfor its community. Two downstream communities,Wunnumin First Nation and Kingfisher Lake FirstNation from the Shibogama First Nations Council(SFNC), took part in the negotiations because of themine’s potential effect on the quality of their watersupply and other environmental factors. These fourFirst Nations groups—known as the “signatory com-munities”—have differing interests and relationships,adding to the necessity of building understandingbetween all of the parties.

Elders from Kingfisher Lake on a tour of Musselwhite Mine.


While First Nations had numerous concerns over thepresence of a mine in their proximity, their top priori-ty related to the environment. They wanted assurancesthat it be preserved and protected and that its sacredand spiritual dimension be treated with respect. Onlywhen these issues had been addressed to their satisfac-tion did they begin to support the mine going forwardand turn their attention to the potential economicvalue of the mine.

While the First Nations wanted a guarantee that theircommunities would benefit from the mine’s presence,they also wanted assurances that this would not comeat the expense of their traditions and values, which aremaintained through the practices of hunting, trapping,fishing and other subsistence activities. Furthermore,many were wary of the advent of a wage economy andits effect on the community, as it is perceived to taketheir people away, both culturally and physically. Thepotential opening up of the area to outside traffic,which the building of a road and power line wouldbring on, was also a concern.

Formal negotiations for an agreement governing themine’s development and operation began in March1988, eight years before a decision was made to goforward with mine development. Meetings were heldon an average of once a month and were facilitated bya law professor who was known to the local communi-ties through his involvement in resource developmentnegotiations in the area several years earlier. Associatedcosts were shared equally by the company and the

provincial and federal governments, and included allexpenses related to First Nations’ participation in thenegotiations. At that time, more than 30 individualinterests were represented at the negotiating table: thefour signatory communities and representatives of thetwo First Nations councils to which they belonged;three mining companies (Placer Dome and two joint-venture partners, eventually replaced in the process by the single joint-venture partner TVX); the numerous relevant ministries of the federal andprovincial governments; and others with an interest in the proceedings.

The sheer number of stakeholders and the complexityof the issues being addressed made it necessary todivide negotiations into three parts, for three separateagreements. This was an important breakthrough inmoving the negotiations forward.

The first agreement, the Ontario-Windigo-ShibogamaPlanning Agreement, was negotiated between represen-tatives from the four communities, the two FirstNations councils and the relevant agencies of theOntario provincial government. It had been a matterof contention among those parties in the past that theOntario Planning Act does not extend to the FarNorth. A consensus to establish the planning boardswas required before participants could focus theirattention on negotiating an agreement with respect tomine development. The planning agreement createdinterim land-use planning boards for the Windigo andShibogama First Nations Councils.

Aerial view of the Musselwhite camp during development. Inset: The transportation of ore.

Photo by Graeme Oxby


The second, the Musselwhite General Agreement, wasentered into by all parties and covers general principlesand issues of common concern. It is described ingreater detail below.

The third, the General Compensation Agreement, wasentered into in recognition that there may be futurenegative impacts from the project that could not havebeen foreseen at the time of the original negotiations.It outlines a formal process by which these can beaddressed as they arise.

THE MUSSELWHITE GENERAL AGREEMENTThe Musselwhite General Agreement addresses fivebasic areas of concern to the First Nations, PlacerDome, and the federal and provincial governments:

• Environment: The agreement requires that FirstNations representatives be thoroughly informed andincluded—beyond what is required by govern-ment—in the progress and decision making regard-ing environmental issues at the mine and that FirstNations representatives be provided with detailedand regular environmental impact assessment infor-mation. An environment committee with FirstNations representatives was established to monitorthe site on an ongoing basis.

• Culture and Heritage: The Musselwhite site wasmapped to show precise locations of the religious,cultural and subsistence resource areas noted byFirst Nations representatives, including graves andother spiritual sites, and trapping, fishing, huntingand berry-picking areas. Accords were included inthe agreement for how these areas will be treated,reclaimed or left undisturbed.

• Employment: The agreement spells out the minimalacceptable level of employment of First Nationspeople by the company. Specifically, members of thefour signatory communities are to comprise 25 per-cent of the mine’s work force. In addition, variouskinds of training assistance are specified for FirstNations community members through the jointventure, the First Nations councils and the provin-cial government.

• Business and Other Economic Opportunities: Theagreement commits the parties to making businessopportunities available to the First Nations commu-nities, through third-party contracts and otherarrangements, as long as the requisite quality ofproduct or service is provided at a competitiveprice.

• First Nations Administration: The agreement pro-vides essential funding to the First Nations commu-nities for their own administration, such as hiringcommunity coordinators and their own indepen-dent environmental advisers to assess environmentaldata and decisions on their behalf, sending repre-sentatives to quarterly meetings and attendingworking committee meetings at the mine site.

The Musselwhite General Agreement took effect onFebruary 21, 1996, the day construction wasannounced, and will remain in force for five yearsfrom that date. Until that date, planning and explo-ration work proceeded in the spirit of the agreementinsofar as possible. A formal process has been estab-lished for monitoring implementation of the agree-ment. The Coordinated Management Committee(CMC), composed of representatives of all parties tothe agreement, meets quarterly to examine progress onall aspects of the agreement, and to air outstandingissues, follow up on past business and identify anypotential future concerns. The CMC has overall

Hardy Keeash, Accounting Technician, and Madeline Chikane,Administrative Assistant, both of the North Caribou Lake First Nation.


responsibility for monitoringimplementation of the agree-ment, and its meetings arefacilitated by the same personwho managed the negotia-tions. A Working Committeemeets every couple of monthsat the site to review routineissues arising from implemen-tation of all aspects of theagreement. Representativesfrom the communities, theSFNC, the WFNC and thecompany attend these meet-ings. Anything that cannot beagreed to at this level is for-warded to the CMC. TheEnvironmental MonitoringCommittee is charged withenvironmental monitoringonly and reports back to theCMC.

The Negotiation Process—Culture, Experience and theLegacy of Past PracticesA history of mistrust, cultural differences and the lega-cy of past mining activities in the area affected thecourse of negotiation of the Musselwhite Agreement inseveral ways.

Many people could recall the damage done to theenvironment, particularly to the waters, during the1930s by inadequately controlled mining in the vicini-ty of Pickle Lake, 80 kilometres to the south. Fishingand trapping had been disrupted without compensa-tion, and significant damage had been done to thelivelihood of First Nations as well as to their watersupply and important traditional sites.

On the other hand, more recent mining projects(1980s)—Placer Dome’s Dona Lake Project andBarrick Gold’s Golden Patricia Mine—in an area southof the Musselwhite property had involved neighbour-ing communities in negotiations through a formalprocess that produced largely satisfactory outcomes forthe First Nations involved. Thus, when negotiations atMusselwhite began in 1988, the existence of two earli-er agreements gave the Cat Lake and North Caribou

communities some familiari-ty with the basic negotiationprocess. For the Wunnuminand Kingfisher Lake commu-nities, who had no previousexperience, cultural differ-ences loomed far larger.Some months into the nego-tiations, members of thesecommunities were finallyable to convey how essential-ly foreign the negotiationprocess was to them: to sitaround institutional tableswith many strangers, beingrepresented by other peo-ple—lawyers and transla-tors—who were alsostrangers, having stacks ofpaper appear and disappear,arguing over the meanings ofwords in a language not theirown. It was necessary tochange the style of negotia-tions to allow more opportu-nity for participants to

confer privately before making decisions and to pro-vide for better translation. The company also increasedits visits to the communities between meetings toanswer any questions they might have.

A history of mistrust meant that the process required asubstantial investment of time and goodwill on bothsides. For example, some two years into the process,and after substantial progress had been made in thenegotiations, a dramatic drop in the price of goldrequired the company to revisit the initial pre-feasibili-ty study for the mine. Planners realized that theywould have to increase the daily throughput from1000 tonnes per day of high-grade ore to 3000–3500tonnes per day of a lower grade of ore. While this hadnumerous implications for the mining methodology, ithad little real consequence for implementation ofissues already negotiated. Nevertheless, the FirstNations asked to revisit what had previously beenagreed upon and to incorporate these new operationalconditions into the agreement. The company’s asser-tions that these changes would have no serious envi-ronmental impact were insufficient. The communities

Fred Jacob of Wunnumin Lake taking water samples inMusselwhite Mine’s environmental monitoring workshop.

16

needed to fully understand the changes for themselves.While this was time and resource consuming, it wasessential to developing trust between the groups.

ACHIEVEMENTSWhile the project is still at an early stage of implemen-tation, there have been a number of achievements aris-ing from the Musselwhite agreements.

EmploymentThe company has maintained a rate of employment ofmembers of the signatory communities above the 25 percent that it committed to in the GeneralAgreement. Achieving this has required consistentsearching and networking in the four communitiesand the hiring of two full-time First Nations employ-ees to find, recruit, evaluate and train First Nationsworkers, and to help resolve any difficulties that ariseonce they are employed. The company also insists thatthe on-site supervisors it hires be willing and able totrain First Nations employees, and this has allowed arelatively smooth integration of First Nations workersinto the mill and underground teams. The companyprovides training to prepare people for work at themine. To date, some 80 First Nations employees havecompleted training programs in underground mining,milling, welding, basic office skills, warehousing, elec-trical and mechanical skills, basic kitchen and house-keeping skills and accounting.

As the number of jobs requiring a minimum level ofeducation (Grade 10) and specific skills not commonin the communities grows, greater effort will berequired to meet the minimum 25 percent employ-ment level. All parties to the agreement are looking forways to address this. Government training initiativeshave been expanded with the company’s support insecuring training dollars. Training opportunities inmanagerial and basic business skills are being explored,and candidates are being sought to attend a communi-ty college course in chef ’s training.

To bolster pre-employment education, Placer Domeoffered two-week summer placements to 12 highschool students from all four communities under agovernment-funded program. However, this programhad mixed success. For many of the students it wastheir first job outside the community. They were unfa-miliar with dealing in English and with the daily rou-tine, and their adjustment problems were considerable.

Business OpportunitiesThe mine has awarded First Nations–owned businessescontracts to supply goods and services to the projectwith an annual value of approximately C$2.5 million.First Nations–owned airlines have been contracted to fly employees in and out of the mine site; a FirstNations–owned company built the airfield; and a laundry, set up by the mine, is now being run under a labour contract with one of the communities. Othercontracts include much of the road work and mainte-nance, some trucking, construction of the recreationcentre, camp catering, janitorial and housekeeping

Mark Billy Adams of the North Caribou Lake First Nation. Mr. Adams is apilot with Weagamow Air, a First Nations–owned airline.

Mining and Indigenous Peoples: Case Studies

Native Training Coordinator Louis Simard standing in front of a sacredbirthing site.


services, and numerous other temporary positions asthey arise (e.g. short-term reclamation projects). Thesehave contributed to local employment, and it is esti-mated that about 30 positions in contractor companiesare held by First Nations members.

While the company does not compromise on competi-tive pricing or on the quality of products and servicesit requires from First Nations contractors,the spirit of the agreement is to sup-port business development withinthe First Nations communities.Therefore, once contractshave been awarded, thecompany endeavours to beas flexible as possible (e.g.with airline schedules ortraining funds) and to pro-vide additional training asneeded.

EnvironmentThe environmental monitoring pro-gram has been successful in ensuringthat the land and water surroundingMusselwhite are being cared for to the satisfaction oflocal communities. Sites of cultural and spiritualimportance have been left undisturbed. The companyhas done its best to make the environmental programresponsive to community requirements by increasingthe frequency and number of water tests, by allowingfor greater involvement of community members, andby providing additional funds to the communities tohire their own independent technical advisers. Whilequestions or disputes arise regularly, they are discussedand resolved openly in the committee meetings.

CompensationThe process established under the General Compen-sation Agreement has led to sub-agreements compen-sating community members for the diminishment or removal from production, due to the mine development, of land uses of economic value, such as hunting and trapping. One such sub-agreement,The North Caribou Trappers Compensation Agreement,provides specific compensation for the removal of 25 square kilometres from two registered trapline owners while mining takes place.

CHALLENGES TO IMPLEMENTATIONAlthough the Musselwhite project is well on the wayto achieving the goals set out in the various agree-ments governing it, a number of challenges have hadto be addressed. These have to do with historical lega-cies and differences of culture. Progress has been madein addressing many of the challenges, in good part due

to their early recognition by the parties to theagreement. However, some issues are of

a longer-term nature and overcom-ing them will require continu-

ing effort.

A major challenge willcontinue to be translatingthe agreement’s provisionsinto attitudes and behav-iours on the part of the

people working at the minesite. Because cultural and

environmental issues add anunfamiliar level of complexity to

many jobs, there is a tendency for people to give them lower priority,

consciously or not. Repetition, clarity and determina-tion on the part of Placer Dome management havebeen essential to embed the commitment to theseterms deeply into the company’s own corporate cul-ture. As well, Placer Dome has had to devote consider-able effort to educating its employees and contractorsin the content of the agreement and to driving homethe seriousness of its proper implementation.

As in the negotiation process, overcoming the longhistory of mistrust and misunderstanding has requiredeffort and patience. The parties to the agreement haveinsisted on a slow, painstaking examination of everyprovision as it goes into effect and of every proposedchange in plan. This process reflects an attempt toovercome the problems experienced by such differentcultures in distinguishing among business, political,cultural and spiritual motives as operational decisionsare made. This has been complicated by the politicalstructures in the First Nations communities. Electionsand other less predictable circumstances have resultedin changes in leadership and a need to revisit andrenew relationships.

A loon’s nest near the mine site.


Long-term, intensive training and support are neededto bring people from so different a culture fully into acompetitive business environment. Even after peoplehave successfully made the transition and whenemployment figures meet the agreed-upon target, theremay be a perception in the community that its othermembers are not benefiting in substantial ways. And,while there has been an increase in cash flow withinthe communities, opportunities for them to capturemore money generated by the mine’s proximity arelimited. A large part of workers’ paycheques is spent in larger, more distant towns to buy tools, cars orsnowmobiles, equipment, furnishings and other personal and family items other than basic needs suchas groceries.

The benefits of developing the skills of a wage econo-my are not always fully appreciated within the com-munities. Becoming more marketable in the broad jobmarket—mastering the work ethic, learning manualskills, developing the necessary social skills and confi-dence—does not translate necessarily into increasedvalue at home. A miner who completes the under-ground training and goes back to his home finds little appreciation of his accomplishment, and noopportunity to sell it. So, he might look elsewhere

for employment, leaving thecommunity with less skilledlabour.

Allegations of bias or specialtreatment are made by bothparties and are particularlydifficult to deal with. Changesthat are viewed by the compa-ny as a normal part of theday-to-day business of min-ing—milling targets or drillingdirection—may still be viewedby the First Nations as decep-tion or manipulation.

From Placer Dome’s perspec-tive, progress is sometimeshampered by internal differ-ences or disagreements amongthe First Nations communitiesand councils, and it is notalways clear what the mine’s

role or best interests should be. From the FirstNations’ perspective, progress is sometimes hamperedby other employees’ lack of appreciation for the effortrequired of them to adapt to the culture and behaviourof a wage economy, in another language, with a set ofrules that is unfamiliar and poorly spelled out.

ELEMENTS CONTRIBUTING TO A SUCCESSFULAGREEMENTThe Musselwhite Agreement is the beginning of a long-term process and lays the foundation for amutually beneficial relationship between a miningcompany and local Indigenous communities. There are a number of factors that have contributed to a successful start:

• A process orientation, with dialogue, education andlearning as the central concerns for all sides, allow-ing time to fully study and absorb issues, incorpo-rating creativity, persistence and follow-up, wherelistening, understanding, appreciation and mutualrespect are the rule.

• The presence of a facilitator who was known tomany in the communities through his involvementat the Dona Lake and Patricia mines projects a

Drill rig on Opapimiskan Lake.


decade earlier, who was sensitive to the cultural dif-ferences represented at the negotiating table andwho generally had the trust of all parties, greatlyaided the process.

• Recognition at the highest levels of the company ofthe importance of developing relationships and ofthe fact that gaining First Nations’ participation ina major industrial project will cost money and taketime and goodwill.

• The division of the agreement into three parts inorder to effectively address the concerns of themany stakeholders was essential to moving theprocess forward.

• The presence on the mine’s staff of a full-time pub-lic relations employee dedicated to achieving andmaintaining good working relationships with FirstNations groups—an employee who is well versed inthe issues, who fully believes in the values of mutu-al respect and learning, and who is persistent andexceptionally patient.

• The presence on the mine’s Human Resources staffof two full-time, well-respected First Nationsemployees dedicated to the success of the trainingand employment initiatives, who negotiate individ-ual disputes, target and develop potential employ-ees, mediate between the communities and themine as necessary, counsel and support individualworkers and trainees, and fulfil many other criticalroles in the interface between the cultures.

• An openness and a willingness to learn publiclyfrom mistakes.

• Recognition of First Nations’ rights and interests inthe land the company is mining; inviting FirstNations to the negotiation table as early as possible;providing information and knowledge in a processthat is proactive, yet respectful and inclusive; edu-cating the First Nations representatives, and beingwilling to learn from them.

• A formal mechanism for reviewing implementationand for airing and resolving complaints, whichincludes regularly scheduled meetings of all parties.Their success in preventing problems from festeringmay be in part due to the continuity provided by

having a single facilitator manage the process fromnegotiation of the agreement through to its imple-mentation.

LESSONS LEARNEDThere are a number of lessons that can be distilledfrom Placer Dome’s experience at Musselwhite.

The first is that agreements must be accepted as fair byall signatories. Without fairness, agreements are builton sand. At Musselwhite, this was achieved by invest-ing the necessary time and resources in a process thatto many would appear excessive, in order to properlyaddress all concerns and to reconcile differences.Willingness on the part of the company to share theperception of the First Nations regarding the sacrednature of the natural world helped reach agreement onmeasures that exceed government regulation and con-fer credibility on the commitment of the parties.

The second lesson is that agreements are living docu-ments. Since all issues cannot be anticipated at theoutset, agreements must provide for mechanisms todeal with unforeseen problems as they crop up. Thisalso requires open-mindedness and flexibility on the

Stephen Winter of the Kingfisher Lake First Nation, Miner 3–Remote Mucker.


part of all parties and a commitment to make thingswork. At Musselwhite, the General Agreement estab-lished a formal mechanism for monitoring implemen-tation and open channels of communication to ensurefeedback to the company. The General CompensationAgreement provides a structure for addressing issues ofcompensation as they arise.

A third lesson is that agreements have to be deliver-able. This means that they must be realistic. Evenwhen they are, expectations may be unrealistic or basic commitments may be subject to differing inter-pretations. The company has been careful to keepexpectations realistic. It has done so by engaging thecommunities in dialogue at an early stage and by keeping channels of communication open to ensuretimely feedback.

Placer Dome is committed to making the MusselwhiteAgreement work to the satisfaction of all parties. Thecommitment required to make it work is captured in astatement made by the mine’s manager at the openingceremonies in 1997. Speaking after a number of FirstNations leaders expressed varying degrees of supportfor the project, some of it lukewarm, he said, “We willstumble and we will fall, but we will get up and move

forward to make this thing work.” Maximizing thebenefits of the mine to all stakeholders requires hardwork and commitment from all. Both Placer Domeand the First Nations remain sensitive to what remainsnot done or unsatisfactory. As the learning processcontinues and as both sides work towards fulfillingtheir commitments, these sources of friction and mis-understanding will be overcome.


Brenda RadiesManager, Corporate CommunicationsPlacer Dome North America LimitedSuite 600–1055 Dunsmuir StreetPO Box 49305, Bentall Postal StationVancouver, BCCanada V7X 1L3

Tel: (+1 604) 661-1911Fax: (+1 604) 661-3785Email: [email protected]

Or visit the following web sites:

Placer Dome: www.placerdome.comTVX Gold: www.tvxgold.com

Jason Mamakua, Tom McKay, Desmond Keewasin, Joe Singleton and Sherman Gliddy successfully completed diamond drilling helpertraining conducted by contractor N. Morissette.

All photos courtesy of Placer Dome except where otherwise stated.

21The Raglan Project

INTRODUCTIONFalconbridge Limited is an international base metalscompany that locates, develops, mines and processesmetals and minerals ranging from nickel and ferro-nickel to copper, zinc, cobalt and precious metals.Founded in 1928 to mine the nickel-copper ores inthe Sudbury area of Canada, Falconbridge todayemploys more than 6700 people in 14 countriesaround the world. It is the Western world’s secondlargest producer of primary nickel products, its thirdlargest producer of cobalt and Canada’s top copperproducer.

Falconbridge seeks to foster the environmental, eco-nomic and social well-being of the communities inwhich it operates through a sustainable developmentapproach to its business affairs. From explorationthrough to project and product development,Falconbridge is committed to meeting the highestenvironmental standards from the outset, and to con-sulting with interested stakeholders as it proceeds.Falconbridge believes this collaborative approach willhelp it anticipate and address issues of sustainabilitythat are relevant to its business. In 1998, Falconbridgeformally introduced its Sustainable Development

Policy and has fully integrated environmental, eco-nomic and social initiatives into the company’s busi-ness strategy.

The policy commits Falconbridge to:

• Design, construct, operate, decommission and re-assess its operations while promoting continualimprovement in order to meet or surpass applicableenvironmental, health, hygiene, energy and safetyregulations, laws and company standards;

• Implement risk management, pollution preventionand energy efficiency systems and conduct regularenvironmental, health, hygiene, safety and emer-gency response audits;

• Ensure that its activities are conducted in a respon-sible and ethical manner that will help maintain thelong-term sustainability and aesthetic quality of itssurroundings;

• Acquire scientific knowledge and technologies thatcan assist in continually improving the safe, effi-cient use of Falconbridge’s processes and products;

Case Study C

Inuit concerns about the new mineincluded the environment,

employment and the influx ofSouthern people.

The Raglan ProjectFalconbridge/Société minière Raglan du Québec ltée

The Raglan ProjectFalconbridge/Société minière Raglan du Québec ltée

NUNAVIK REGION, QUEBEC, CANADA


• Promote the establishment of responsible standardsthrough active participation with employees, gov-ernments and other stakeholders;

• Promote the safe use, reuse, recovery, recycling,transportation and disposal of Falconbridge prod-ucts by informing and working with customers,suppliers, industry associations and governmentagencies;

• Facilitate dialogue with stakeholders in order toanticipate and address issues of regional and globalsustainability that are relevant to its business;

• Foster the environmental, economic and social well-being of the communities in which it operates;

• Promote employee awareness of this policy andenhance their capabilities to implement its objec-tives; and,

• Regularly communicate progress on this policy tointerested stakeholders.

Through its wholly owned subsidiary Société minièreRaglan du Québec ltée (SMRQ), Falconbridge is mining one of the world’s finest sulphide nickeldeposits at Raglan in the harsh and barren UngavaPeninsula in the extreme north of Quebec, Canada,about 1800 kilometres north of the city of Montreal.The property, which stretches for 55 kilometres from east to west, contains 20 million tonnes ofproven, probable and possible ore reserves grading

2.85 percent nickel and 0.77 percent copper.Production at the C$550 million mine began inDecember 1997, following more than 30 years ofexploration, negotiation and development. As part ofthe conditions leading up to developing the mine,Falconbridge/SMRQ signed a comprehensive agree-ment with the Inuit organization Makivik Corporationto ensure the participation of the local Inuit people inthe benefits of the mine. This agreement represents thefirst such agreement between an Aboriginal group anda mining company in Quebec history.

The mine is expected to create approximately 1200 direct and indirect jobs, of which 350 are full-time on-site positions. The site consists of a concentra-tor and a megawatt power plant, and will produce 130 000 tonnes of high grade nickel-copper concen-trate annually from open-pit and underground miningoperations. Concentrate is shipped south to QuebecCity and transported by rail to Sudbury, Ontario,where it is smelted and then sent on to Norway forrefining. The mine is expected to produce annually 21 000 tonnes of nickel, 5000 tonnes of copper, 200 tonnes of cobalt and significant quantities of precious metals. Recent exploration results support a planned expansion of Raglan’s annual nickel outputto at least 30 000 tonnes, when market conditionsimprove, and will ensure a mine life of at least 20 years.

The Ungava Peninsula where the mine is located formspart of the vast northern Quebec territory of Nunavik

The Raglan Mine is located in the harsh andbarren Ungava Peninsula in the extreme northof Quebec, Canada.


(660 000 square kilometres).The Inuit who have inhabitedthe region for an estimated4000 years number about8000. Originally a nomadicpeople, the Nunavik Inuit settled into permanent villagesin the 1950s. Today, there are14 such villages dispersedwidely along the coasts ofUngava Bay, Hudson Straitand Hudson Bay. There are noroads linking these communi-ties. The only all-year access toand within Nunavik is by air.During the summer there is ashort period when maritimeservice is open, but the regionlacks proper port facilities.Two of the villages are within relatively close distanceof the mine: Salluit (population 850) lies 100 kilome-tres northwest and Kangiqsujuaq (population 370) islocated 60 kilometres east of the site. In addition tothe Inuit, there are approximately 800 non-Inuitinhabitants of Nunavik.

HISTORY OF NUNAVIK AND MAKIVIKCORPORATIONIn 1912, Quebec attained jurisdiction over its north-ern territory through a land transfer from the

Northwest Territories by the federal government ofCanada. A proviso of the transfer was that Quebec settle the land ownership question with the territory’sAboriginal inhabitants. This matter was finallyresolved in 1975 in the form of the James Bay andNorthern Quebec Agreement (JBNQA) which wassigned by seven parties: Canada, Quebec, the GrandCouncil of the Crees, the Northern Quebec InuitAssociation, Hydro-Québec, the James BayDevelopment Corporation and the James Bay EnergyCorporation. Under the terms of this agreement, theInuit gained special rights of land ownership and use,including hunting, fishing and trapping. The agree-ment created public institutions such as the KativikRegional Government (KRG), Kativik School Boardand Kativik Regional Board of Health and SocialServices with supra-municipal-type powers over theentire territory north of the 55th parallel (i.e.Nunavik). The Inuit were provided with compensationmoneys in the form of a heritage fund. A legal entity,Makivik Corporation, was established to receive andmanage these funds and to oversee implementation ofthe agreement.

Today, Makivik Corporation is the main engine ofNunavik’s economic development, and negotiates withprivate- and public-sector partners on behalf of theNunavik Inuit agreements. The Makivik Executive and Board of Directors are directly elected by the Inuitresidents of Nunavik. A Board of Governors, which

Originally a nomadic people, the Nunavik Inuit settled into permanent villages in the 1950s.

The only all-year access to and within Nunavik is by air.


serves as a council of elders, isappointed by the Executiveand Board of Directors.

RAGLAN HISTORYThe Raglan ore bodies occurin the Cape Smith–WakehamBay ultramafic belt where sur-face sulphide showings werefirst discovered in the 1930s.They have been exploredintermittently since that timeby a number of companieswhose interests eventuallymerged with Falconbridge’s in the mid-1960s. Today,Falconbridge holds a 100 percent interest in theRaglan project through SMRQ. Early attempts todevelop the Raglan nickel-copper deposits were madeduring the 1960s but were halted when global marketsdeclined in the 1970s and when it was realized thatthe Raglan ore bodies would not economically supportthe construction of a greenfield smelter and refineryfacility.

However, in the late 1980s and early 1990s, severalsignificant events occurred which, in conjunction withthe establishment of the 1975 JBNQA, advanced theproject’s prospects for development:

• Arctic and sub-Arctic mining proved itself to becost-effective in Greenland and Canada’s NorthwestTerritories.

• Ice-breaking vessels had been developed thatextended the traditional four-month marine ship-ping window to eight months or more, allowingconcentrate produced on site to be transported toexisting facilities in Sudbury for smelting and on toNorway for refining.

• The 1985 cessation of the Asbestos Corporation’soperations allowed SMRQ to acquire its port androad infrastructures at Deception Bay, a consider-able saving for the development of the Raglan project.

• As a result of the JBNQA, each village received itsown airstrip. This, combined with technicaladvances in weather reporting and the introductionof GPS navigation technology, improved air servicereliability in Nunavik.

• Cost-effective modular buildings became available,greatly facilitating construction of housing andother facilities on site, and reducing on-site labourrequirements and construction logistics.

• Additional surface and underground diamonddrilling, conducted during the period from 1989 to1996, led to the discovery of additional ore reserves.

During this period, the airstrip and roads wereupgraded, as were retaining dikes for fuel tanks andother infrastructure left behind by AsbestosCorporation. The company also completed a feasibilitystudy for developing the mine as well as extensiveenvironmental baseline and impact studies.

Deception Bay facilities.

During the late 1980s and early 1990s, cost-effective modular build-ings became available.


THE RAGLAN AGREEMENTA mining development in such a remote and ecologi-cally fragile area is clearly of great importance to thepeople who live there. From the outset, Falconbridge’scommitment has been to consult with the local com-munities, to inform them of the company’s activitiesand to make their concerns integral to the company’splanning process—steps Falconbridge takes at all of its operations as part of its worldwide community relations program.

During the early phases of project exploration,Falconbridge hired a local adviser to provide liaisonbetween the company and the neighbouring communi-ties of Salluit and Kangiqsujuaq. Formal consultationswith the communities were part of an official approvalprocess set out in the JBNQA involving scrutiny ofdevelopment projects by the Kativik EnvironmentalQuality Commission (KELQ1). The process broughttogether personnel from all levels and departments ofthe company, villages, their mayors and councils, theKRG, KELQ, the Makivik Corporation, the federalCoast Guard and Quebec provincial ministries respon-sible for mining and environment. Through these con-tacts, it became clear that the main concerns of thelocal people centred around the environment, employ-ment and the influx of Southern people to their lands.While many expressed an interest in expanding into awage economy, they did not wish to abandon the tra-ditional pursuits of hunting and fishing that are socentral to their culture. They were also concerned thateconomic diversification not occur at the expense ofthe environment. Given the nature of traditional liveli-hoods, water quality was of particular concern.

The company took a number of steps to acquaint localpeople with the project and to consult with themabout their concerns. These initiatives included visitsby company personnel to communities, meetings withmayors and elders/counsellors of the villages, partici-pation in local radio talk shows by the company’s localadviser, and visits by community members to bothRaglan and other operating northern mines. The com-pany also participated in local events such as CareerWeek which is organized annually by the KativikSchool Board and the KRG. These consultations andfrequent contacts between stakeholders created the

basis for developing a relationship of trust and aneventual agreement with the local inhabitants.

In March 1993, Falconbridge and MakivikCorporation signed a Memorandum of UnderstandingRegarding Negotiation of an Agreement in Respect of theMining Project Near Deception River. The memoran-dum of understanding set out the discussion points forwhat would later become the Raglan Agreement signedby the Société minière Raglan du Québec, MakivikCorporation and two of its subsidiaries (the QarqalikLandholding Corporation of Salluit, the NunaturlikLandholding Corporation of Kangiqsujuaq2) and thetwo nearby communities of Salluit and Kangiqsujuaq.The Raglan Agreement provides, among other things,five principal benefits:

1. Priority of employment for qualified Inuit in thetwo closest communities to the project (Salluit andKangiqsujuaq), the region as a whole, and otherInuit from Nunavik;

2. Priority in awarding contracts to competitive Inuitenterprises for work required during the “operatingphase” of the mine by direct negotiations with qual-ified Inuit enterprises;

The Raglan Agreement provides for qualified Inuit to be givenpriority of employment.

1 KELQ is made up of representatives from the Inuit communities of Nunavik,civil servants and academics appointed by the Minister of the Environment of theProvince of Quebec.

2 The landholding corporations are the local official entities that, through MakivikCorporation, are responsible for the landholdings of the region.


3. Monetary compensation and profit-sharing pay-ments to the signatories of the agreement for thebenefit of Salluit, Kangiqsujuaq and Nunavikregion inhabitants;

4. The establishment of the Raglan Committee, a per-manent committee responsible for overseeing imple-mentation of the agreement and reviewing anyoutstanding environmental issues. The RaglanCommittee has six members: one from each ofSalluit, Kangiqsujuaq and Makivik Corporation,and three from Falconbridge. The committee meetsat least once every calendar quarter for the first fiveyears, and at least twice thereafter; and,

5. Additional mitigation and monitoring of the environment beyond regulatory requirements and the results of all monitoring to be reportedto the Raglan Committee on a regular basis.

INUIT TRAINING ANDEMPLOYMENTFalconbridge has a long-standing history of maximiz-ing the number of localpeople it hires for its opera-tions. In the DominicanRepublic, for example, thecompany now employs onlytwo expatriates in a work-force of 1500, compared with150 people in 1971 whenoperations began. Achievingthis transition required timeto develop the necessary local skills. It is Falconbridge’sintention to maximize the number of local people itemploys at all levels at Raglan.

During the project’s final development phase, thecompany employed a total of about 100 local peopleon the Raglan site. While this experience was positive,it became quite clear early on that there were a num-ber of challenges facing the company in its commit-ment to maximize qualified local hire. These were thelack of job-ready skills and training among the localInuit; the logistical challenges of a very widely dis-persed workforce; and the difficulties presented bybringing together two very different cultures. These

barriers are recognized in the Raglan Agreement whichcalls for programs covering training, recruitment andcross-cultural support.

The company set up the Raglan Employment andTraining Technical Committee to implement the train-ing and employment section of the agreement, whichhas developed an Inuit training plan for the years1998–2003. The plan, which targets positions at alllevels throughout the company for Inuit hire over thenext five years, is based on a human resources develop-ment study commissioned by the company in 1992and which formed the basis for discussion of a numberof sections of the Raglan Agreement. The study exam-ined in detail a wide range of important issues relatingto the gap between projected labour supply and

demand at the mine site.Other mines employingAboriginal peoples in NorthAmerica were surveyed tolearn from their experiencesand practices.

Falconbridge/SMRQ, theKativik School Board andKRG are working together asmembers of the RaglanEmployment and TrainingTechnical Committee todevelop training programs forpotential Inuit employeesprior to employment atRaglan and to develop inter-nal training programs forInuit employees once they are

hired. The company has hired two Inuit employmentand training officers who are responsible for the hir-ing, training and orientation of all Inuit staff. Theofficers work in cooperation with the KRG in each vil-lage to identify candidates for jobs at Raglan. In 1998,the Plan received a contribution of C$4 million fromthe ministère de l’Emploi et de la Solidarité du Québec(Quebec Ministry of Employment and Solidarity).

In the South, life is regulated by the clock and theeight-hour work day. People living in the North knowa very different reality, and adapting to the rigours ofan industrial work schedule was clearly going to be achallenge. Wherever possible, the company has been

Willie Keatainak, one of the two Inuit employment and trainingofficers responsible for the hiring, training and orientation ofall Inuit staff.


flexible. For example, thecompany offers its Inuitemployees an optional rotation of 14 days on and14 days off to accommodatetheir concern that the regularshift of 28 days was too longa period to spend away fromtheir families. Inuit employ-ees are also able to hunt withfirearms beyond the immedi-ate vicinity (i.e. beyond atwo-kilometre radius) of theRaglan site and have access toa freezer and kitchen in orderto store and prepare theircountry food. (In accordance with the JBNQA, non-Native peoples are banned from hunting and fishing in and around the Raglan site and are prohibited frompossessing firearms.)

Mining companies operate in a very competitive envi-ronment and in order to compete must keep efficiencyhigh. Jobs in a mine are also highly interdependent,and absenteeism or tardiness can hold up the entireprocess and greatly reduce productivity. These adapta-tions are not made overnight. To ease Inuit integrationinto the work environment, Falconbridge operates acareer counselling and employee assistance programand a cross-cultural training program for all employ-ees—both Inuit and Southerners. The cross-culturaltraining provides managers, supervisors and employeeswith a broad understanding of Inuit and Southern cul-tures and practical exercises and tools to understandeach other, communicate effectively, work well incross-cultural teams, and recognize and resolve cross-cultural conflicts in a positive manner. Cross-culturaltraining for both Inuit and non-Inuit personnel is heldon site, while training for non-Inuit Raglan managersis held in the villages of Kangiqsujuaq and Salluit toprovide them with an opportunity to experience Inuitcommunities and meet Inuit leaders.

To address future labour requirements, Falconbridgehas sponsored incentives for Inuit children to receivemining-related educational programs in the schools.The company also sponsors Stay-in-School programsand scholarships to encourage local young people tocomplete their education. The Raglan Education Fund

was established as part of the Raglan Agreement toprovide scholarships to Inuit beneficiaries undertakingpost-secondary studies related to mining. The compa-ny also operates an information program regarding themining industry and opportunities for employment atRaglan and offers summer jobs to high-school students.

From 1991 to 1996, more than 100 Inuit were hiredby Falconbridge or its contractors to carry out con-struction work on the road, build the accommodationcentre and work underground. During that year, edu-cational programs in pre-employment training, heavyequipment operation, heavy equipment mechanics and cooking were set up. Out of the 70 candidateswho successfully completed these programs, 40 foundplacement after graduation. Currently, 75 Inuit areemployed full time at Raglan.

INUIT ENTREPRENEURSHIPIt is estimated that employment and economic initia-tives in the Raglan Agreement will bring C$50 millionin economic benefits annually to the businesses andpeople of Nunavik and the Abitibi Region of northernQuebec, the nearest southern community. Under theterms of the Raglan Agreement, the company isrequired to promote the use of Inuit enterprises when-ever possible in supplying the goods and/or services toRaglan. The agreement sets out a list of potential con-tract work which will be preferentially awarded toInuit enterprises provided they are suitably qualifiedand competitive. The criteria for awarding contractsinclude cost-competitiveness, continuity of supply,quality of work and timeliness. Makivik Corporation,

Falconbridge signed a contract with a local enterprise tohaul concentrates, fuel and supplies.


in conjunction with the Kativik Regional Develop-ment Corporation, is responsible for maintaining anup-to-date list of qualified Inuit enterprises for consid-eration by Raglan. For goods and services not formingpart of this list, the agreement requires the companyto ask potential contractors to identify, qualitativelyand quantitatively, the number of Inuit and/or Inuitenterprises, if any, they would engage directly or assub-contractors or suppliers in connection with thecontract, and to indicate that this will be consideredfavourably in awarding contracts. Contractors mustalso agree to assist in the training of such Inuitand/or Inuit enterprises in the supply of goods or theperformance of services, and to supply SMRQ with its foreseen Inuit training program and quarterly compliance reports. Recognizing the challenges theseconditions may present, especially in the early years,SMRQ endeavours to remain as flexible as possible to help Inuit and non-Inuit suppliers through any difficulties in meeting their obligations.

Falconbridge has signed a C$50-million contract withthe Inuit enterprise Kiewit-Nuvumiut—a joint ventureof Kiewit and the villages of Salluit and Kangiqsujuaq—under a seven-year contract for open-pit mining.Falconbridge has also entered into a contract worthC$10–C$12 million with a local enterprise for truck-ing concentrates between the mine site and DeceptionBay, and for hauling fuel and supplies to the site. Thecontracting review process for diamond drilling atRaglan is now under way. Qarqalik LandholdingCorporation and Nunaturlik Landholding Corporationare pursuing a number of joint-venture possibilities,with legal, financial and advisory assistance fromMakivik Corporation.

COMPENSATIONThe Raglan Agreement requires Falconbridge to pro-vide compensation payment to Makivik Corporationand to a trust fund for the local Inuit in the form ofguaranteed payments, which over 18 years could totalmore than C$70 million. Payment is to be made inthree parts along the following lines:

• Guaranteed allocations amounting to $C10 millionto be paid over a 15-year period (and continuingthereafter at C$800,000 per year during the lifeof the project);

• A guaranteed second allocation of C$275,000 peryear during the life of the project; and,

• Profit sharing based on 4.5 percent of net operatingcash flow, the payment of which is expected tocommence in the sixth to seventh year of the operation of the mine, once initial and historicinvestments have been recouped.

These payments, which are made to the Raglan Trust,are administered by six trustees representing the threecategories of Inuit beneficiaries: the Community ofSalluit, the Community of Kangiqsujuaq and Nunavikas a whole. Distribution of the fund is made annuallyaccording to a formula agreed to by the parties withroom for discretion within each class of beneficiary.

ENVIRONMENTAL PROTECTIONA major concern of the local people was the potentialenvironmental impact of a major mining operation intheir midst. As a result of extensive baseline studies,the Raglan project has been designed to minimize liquid effluent, water consumption and air emissionswhile containing acid mine rock and providing forprogressive reclamation of tailings. It is generally considered a clean, low water-consumption projectwith stringent new effluent requirements.

For environmental and economic reasons, the Raglanconcentrator and power plant were constructed inQuebec City in 12 separate modules and then trans-ported 4800 kilometres by sea before being installed at the Raglan site. The 300-person living complex and service facilities were also shipped in prefabricatedform to the site and installed on pilings to avoid disturbing the permafrost.

A detailed environmentalimpact assessment examined all aspects ofthe environment, includ-ing climate, plant life,water quality, archaeologi-cal sites, land-use patterns and the numbersand migratory patterns of land and sea life.


As part of the government permitting process for theRaglan project, the company undertook a detailedenvironmental impact assessment which examined allaspects of the environment, including climate, plantlife, water quality, archaeological sites, land-use pat-terns and the numbers and migratory patterns of landand sea life. Traditional knowledge of the environmentwas used in preparing these studies. One outcome ofthis exercise was a decision to shorten the shippingseason and avoid ice breaking from March to June inorder to minimize the impact on marine mammalmigratory patterns and the Inuit hunting season.

Falconbridge will continue to monitor and make recommendations to the Raglan Committee on anyoutstanding environmental issues. The Inuit people,through Makivik, are part of the process, reporting tothe Committee on any changes to the environment. Aswell, an external consultant has been hired to analyseand make recommendations to the Raglan Committeeon any outstanding environmental issues, and an Inuitguide has been engaged to monitor and report on anyenvironmental changes.

As part of its environmental monitoring program,Falconbridge has been conducting an Arctic char studyin collaboration with the Kuujjuaq Research Centre,Quebec environment officials and the community ofSalluit.

Archaeological sites and special places were identifiedand mapped for protection during studies undertakenin 1991 and 1992. Approximately 24 archaeologicalsites were clearly identified, with 13 noted in theDeception Bay area and 11 inland.

REFLECTIONS ON WHAT WORKEDRaglan began operating fully in April 1998. While itmay be too early to judge the project an unequivocalsuccess, there are a number of factors that can be iden-tified as having contributed to a successful agreementand a good relationship with the local Aboriginal peo-ple. These include the following:

• Clearly defined rights of ownership over the landestablished as part of the James Bay and NorthernQuebec Agreement;

• The existence of an organization that was represen-tative of the people and could negotiate on their

behalf and a fairly stable political structure withinthe communities;

• Early contact with and involvement of local com-munities, which created a climate of trust, keptexpectations realistic and created a feeling of owner-ship by all over the process;

• Formal recognition by parties to the agreement ofthe challenges the company would face in meetingits commitments and a willingness by all parties toseek solutions (e.g. training and a human resourcesdevelopment strategy);

• The hiring of local liaison officers to act as a com-munication channel between the company and thecommunities, and between Inuit employees andnon-Inuit managers;

• Establishing cross-cultural training programs for allemployees;

• A well-defined procedure for feedback and monitor-ing implementation of the agreement;

• An ongoing joint planning and information-sharingmechanism between SMRQ and key partners relat-ing to training and employment of Inuit beneficia-ries, which provides a useful forum for problemsolving and for understanding each other’s situa-tion, perspective and constraints;

• Pre-employment training provided to Inuit employ-ees prior to being hired at Raglan, which eases inte-gration into a modern industrial mine site such asRaglan; and,

• Regular information sharing between Falconbridgeand partners in the communities and Makivik.

CONCLUSIONIn 1997, Falconbridge was awarded the Quebec FirstPeoples Business Association’s Grand Prize in recogni-tion of its efforts in the employment of Native people,its support of their business and for the developmentof the Raglan Agreement.

At the Raglan opening ceremonies in July 1998, PitaAatami, the new President of Makivik Corporation,made the following remarks: “This project represents avivid illustration of how development between a majormining corporation—Falconbridge—and Aboriginalcommunities can take place. Makivik Corporation is


proud to have signed the Raglan Agreement withFalconbridge in February of 1995, which paved theway to developing this project in tandem with LaSociété minière du Québec ltée.”

At the same ceremonies, Falconbridge President andCEO Øyvind Hushovd responded by saying, “With itscommitment to the people of Nunavik, the RaglanAgreement stands as a landmark in Canadian mininghistory, and in the development of Canada’s North.Raglan marks the beginning of a new era in mining—one that seeks to work productively with a variety ofstakeholders in order to recognize and respond to localconcerns.”

The Raglan operations.


Al Giroux Société minière Raglan du QuébecManager of Raglan Operations120, avenue de l’AéroportRouyn-Noranda, QuébecCanada J9X 5B7

Tel: (+1 819) 762-7800Fax: (+1 819) 797-0531E-mail: [email protected] CasselmanDirector, Corporate CommunicationsFalconbridge LimitedSuite 1200, 95 Wellington Street WestToronto, OntarioCanada M5J 2V4

Tel: (+1 416) 956-5781Fax: (+1 416) 956-5757E-mail: [email protected]

Or visit the following web sites:

Makivik Corporation: www.makivik.org

Falconbridge Limited: www.falconbridge.com

All photos courtesy of Falconbridge/Société minière Raglan du Québec ltée except where otherwise stated.

31The Red Dog Mine Story

INTRODUCTIONThe Red Dog zinc–lead–silver mine is located 200 kilometres north of the Arctic Circle on landowned by the Northwest Alaska Native Association(NANA) in the foothills of the DeLong Mountains of northwestern Alaska. The deposit, one of the largestof its kind in the world, consists of a number of orebodies totalling more than 143 million tonnes ofreserves and resources containing 15.9 percent zinc,4.4 percent lead and 82 grams/tonne silver.

The mine was built and is being operated by ComincoAlaska Incorporated under a lease agreement withNANA Regional Corporation. It is an example of amutually beneficial partnership between indigenousAlaskans and a major mining company, with associat-ed stakeholders such as vendors, local businesses, uni-versities, technical schools and various levels ofgovernment. Under the terms of the agreement, themine has adopted specific measures to ensure that itsoperations have minimal effect on the traditional wayof life of the local Inupiat1 people and that stringentprocedures are in place to protect the regional envi-ronment, while guaranteeing shareholder participationin the economic benefits of a modern mining project.

Production at Red Dog began in late 1989 and, withthe discovery of the nearby Aqqaluk ore body in 1995,is expected to continue for several decades. At peakproduction in 1999, the mine is expected to produce3.2 million tonnes of mined ore annually—about 7 percent of the world’s zinc supply—and to provideapproximately 460 direct jobs. Ore is milled into concentrate on site and the concentrate is transported84 kilometres to a seaport where it is stored. Fromthere, it is shipped to smelters in Canada, Europe andAsia during the 100-day ice-free shipping season. Theexistence of high-grade ore that is amenable to open-pit mining has helped offset the high costs of trans-portation and labour and the large capital expendituresrequired to build an operation of this scale in soremote a region. The State of Alaska, through theAlaska Industrial Development Authority (AIDEA),has played an important role in making the projectpossible by financing and constructing a seaport facili-ty and access road. The financing essentially comesfrom the toll fees charged to the company for use ofthe facility.

COMINCO AND THE ENVIRONMENTCominco Alaska’s parent company, Cominco Ltd., is aCanadian integrated natural resource company that

Case Study D

The Red Dog Mine StoryCominco Ltd.

1 Inupiat is the plural of Inupiaq (Eskimo). Inupiaq is also the language spoken bythe Inupiat.

The Red Dog Mine StoryCominco Ltd.

NORTHWESTERN ALASKA, USA


employs some 5700 people in its operationsworldwide, either wholly owned or whereCominco is the largest shareholder. It is theworld’s largest producer of zinc concentrateand fourth largest producer of zinc metal.While its primary business interest is zinc,it also has significant business interests inother metal products such as lead, copper,silver, gold, cadmium, bismuth, germaniumand indium. Cominco has operated severalmines in the Far North, including theworld’s most northerly base metal mine,which is still in operation on LittleCornwallis Island in the Canadian Arctic,100 kilometres southeast of the NorthMagnetic Pole.

Cominco is committed to conducting its business inan environmentally and socially responsible manner.To this end, the company has adopted an environmen-tal policy to guide its employees in the daily perfor-mance of their jobs. Red Dog’s own environmentalpolicy is consistent with that of the parent company,but reflects the unique aspects of the mine, environ-ment and NANA culture. In particular, the policyhighlights Red Dog’s respect for other, non-mininguses of the land such as subsistence activities.

To ensure the highest standards, Red Dog has imple-mented a gain-share program that measures andrewards progress on a number of key performanceparameters. The program is known as Sivulliqusi,which is Inupiaq for “lead dog,” and puts words intoaction by outlining specific performance metrics which can be monitored. As many as 20 different environmental performance indicators are measured as part of Sivulliqusi. Increased awareness of environ-mental protection and a sense of ownership andresponsibility for environmental performance amongemployees have been some of the significant benefitsresulting from the implementation of the program.

THE NANA REGIONThe NANA region straddles the Arctic Circle inAlaska’s Northwest. It is home to 6800 people in anarea roughly the size of Portugal (98 420 square kilo-metres). Most of the region lies within conservation“withdrawals” (protected areas) such as parks, monu-ments and wildlife refuges, as defined by the Alaska

National Interest Lands Conservation Act of 1980.Although the region is breathtakingly beautiful, its climate is severe. Winters are long and cold, and stillair temperatures frequently drop to below –300 C.Summers, although short, are sunny and warm.

The majority of the region’s inhabitants—over 85 percent—are Inupiat, giving it a high degree ofhomogeneity that distinguishes it from other areas ofAlaska. The Inupiat are believed to have inhabited theregion for more than 10 000 years. They have devel-oped a way of life well adapted to the harsh Arcticconditions and have traditionally relied on whale, fish,caribou, moose, berries and roots. Today, the Inupiatof the NANA region live in 11 small villages widelydispersed along the coast and the rivers of the interior.The main village and seat of the Northwest ArcticBorough is Kotzebue, which has a population of 3000.Because of the long distances involved and a lack ofroad networks, air provides the primary year-roundmeans of transportation in the region. For most fami-lies, the household economy is a mix of subsistenceactivities and part-time or seasonal jobs. Subsistencehunting and fishing carry strong cultural and socialsignificance, and the land and water upon which thesedepend are a vital part of Inupiat identity, providing acultural and economic bond between generations.

NANA REGIONAL CORPORATIONNANA Regional Corporation, on whose land the Red Dog deposit is located, is one of 13 regional corporations established, along with more than

Cora and Truman Cleveland of Ambler stand in front of a fish rack.Subsistence is a part of everyday life in the Arctic.

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200 village corporations, by the enactment of the1971 Alaska Native Claims Settlement Act (ANCSA),which settled indigenous land claims of Alaska Nativepeoples against the USA. Eligible Alaska Native peo-ples (Indians, Eskimos and Aleuts of at least one-quar-ter Native blood) were enrolled as shareholders inthese corporations, which were to select and receivetitle to 18 million hectares (44 million acres) of public land and manage a cash settlement ofUS$962.5 million. Before land selection could begin,the Act required the Secretary of the Interior to nomi-nate up to 33 million hectares of Alaska lands for pos-sible wilderness classification. This served to delay by anumber of years final selection of ANCSA lands by thecorporations, as it tied up much of the land of interestto Native peoples in wilderness withdrawals. Today,there are 80 000 Alaska Native people, of whom morethan 10 000 are Inupiat with shares in the NANARegional Corporation.

Each person enrolled in the NANA region received 100 shares of NANA stock and 100 shares in one of theregion’s 11 village corporations.In 1976, all of the village cor-porations, with the exception of Kotzebue, voted to mergewith NANA. While the villagesmaintain their autonomy andhave final say on what happenswithin their boundaries, NANA is able to operate andmake decisions with one voice.NANA is governed by a boardof directors who are elected byshareholders.

While NANA’s primary purposeis to protect the land, resourcesand culture of the Inupiat peo-ple, it has as a corporation enjoyed considerable suc-cess in joint-venture and other investment initiativesranging from tourism to petroleum technology andmining. Today, it owns or works in partnership with 23 corporations and, at year-end 1997, reporteda shareholders’ equity of almost US$70 million.Dividends to shareholders have totalled over US$26.6 million since ANCSA was enacted.

HISTORY OF THE RED DOG MINEThe history of the Red Dog Mine dates back to 1968when the rusty alteration of one of its creeks wasnoticed by a local bush pilot and prospector fromKotzebue. Subsequent analysis of rock samples fromthe area indicated zinc and lead mineralization. In1970, these results were reported in an open file bythe United States Geological Survey (USGS), wherethey remained largely ignored until 1974.

Outside interest in the area was sparked in 1975, following a press release issued by the US Bureau ofMines that provided results of a consultant’s report on the zinc–lead mineralization at Red Dog. Comincoimmediately sent in an exploration crew that conclud-ed that the deposit was indeed a prospect of majorimportance. At that time, however, the land contain-ing the deposit had been withdrawn on a temporary,

five-year basis as part of alarger tract of land beingstudied for possible wilder-ness classification under theterms of ANCSA. Althoughthe Red Dog prospectcould not be staked becauseof its status, land as close as 1.6 kilometres west of thedeposit could be exploredand staked, and Comincodid so. When the wilder-ness study withdrawalexpired in December 1978,Cominco staked theprospect.

At around the same timethat Cominco was exploringthe area, NANA RegionalCorporation began to takean interest in the prospectand, in 1976, applied to

establish ownership of the land containing the deposit under the terms of ANCSA. The question of ownership of the land was finally resolved in 1980, following the passage of the Alaska NationalInterest Land Conservation Act, when NANA’s rightto select the land was clearly established, subject to prior rights. Cominco believed that its claims constituted a prior right.

Victoria and Herbert Onalike of Noatak spend time teaching their grandchildren about the past and the future of the NANA region.

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Thus, a long period of meetings and negotiationsensued to resolve the conflict of interest betweenCominco and NANA. Cominco was by no means theonly company interested in the site, but its reputation,persistence and Arctic mining experience gave it anadvantage over rival firms. In 1981, Cominco invitedsix NANA leaders to visit its other North Americanoperations, including its Polaris zinc mine in Canada’sHigh Arctic and its Black Angel lead–zinc mine inGreenland, where they were able to meet privatelywith local leaders to discuss the implications of a largemine in their midst.

Because NANA’s primary goal is to protect the inter-ests of the Inupiat people of the region, it consultedwith its shareholders regarding mine development.Earlier surveys, conducted in the early to mid-1970s,had indicated little shareholder support for resourcedevelopment on their lands, for fear of the impacts itmight have on their traditional lifestyle and subsis-tence resources. As well, the commercial fishing indus-try was at its peak, and shareholders were skeptical asto whether a mine would provide much in the way ofbenefits. Thus, NANA conducted meetings in villagesthroughout the region to seek consensus on developingthe mine. While a primary concern of the shareholderscontinued to be for the land and the continuation oftheir traditional lifestyles, the importance of a casheconomy had grown for many families. By the 1980s,

most shareholders felt that the mine could be devel-oped in a way that would protect their lands and tra-ditional way of life.

THE COMINCO–NANA AGREEMENTIn 1982, NANA and Cominco signed a Developmentand Operating Agreement, giving Cominco the rightto build and operate the mine and market the metals.In return, NANA receives an escalating percentage ofroyalties and a commitment from the company to pro-vide its shareholders with employment while protect-ing their environment and subsistence lifestyle. Keyaspects of the agreement include:

• a guaranteed financial return through advanced netsmelter return royalties and net proceeds royalties;

• an advisory committee made up of equal numbersof senior NANA and Cominco representatives toregularly review operations performance and futureplans;

• specific measures to promote the employment ofIndigenous shareholders at all levels of the project;and,

• specific measures to protect traditional lifestyles andthe environment.

Upon signing the agreement, Cominco paid NANAUS$1.5 million. Every year thereafter, until the minewent into production, NANA received an additionalUS$1.0 million. Once production began, the yearlyroyalty changed to 4.5 percent of the net smelterreturn. After Cominco recovers its capital investment,NANA will share in the net proceeds beginning at 25 percent and increasing by 5 percent every five yearsuntil NANA and Cominco share equally in the profits.These payments directly benefit NANA shareholderswho receive dividends from NANA. Other NativeAlaskans benefit through provision 7(i) of ANCSA,which requires regional corporations to share 70 per-cent of all resource development profits with otherregions.

In addition, Red Dog provides, in lieu of taxes, several million dollars annually to the NorthwestArctic Borough. These payments, which will totalUS$70 million over 24 years, flow back to residents of the area in the form of improved education andeconomic development opportunities.

Edith Pungalik teaches young shareholders how to make a fishnet atNANA’s Camp Sivunniigvik.

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THE RED DOG MANAGEMENT COMMITTEEOn the effective date of theagreement, Cominco andNANA established the RedDog Management Committeewhose 12 members are drawnequally from NANA andCominco. The chairperson isdesignated by Cominco fromone of its members. The pur-pose of the committee is to“generally oversee any and allexploration and mineral devel-opment and production activities occurring pursuantto [the] Agreement and [to] be responsible for safe-guarding the physical, cultural, economic and socialneeds and the subsistence needs of the Native peoplesof the NANA region, consistent with the provisions of[the] Agreement.”2 The committee meets quarterly toreview operating and other reports, approve plans,monitor implementation of the agreement and resolveany outstanding issues.

EMPLOYMENT AND TRAININGThe single largest economic impact of the Red DogMine on the region is through employment created byCominco and its suppliers. Since formal employmentin the region has traditionally been low, an importantgoal of the Cominco–NANA Agreement is 100 per-cent shareholder hire at the mine.

In 1982, when the agreement was signed, the partiesrecognized that very few NANA shareholders possessedthe requisite skills for working at a mine and that con-siderable time, money and effort would have to beinvested in training and related programs. An employ-ment committee, made up of four voting membersdrawn equally from Cominco and NANA, was set upalmost immediately to address these challenges. Oneof its first tasks was to develop an employment planand to report back to the Management Committee onits implementation.

The employment plan was to be a living documentthat could be modified to fit changing circumstances.It included provisions for appointing a personnel

officer from among NANA shareholders to assist inthe recruitment and training process and in the deliv-ery of scholarship programs to Inupiat students inter-ested in studying in the mining, geological, businessand engineering fields. NANA was to develop a data-base of eligible potential employees and to assist thecompany with interviews in the villages. The parties tothe agreement were able to obtain assistance from theUS Department of Education for early mine and milloperator and maintenance training programs. Pre-employment training to prepare shareholder employeesfor entry into these programs was set up with theAlaska Vocational/Technical Center in Seward, Alaska.

The parties to the agreement have seen a slow butsteady increase in the number of shareholders workingat the mine. In 1999, 58 percent of the workers andcontractors employed by Cominco Alaska were NANAshareholders. While this is a notable achievementgiven the circumstances, it remains short of the goalthe parties set themselves in 1982.

In 1995, NANA and Cominco recommitted them-selves to fulfilling the terms and spirit of the 1982accord. NANA is working with state and federal gov-ernments to raise regional educational standards, whileCominco concentrates on providing on-site and off-site training and education programs.

Red Dog’s on-site training plan is geared to ensuringextensive training for all employees in each area ofoperation. Employees share acquired skills by teaching

The Red Dog Mine employs 420 workers. Shareholders ofNANA Regional Corporation account for more than half of them.

2 Development and Operating Agreement Between NANA Regional CorporationInc. and Cominco Alaska Incorporated—October 11, 1982, p. 54.

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others with whom they work. New programs, such asthose for the assay and metallurgical laboratories, aredeveloped continually and incorporated into the over-all training plan. Apprenticeship programs are avail-able in trades such as heavy duty mechanic, electrical,millwright and power generation. Technical training inthe assaying, geological, metallurgical and environ-mental fields, and occupational training in mill, portand mobile equipment operations are also offered. Bythe end of 1998, Cominco had invested US$8.8 mil-lion in such training, and almost all people in trainingwere NANA shareholders.

The biggest challenge, however, remains the low level of employment of NANA shareholders in technical, professional and managerial positions. Ofthe 219 NANA shareholders currently employed at the

mine, 20 hold professional and managerial positions.To address this, Cominco has added a cooperative education job-share program for employees, an engineering scholarship education program and aschool-to-work partnership with the Northwest ArcticBorough School District.

The cooperative education job-share program offersemployees the chance to pursue a four-year mining-related college degree on a semester-on/semester-offbasis, while remaining full-time employees with thecompany. All employees are eligible to participate inthis tuition-aided program once they have completedsix months of continuous company service at Red DogMine.

To foster interest among students, Cominco andNANA visit the 11 schools in the region twice a yearto tell students about the many employment opportu-nities at Red Dog, the educational requirements foreach position and what the lifestyle entails. The company sponsors an annual career day and an essaycontest in which winners from each high school areinvited to tour the Red Dog facilities.

The school-to-work partnership with the local schooldistrict is designed to make school a more relevantexperience for high-school students by directly connecting their studies to future jobs. In 1998, 50 children from eight schools participated. An environmental education module introduced in the fall of 1997 gives high-school students experience incollecting and analysing data related to aquatic systemsin their own village. Environmental coordinators fromRed Dog work with the students to interpret theirfindings.

Cominco also sponsors three full scholarships forNANA shareholders accepted to accredited colleges to study mineral processing engineering, mining engineering, geological engineering or chemical engineering. In exchange, students must agree to work for Cominco Alaska for a period equal to thenumber of years they attend college.

In addition to direct job opportunities, Red Dog contributes to regional employment through contractsfor the supply of goods and services to the mine. Eight of the on-site employers at Red Dog are NANAjoint-venture partners. While not a NANA joint venture, Arrow Transportation, responsible for trans-porting concentrate to the port site for storage andshipping, has a 72 percent level of shareholder hire.

PROTECTION OF A WAY OF LIFE, SUBSISTENCERESOURCES AND THE ENVIRONMENT A major concern of NANA and its shareholders wasfor the environment and subsistence resources. Theywanted assurances that these would not be compro-mised by the development and operation of the mine.To a large extent their concerns were addressedthrough the public and comprehensive environmentalimpact assessment of the mine required by the USNational Environmental Policy Act (NEPA). Theassessment addressed all major environmental,

Cominco’s Job Shadow Program helps make school a relevant experiencefor participating high-school students by directly connecting their studiesto future jobs.


socio-economic andcultural/archaeologicalresource aspects of the development. The manypermit and other regulatoryrequirements imposed by federal and state authoritiesdirectly and indirectly ensurethat obligations in theCominco–NANA agreementare met.

To ensure compliance with the agreement and to providefeedback to the mine’s mana-gement on matters affectingthe environment and traditional lifestyles, theCominco–NANA Agreementestablished a subsistence advisory committee. The committee, made up of eldersfrom Noatak and Kivalina3

(the two villages nearest themine), meets quarterly, or asrequired, to review reportsgenerated from the extensiveenvironmental monitoring required by governmentregulations and Cominco. The committee took part inselecting a route for the 84-kilometre concentrate haulroad from the mine to the port, which generally avoidsimportant caribou migration paths, fish spawningareas and waterfowl nesting sites. It continues to mon-itor road activity for potential effects on subsistencehunting and can shut down traffic if it is felt to benegatively affecting subsistence activities. The commit-tee is also involved, in consultation with the villagersof Kivalina, in the scheduling of shipping periods tominimize effects on traditional whale hunts carried outby the villagers of Kivalina. Red Dog pays all travelcosts and other expenses for the participation of nineNANA shareholders on this committee. In addition,each member receives a stipend for each meetingattended.

The early involvement of the subsistence committee iscredited with the successful resolution of water qualityproblems in Red Dog Creek. Because Red Dog Creekflows over the rich zinc deposit, it contains naturallyhigh concentrations of metals. However, in 1991, itwas discovered that mining activity was increasing the level of metals in the stream. A US$11-milliondiversion ditch system was built to divert clean creekwater past the pit to Red Dog Creek below the mine.Mine runoff water containing metals is collected and pumped to the tailings pond where it is treatedbefore discharge.

Based on several incidents, such as minor variationsfrom treated water quality limits and some administrative deficiencies in permits in the early1990s, the mine was the subject of a Clean Water Actenforcement action by the US EPA and Department of Justice. It is Cominco’s view that none of the regulatory/legal concerns resulted in environmentalharm or a compromise of principles embodied in the Cominco–NANA agreement. Nevertheless, in

Red Dog’s access road and port facility were financed andconstructed by the State of Alaska.

3 Noatak is a village of slightly more than 400 located on the banks of the NoatakRiver, 55 kilometres south of the mine. Villagers rely heavily on subsistence fish-ing and hunting of caribou, moose and waterfowl. Kivalina is located on thecoast, 80 kilometres southwest of the mine and 25 kilometres north of the mine’sport site. Its population of 350 depends on subsistence hunting of seal, walrus,whale and caribou, as well as fishing.


settlement of the enforcement action in 1997,Cominco was required to pay a cash penalty and commit to complete a number of environmental projects in the mine area.

By the time the action was initiated, Cominco hadalready upgraded existing effluent treatment facilities,and operation of a new state-of-the-art treatment plantbegan in late 1994. Performance of this plant has beensuperb, and discharge is well within permit require-ments. New and exceptionally tight limits wereimposed in 1998, but by this time, measures hadalready been implemented to further upgrade effluentquality.

The combination of contaminated water collection,management and treatment in the mine area hasresulted in a significant improvement of water qualityin Red Dog Creek and downstream. This is confirmedby the presence of fish near the mine where conditionswere highly toxic in pre-mining years (for more information, see story on Cominco’s web site: www.cominco.com/Enviro/Stories/rd-fish.html).

In addition to environmental consequences, NANAalso had concerns about the potential effects of themine’s presence on Inupiat culture and values. Thecompany maintains a fly-in workforce, which has pre-vented a major influx of new settlement to the regionand has preserved the homogenous Inupiat nature ofthe region. The company’s strict drug-and alcohol-free policy has helped pre-vent the arrival of social problems fromoutside the region. A rotation scheduleof 28 days at work and 14 days off, orthe variation of 14 days at work and 7days off, and a fairly flexible leave policyhave allowed the mine’s Inupiat employ-ees to continue a traditional way of lifewhile employed by the mine.

As in other rural areas of the world, theNANA region has experienced someout-migration to urban centres, such as Anchorage, 1600 kilometres to thesoutheast. While the mine itself is notdirectly causing the migration, steadyemployment does give workers thefinancial means to relocate should they

wish to pursue housing, education, recreation andother opportunities not available locally. This is acause of concern to NANA, whose leaders have begunfocusing attention on improving village infrastructure,standards of education and other amenities.

LESSONS LEARNEDThe single most important lesson learned by NANAand Cominco is that the institutional structures thatform the framework of their relationship must be ableto accommodate the evolution of that relationshipover time. The legal aspects of the agreement and theprecise wording developed when two parties are justbeginning to formalize a relationship simply cannotanticipate all aspects of the evolution of that relation-ship. It is the spirit behind the agreement and thecommitment to broad principles of mutual respect and trust that matter most in forming a successfulrelationship.

Communication between the parties is a key factor indetermining success and is dependent on both partiesbeing able to listen actively and to understand eachother’s position. An institutional structure conduciveto open communication is important, but there mustalso be a commitment by both parties to maintain dia-logue through thick and thin. Trust and respect areparamount, and fostering these depends on a numberof factors, including the chemistry between the indi-viduals involved, honesty in all dealings and having at

Protective lining being installed in the Red Dog Creek channel.

Both parties to the agreement seek a fair share of thebenefits arising from the development. Benefits can bein the form of cash payments from the developer tothe community and they can also emerge throughpreferences in hiring or contracting. The latter canturn out to be an important source of friction betweenthe parties to the agreement. In order to avoid prob-lems, the parties need a clear set of rules to guideactions at any particular point in time. Just as impor-tantly, however, they need a mechanism to be able toreconsider the rules to meet evolving and changingneeds. Transparency of process, commitment to com-munications and fundamental trust are key to resolv-ing frictions that are certain to arise in implementingthese agreements. It is the spirit of the agreement andmutual commitment to some shared values that ulti-mately ensure the success of the relationship.

CONCLUSIONThe Red Dog Mine is an example of responsible devel-opment of a mineral resource through cooperation andunderstanding between a mining company and anIndigenous people. A business agreement and relation-ship have been established that benefit both partiesand will continue to do so well into the next century.

For NANA, the mine has created modern jobs andnew opportunities for its people in a way that allowsthem to preserve their culture and traditional subsis-tence way of life. The skills and cash flow (estimatedat just over US$35 million at year-end 1998) createdby the mine are providing a strong basis for long-term


least some common ground with regard tothe goals and objectives.

One of the principal sources of difficultyencountered in agreements governing min-ing projects arises from the very differentnatures of the parties involved. In the caseof NANA and Cominco, one is a politicalorganization related to its people throughconsensus decision-making mechanismsand the other is a commercial organizationthat operates on the basis of policies set byan executive board but implemented on ahierarchical decision-making model.Bridging the gap these differences create is central tothe successful implementation of the agreement.

The two organizations also have significantly differentviews of time with respect to decision making. Thecommunity, faced with a development project, antici-pates fundamental changes in its way of life when thedevelopment proceeds and, for this reason, wants togive ample time to build a consensus about the newdevelopment. A company, on the other hand, is oftenunder time constraints arising from financing, marketwindows, and regulatory or operational conditions.Time is normally of the essence, and quick action isoften sought. Again, a reconciliation of theseapproaches must be achieved.

The cyclical nature of the mining business is not oftenwell understood by the community and the politicalleaders with whom the mining company must deal.Commitments and promises can be difficult to main-tain in an ever-changing environment. For example,the commitment to start up a project within a certainperiod of time may be missed due to a fall in markets.The up-and-down cycles of the mining business,which condition a company’s decision, can oftenbecome grounds of frustration for the community.Similarly, the significant technical challenges that areoften encountered by a company may reasonablyrequire changes to be made to the original project.These changes can lead to misunderstandings if theyare seen as a variation on original agreement terms.Trust and good communications are key elements inovercoming the difficulties that can arise in thesekinds of circumstances.

James Adams of Noatak works as a loader operator at Red Dog Port.Because the mine is so close to his hometown,

Mr. Adams can live in Noatak when he is not working.

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economic growth in the region. For Cominco, RedDog has become a major strategic source of zinc andlead concentrate for its expanded smelting and refiningoperation in Canada, and it has helped the companyconsolidate its leadership role in the zinc industry.

The Inupiat of Northwest Alaska have a proud tradi-tion as whaling captains, dog mushers, commercialpilots, artists, carvers, members of the AlaskaLegislature and active participants in the AlaskaNational Guard. Today, they can add to that list milloperators, geologists, pipeline engineers, supervisorsand trainers in the mining industry, and corporateexecutives. In the new millennium, a leadership tier

will develop out of young NANA shareholdersemployed at Red Dog. Their ideas and skills will be a source of economic strength and leadership toNANA, the region and the state. It is an illustrationthat mining can be compatible with the principles ofsustainable development and the values of Indigenouspeoples.


Kea BarkerCorporate Communications OfficerCominco Ltd.#500–200 Burrard StreetVancouver, BCCanada V6C 3L7

Tel: (+ 1 604) 682-0611Fax: (+1 604) 685-3019Email: [email protected]

Or visit the following web sites:Cominco: www.cominco.comNANA: www.nana-online.com

The ore mined at Red Dog is stored in two concentrate storage buildings,which are the length of four football fields. The two largest buildings inAlaska are located at Red Dog Port.

All photos courtesy of Cominco except where otherwise stated.

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41The Tampakan Copper Project

INTRODUCTIONWMC Limited is an Australian-based mining companyengaged in the exploration for, and production of,minerals around the world. Although its principalmining operations are in Australia, it undertakes min-eral exploration in North and South America, Asia,Europe, Africa and the Philippines.

WMC’s activities are guided by its Code of Conductand by its Statement of Purpose which commits it tomanage all operations consistent with world best prac-tice. WMC’s Environmental Policy requires environ-mental factors to be integrated into planning andoperational decisions and processes consistent with theprinciples of sustainable development.

In 1995, WMC adopted a formal Indigenous PeoplesPolicy which applies to its relations with Indigenouspeoples around the world. The policy commits WMCto developing relationships of mutual understandingand respect with the Indigenous peoples of the areas inwhich it operates.

In 1998, WMC set out the three pillars of its commitment to sustainable development: responsibleeconomic growth, environmental and natural resource

conservation, and social responsibility—built on afoundation of its ethics and values.

THE TAMPAKAN PROJECTWMC has had an active exploration program in thePhilippines since 1987. The current focus of explo-ration is on a copper and gold discovery in the high-lands near Tampakan on the southern island ofMindanao.

WMC has signed a Financial or Technical AssistanceAgreement (FTAA) with the Philippines government,which gives it permission to explore for and developmineral deposits as a contractor to the national gov-ernment. The FTAA gave WMC exploration access toalmost 90 000 hectares, which must be progressivelyreduced over five years to a maximum of 5000hectares. As of July 1998, the FTAA area was approxi-mately 43 900 hectares.

If a minerals development project goes ahead atTampakan, the FTAA calls for a sharing of the pre-taxnet revenues on the basis of 60 percent in favour ofthe government (and therefore the people of thePhilippines) and 40 percent to WMC, after the

Case Study E

Tess Penera, WMC Information Centre coordinator, teachingschoolchildren of the Tampakan National High School about

the mine development plan using a scale model.

The Tampakan Copper ProjectWMC Limited

MINDANAO, THE PHILIPPINES


recovery of all capital andoperating expendituresincurred in evaluating, devel-oping, constructing andoperating the project.

Following the completion ofa drilling program totalling31 000 metres, estimates ofindicated and inferred miner-al resources at cut-off gradesof 0.2 percent and 0.5 per-cent copper have been made(see Table 1).

As of October 1998, a full-scale feasibility study had notyet begun, and, if a minewere to be developed, pro-duction is unlikely beforelate 2003 or early 2004.

PROFILE OF LOCAL COMMUNITIESThe potential minerals development area is located in the province of South Cotabato in southernMindanao. The three main cultural groups in SouthCotabato are:

The Bla’an Indigenous Cultural Communities: TheBla’an are more identifiable in the mountainous interior of southern Mindanao, where they have largely maintained their traditional cultural practices,as distinct from the Bla’an living on the coastal plainsand foothills who are generally indistinguishable fromthe dominant Visayan Christian settlers who migratedto southern Mindanao in the 1940s. The territory over which the Bla’an exercise traditional responsibilitytoday represents only a portion of their traditional territory.

The Visayan Christian Settlers:The most significant migrationof Filipinos from the VisayanIslands in the centralPhilippines to southernMindanao occurred in the1940s. Led by General Santos,it was a continuation of theAmerican colonial govern-ment’s earlier resettlementscheme aimed at redistributingthe Filipino population insouthern Mindanao.

The Muslim Settlers: For several centuries prior to theearly 1900s, Muslim groupsdominated Mindanao’s coastallowlands and ports, where theyundertook extensive slave raidson groups such as the Bla’an.

The influx of the Visayan Christian settlers sawMuslim groups lose their political and economic dominance, although numerically they still constitutea significant portion of Mindanao’s population today.

The area of focus for WMC’s exploration activities ishome to five traditional Indigenous Bla’an communi-ties, with a total population of approximately 2300 people. They live in the highlands adjacent tothe area of the Tampakan Project. The highland Bla’anare an animistic group who traditionally have practisedhunting and nomadic slash-and-burn agriculture.

Unlike the coastal and lowland Bla’an who have beenlargely immersed in the majority Visayan population,the highland Bla’an have maintained their distinctivecultural practices in their polygamous, slash-and-burn

Table 1. Estimates of Indicated and Inferred Mineral ResourcesRESOURCE AT A 0.2% COPPER CUT-OFF RESOURCE AT A 0.5% COPPER CUT-OFF

Resource Tonnes (m) Au(g/t) Cu(%) Resource Tonnes (m) Au(g/t) Cu(%)Category Category

Indicated 1300 0.24 0.56 Indicated 600 0.32 0.78

Inferred 1200 0.16 0.39 Inferred 300 0.26 0.69

Total 2500 0.20 0.48 Total 900 0.30 0.75

Exploration drilling (drillhole 90) at the TampakanCopper Project.


agricultural society, characterized by strictly regulatedrules of conflict resolution and warfare.

The highland Bla’an live in thatch-roofed bamboodwellings loosely clustered into villages or communi-ties which exercise responsibility for the surroundingland called the banwu, over which they have rights tohunt and cultivate. Each banwu is under the authorityand control of a traditional leader called a fulong. Thetraditional leader of a number of neighbouring banwuis called the bong fulong (senior leader). In mostinstances, bong banwu’s affiliation and inheritance oftraditional authority and control over land passthrough the patrilineal line.

At the time that WMC commenced exploration in thearea, the highland Bla’an were facing a particularly dif-ficult situation of increasing conflict with encroachingVisayan settlers seeking to acquire Bla’an traditionalterritories, as well as increasing social disintegration,largely the result of Visayan and Muslim conflict, poorhealth, extremely high infant mortality and very limit-ed access to basic services.

RELEVANT FILIPINO LEGISLATION AND REGULATIONSThe 1987 Constitution provides for “ancestral domainfor Indigenous cultural communities.” Indigenouspeople have the opportunity to assert their claim forassociation with their ancestral domain land throughthe operation of a Departmental Administrative OrderNo. 2 (1993), which was established by theDepartment of Environment and Natural Resources asa basis for issuing Certificates of Ancestral DomainClaim. Certificates recognize the right of occupationand land use of Indigenous groups by way of anAncestral Domain Management Plan.

Under its FTAA, WMC is legally required to “con-tribute to national development by helping to developthe host and neighbouring communities of theContract Area” and to “recognize and respect therights, customs and traditions of Indigenous tribalcommunities.”

The Philippines Mining Act 1995 contains provisionsrelating to prior consent for the opening of ancestraldomain lands and for payment of royalty toIndigenous cultural communities to finance a trust

fund for their socio-economic well-being. TheImplementing Rules and Regulations of the MiningAct 1995 require that affected Indigenous communi-ties receive no less than one percent of a mine’s grossoutput as a royalty payment. In addition, one percentof mining and milling costs must be contributed tohost communities to help with infrastructure andsocial development. In addition to the royalty pay-ments, national taxes, real property tax, local businesstax and occupation fees are shared by the federal gov-ernment, the relevant provincial government and theaffected village (barangay) councils.

In late 1997, the Philippine Congress passed theIndigenous Peoples’ Rights Act (Republic Act 8371),which confers ownership of both surface and sub-sur-face natural resources to the Indigenous cultural com-munities. Since this appears to be at odds with thePhilippine Constitution, which expressly declares thatthe state owns such rights, there will be a period ofuncertainty until the Indigenous Peoples’ Rights Act is clarified.

COMMUNITY PARTICIPATIONCommunity Information and ConsultationVery early in the exploration phase, WMC began com-munity consultation and a program of communitydevelopment with people living or having an interestin the potential minerals development area. Commu-nity consultation continues to encompass the people

Local transport—a carabao—at the Lampitak River crossing, on the road to the Tampakan Copper Project.


and groups potentially affected by WMC’s activities as well as local government units, government agenciesand interested non-governmental organizations.

The initial focus of consultation has been on the people most affected by exploration activities and has involved two main cultural groups: the Bla’anIndigenous cultural communities and the Visayan settlers. The community consultation program has two main goals:

• To learn about the needs, concerns and aspirationsof the community and ensure community participa-tion in formulating development programs andimproving living standards; and,

• To ensure that those potentially affected by WMC’sactivities fully understand the consequences of thecompany’s presence in the area. This involvesexplaining WMC’s activities and plans, discussingthem with the community, and listening to andanswering questions.

Key Bla’an ConcernsThe company’s ethnographic work with the Bla’anearly in the exploration phase of the project provided a solid basic understanding of highland Bla’an culture,thus enabling the particular interests and concerns ofthe Bla’an to be identified at the outset of local,regional and national consultations. The pre-eminentconcern of the Bla’an was to protect their interest intheir traditional territory and to secure title to thatland. The highland Bla’an community has seen thelowland Bla’an disenfranchised and dispossessed oftheir traditional territories, with an accompanyingbreakdown in associated cultural practices. They see

the preservation of their culture as inextricably tied tothe maintenance of their attachment to their tradition-al territories and a strong fabric of social life.

WMC’S ASSISTANCE IN OBTAINING CERTIFICATESOF ANCESTRAL DOMAIN CLAIM The cultural contact history of the Bla’an has left themwith a legacy of many broken promises from both gov-ernment and logging companies that exploited theirtraditional territory. As a result, the Bla’an Indigenouscultural communities in the project area sought a spe-cific written undertaking from WMC defining howWMC would operate in the area. In the agreement,WMC undertook to assist the Bla’an with the docu-mentation of their traditions for the purposes of sub-missions for Certificates of Ancestral Domain Claim.

Under Filipino law, much of the highland Bla’an tradi-tional territory is classified as public or forest land,which is land with a slope exceeding 18 percent andover 600 metres above sea level. Any person living onsuch land is considered an illegal squatter. However,Indigenous people do have an opportunity to asserttheir claim for traditional association with such landby applying for Certificates of Ancestral DomainClaim from the government. Certificates so issued rec-ognize the right of occupation and land use ofIndigenous groups by way of an Ancestral DomainManagement Plan.

WMC ethnographic and archaeological teams workedwith the five Bla’an communities to document Bla’antraditions in the area and the extent of Bla’an tradi-tional territory. The work provided ethnographic andarchaeological records of five Bla’an communities,identified the boundaries of their traditional territoriesand provided the necessary research and documenta-tion for the government to assess their claims appro-priately. The work was completed over the course ofthree years and the bound voluminous documentationwas turned over to the Bla’an communities, whichhave lodged the relevant documentation with the gov-ernment. After due examination and consideration ofthe documentation, the Philippines government hasawarded Certificates of Ancestral Domain Claim tosome of the Bla’an Indigenous cultural communities,thus providing a recognition of the status of the com-munities and a measure of protection of their tradi-tional territories. The certificates legalize the presenceof the Bla’an on the land under Filipino law and

Community organizers’ presentation forthe Surface Landowners’ Association at

the Pula Bato Nursery.


prevent occupation by unau-thorized people, thus reducingthe potential for conflict inthe area.

CONSULTATION WITHOTHER KEY STAKEHOLDERS Although the initial focus ofconsultation was with groupsmost affected by WMC’sexploration activities, WMCrecognized that it must notswing the pendulum so fartowards the local highlandBla’an community that itwould cause a backlash againstthe Bla’an from the local non-Bla’an residents. For example,WMC’s recognition of thehighland Bla’an and their affiliation with their traditional territory has been seen by many Visayanresidents in the region as significantly diminishingopportunities for Visayan occupation of what theyhave regarded as unoccupied land, despite the Bla’anpresence. In this regard, some local Visayan squattershave been resentful of WMC’s recognition of the traditional interests of the highland Bla’an and thecommunity facilities that WMC has funded in thehighland Bla’an communities.

The company therefore sought to address the needs ofthe local non-Bla’an farmers and settlers by increasingthe standard of existing community facilities in nearbyregions, including medical and education facilities,thus facilitating the development of services to boththe Bla’an and non-Bla’an on an equitable basis.

In addition, many people in the lowlands downstreamof the potential mineral development area have ques-tions about the project, particularly regarding waterquality. When it emerged that many were unsure ofwhat WMC was doing or planning and that specula-tion was rife, WMC took immediate steps to improvecommunications with these groups. The opening of aWMC Information Centre in the town of Tampakanhas enhanced communication. The Centre is open tothe public and includes scale models of the potentialmineral development area, complete with towns, riversand mountain ranges. The Centre also hosts visits tothe base camp, drill sites and rehabilitation projects by

individuals, organizationsand school groups seeking abetter understanding of com-pany activities. This programhas been expanded by amobile education and aware-ness component in which thecommunication is takendirectly into the villages.

WMC’S ENVIRONMENTALCOMMITMENTSWMC’s EnvironmentalPolicy commits the companyto achieving compatibilitybetween economic develop-ment and maintenance ofthe environment. WMC alsosubscribes to the Code for

Environmental Management (developed by theMinerals Council of Australia) which carries obliga-tions in relation to sustainable minerals development,community consultation, environmental awarenesstraining, environmental management systems, publicenvironmental reporting and target setting. As well,WMC is an active member of the InternationalCouncil on Metals and the Environment (ICME),whose Environmental Charter sets out principles ofenvironmental stewardship, product stewardship andcommunity responsibility.

Under its FTAA, WMC is required to minimize theenvironmental impact of its operations, and to rehabil-itate and vegetate any disturbed areas in a responsiblemanner. WMC has conducted baseline environmentalstudies at Tampakan since 1994 as a precursor to a full Environmental Impact Assessment. The baselinereports have been publicly distributed, in line with thecompany’s commitment to transparency and to sharinginformation with the communities in which it operates.

WMC has taken steps to identify, anticipate andaddress key environmental concerns of the local com-munities. It is dealing with the following environmen-tal issues in its ongoing process of communityconsultation, information and education:

Surface Mining: WMC has constructed a program to show community leaders existing surface operationsthat operate to the same high standard WMC would set.

A young Bla’an girl tends a school garden near the TampakanCopper Project. WMC funds the school, which is in an isolat-ed area where previously there was no formal education.


Deforestation: WMC’s operations would involve clear-ing some regrowth forest. However, WMC has givenassurances that no culturally important sites will beaffected and that it will rehabilitate all areas it dis-turbs. The company is also actively assisting in thereforestation of areas denuded by logging companies.

Water: WMC has publicly stressed that it will notadversely affect the quality or quantity of water down-stream of its activities. It has ruled out river disposalfor tailings and surplus rock management and will usea total containment approach to chemicals used inmining and processing.

Tailings: WMC has ruled out river disposal and islooking at options that include valley impoundment ora pipeline to transport tailings to lowland impound-ment or deep seabed deposition. The TampakanProject recognizes the guiding philosophy for tailingsmanagement, as stated by the World Bank: “Tailingsmust be disposed of in a manner that optimizes pro-tection to human safety and the environment.”

Seismic Activity: WMC recognizes that the project is inan area of comparatively high seismic activity and willdesign all mine facilities and structures appropriately.

SOCIAL IMPACT ASSESSMENTWMC is committed to avoiding adverse social impactand, where this is not possible, to mitigate or compen-sate. This applies to all interests affected by the project.

Although it is unusual to conduct ethnographic andsocio-economic groundwork so early in a minerals pro-ject, WMC initiated a comprehensive process of socialimpact assessment as soon as detailed geological explo-ration commenced in 1994. The work, which is ongo-ing, involves:

• a cultural research program which seeks to identifycommunities and interests, to understand their his-tory, lifestyles, traditions, and their contemporaryneeds and aspirations. These records now representthe vast bulk of documentary information knownabout the customs and traditions of the highlandBla’an;

• collecting and analysing existing statistical data;

• establishing baseline socio-economic indicators,including health indicators such as infant mortalityrates, against which future data may be compared;and,

• undertaking detailed socio-economic regional base-line studies (being conducted by the MindanaoState University).

The company works closely with government agenciesthat have responsibility for local matters and withIndigenous people in the documentation of the Bla’antraditions and the development of programs with theBla’an.

WMC was particularly concerned about the potentialimpact of its activities on the highland Bla’an. TheBla’an have had limited experience with the outsideworld and it is likely that, over time, WMC’s presencewould bring changes to their values and cultural wayof life. The program also addressed the economicexchange cycle among the Bla’an as a basis for under-standing the impact that WMC may have by injectingresources into the area. Thus, the company has putconsiderable effort into working with the Bla’an in theearly stages of the project.

NEGOTIATED AGREEMENTSNegotiating ProcessWMC entered into a two-tier process to develop writ-ten agreements with each cultural community. Thefirst phase was to agree to Heads of Agreement. Thesecond stage was to negotiate Principal Agreementsthat built on the Heads of Agreement and detailedspecific longer-term plans and commitments.

Loreto Inoncente, WMC’s drilling logistics foreman at the TampakanCopper Project, ensures the integrity of a drill hole cap at rehabilitationdrill hole number 13.


The two-tier process was used for several reasons:

• The Bla’an needed time and assistance to under-stand the intentions of WMC and the potentialimpact on the communities of WMC’s activities.The Heads of Agreement provided the opportunityfor both the Bla’an community and WMC tounderstand more about each other, and also provid-ed a basis on which a mutual understanding andpositive working relationship could grow.

• The two tiers of agreements parallel, to a certainextent, the traditional Bla’an structure of agree-ments, whereby a first agreement termed a Kasfalabinds two people together in agreement on a mat-ter. The second, more binding agreement is aDiandi, which is a blood compact. The Diandi is apublic agreement, the breach of which by eitherparty is punishable by death.

• The second-stage agreements, the PrincipalAgreements, provide more detailed, longer-termplans. In addition, they are made not only with theBla’an Indigenous cultural communities but alsowith the three affected municipalities, the relevantbarangay councils and with the individual settlerswho may be occupying land in the Mine Develop-ment Area.

Principal AgreementsWMC used an interest-based negotiation process fordeveloping the Principal Agreements. These agree-ments will ensure that the rights of Indigenous andnon-Indigenous communities are recognized and,where necessary, appropriate compensation is paid.The Principal Agreements establish a basis for com-pensation for any disturbance or relocation consistentwith World Bank resettlement guidelines. Compensa-tion may include:

• an equivalent land holding away from the mine site;

• appropriate payment for loss of crops;

• payment for and assistance in developing new culti-vation areas;

• payment to replicate housing and other infrastruc-ture at a new location;

• rental payments for original land holdings; and,

• return of the rehabilitated land at the end of themine’s life.

The Principal Agreements also provide for:

• ongoing community development;

• royalty payments for the Bla’an communities; and,

• Mining Community Development Contributions tothe general community living within the affectedbarangays. Although the Mining Act requires WMCto contribute one percent of mining and millingcosts to assist host communities with infrastructureand social development, WMC has agreed to con-tribute one percent of gross output for communitydevelopment through the barangays councils.

Community DevelopmentWMC made a minimum three-year commitment toestablish a community development program with thefive Bla’an Indigenous cultural communities, as well aswith the Visayans and Muslims living within affectedbarangays. WMC’s community development teamworks closely with the local people to ensure the pro-gram is driven by their needs and aspirations and isultimately capable of being managed by them.

WMC has spent on average 15 percent of its annualproject budget directly on community development,initially focused on the Bla’an, but with concurrentand increasing development expenditures on surround-ing non-Bla’an communities. Key activities that lay thebasis for sustainable community development include:

• institutional strengthening through communityorganizing, leadership, administration and manage-ment training and capacity building;

Efren Villarina, WMC corporate affairs officer, facilitating a presentation forhatud balita (news delivery) at the Tampakan Municipal Hall grounds.


• infrastructure projects, such as improved road access(farm-to-market roads), improved housing, multi-purpose community centres and provision ofpotable water supplies;

• sustainable agricultural programs (training inappropriate farming techniques on slopes to mini-mize erosion, improve soil fertility, etc.), nurseriesto support reforestation and rehabilitation projectsand the provision of farm implements and workanimals. This is particularly important as the Bla’anmove from slash-and-burn to sedentary agriculturalpractices;

• health initiatives such as medical clinics, equipmentand staff, community health training and preventivehealth and nutrition programs; and,

• education initiatives such as building schools andfunding teachers and materials to provide primaryeducation and adult functional literacy programs inareas where there were no schools. The DemolanFoundation, a non-government organization, has

been responsible, in conjunction with theDepartment of Education, Culture and Sports, foreducational aspects of the community developmentprogram.

FoundationsUnder the Principal Agreements, a foundation is beingestablished for each Bla’an Indigenous cultural com-munity to implement social, economic and other com-munity development programs and to manage the flowof royalties should mineral development proceed.

It is anticipated that approximately 50 percent of thefunding for the community development program(pre-mining and pre-royalty payments) will be chan-nelled through the foundation so that financial man-agement skills can be acquired by the Bla’ancommunities prior to the potential flow of royalties.

The foundation is managed by a tripartite Board ofTrustees representing the Bla’an, government andWMC. WMC will gradually withdraw from the boardas the Bla’an acquire the appropriate skills.

ASSESSMENT OF OUTCOMES/RESULTSCommunity BenefitsWMC’s commitments to local Indigenous communi-ties have already resulted in a range of tangible com-munity benefits, including:

Certificates of Ancestral Domain Claim: While they donot give title to the land, they help secure improvedtenure over land on which the Bla’an live.

Cultural Sites: WMC believes it has identified all cul-tural sites of significance to the Bla’an within the pro-ject area and has developed a management plan tominimize impact on these sites and to assist in thepreservation of cultural knowledge associated withthese locations.

Community Development: WMC has spent, on average,15 percent of its annual project budget directly oncommunity development. To date, WMC has spent atotal of A$42 million on the project.

Community Services: In consultation with the Bla’an,the company has concurrently built community facili-ties, including clinics and schools, in localities centralto the traditional territorial interests of most of theBla’an groups. Each highland Bla’an group has been

Jojo Bacani, WMC environment and loss control manager, discussing multi-cropping with landowner/farmer Georgene Magnanua and Sammy Delloso.


able to maintain its affiliation through residence withits traditional territory and to benefit from the com-munity services.

Employment: WMC has a preferential employmentprogram for local people. In 1997, out of a workforceof 167, there were 8 expatriates, 105 regular Filipinoemployees, 13 Filipino contractual employees and 41 Filipino contractors.

Environment: WMC is actively assisting reforestationof areas denuded by logging companies. Already 500 000 trees have been planted by local farmers usingseedlings from local WMC nurseries. Four of the nurs-eries have been handed over to local communities.These nurseries now produce up to 750 000 seedlingsannually.

Environmental Monitoring: WMC has worked with the barangays to develop and implement a community-based environmental monitoring program. Commu-nity inhabitants are selected by their community toundergo training to carry out their monitoring respon-sibilities. All samples are sent to an independent laboratory and the results are sent to the group forassessment, and, if necessary, corrective action.

The focus on local community and Indigenous issueshas led WMC to be largely successful in laying thefoundation for social sustainability of the localIndigenous community. If WMC chooses not to develop the project, then it will leave the highlandBla’an in a significantly better position than before the company arrived.

Relations with the Bla’anThe initiatives between WMC and the local Bla’an inthe Tampakan area have been largely successful todate. As Limukun Cafion, a senior Bla’an from BongMal bong banwu, has commented, “We, the leaders ofBong Mal, need help to explain our situation to thegovernment. We are very poor and cannot afford eventhe salt we need in our diet. But, we do not have anyadvocates. We would like WMC to stay in our area andbe our advocate...talk to the government and help us.”

Nevertheless, WMC has recognized that there may bean ongoing level of dissatisfaction throughout the pro-ject area on the part of a very small number of thecommunity fired by disenchanted advocacy groups.

This has been recognized and mechanisms are beingdeveloped as part of the community program toaddress this issue in an open and honest manner. Thecompany believes that transparency in all dealings withthe community is essential.

Relations with Other StakeholdersThe success of WMC’s relations with the Bla’an hasgenerated suspicion and resentment among some whoclaim to be stakeholders. High public profile opposi-tion to WMC’s community activities has arisen on anumber of occasions with respect to the TampakanProject, principally because the successful developmentof a project by WMC is a threat to the campaign ofthose who philosophically oppose foreign investmentin the Philippines.

The provision of health facilities, mobile clinics, edu-cation facilities and agricultural advice to Bla’an cul-tural communities has been publicly interpreted bysome critics as the provision of inducements, despitethe fact that such assistance is unconditional andincumbent upon WMC under the terms of its FTAAand the company’s Indigenous Peoples Policy.

Localized protestations from elements of the non-Bla’an local community accelerated WMC’s plannedextension of the community relationship programbeyond the local highland Bla’an to encompass thenon-Bla’an communities in the area.

WMC nursery attendant Geronimo Consad at the Tampakan CopperProject seedling nursery at Danlag, near the project site.


LESSONS LEARNEDAlthough WMC has not yet taken a decision to pursuethe development of the project, already there are manylessons it has learned:

• By engaging in consultation with Indigenous peopleearly in a project, a developer is able to identify riskfactors earlier and develop programs to addressthose factors, thereby lowering the risk to the pro-ject as early as possible.

• It is imperative that a developer understand thestructure and functioning of local Indigenousauthority and model its initial approach on thelocal structure. Not only does this assist the compa-ny to understand the local Indigenous people, but,of equal importance, Indigenous people will have amuch better chance of understanding the company.

• The company must approach and work with boththe Indigenous and non-Indigenous communityconcurrently, otherwise some groups may feel disaf-fected by the attention given to other groups.Defining the community as only one interest groupmay disenfranchise other key groups.

• The prospects of success for any community pro-gram depend, to a significant degree, on the com-munity having ownership of the process. This canoccur only if the community is identified andengaged at the earliest stages of the development.

• It makes good business sense for the company toengage itself in appropriate social programs sincethese will bring a higher level of peace and order tothe community and a general stability in the localcommunity. (The awarding of Certificates ofAncestral Domain Claim to the local Bla’an willbring a better security of title not only to the Bla’anbut to the project, a situation that is better than theformer position where the company was dealingwith land on which the interests of Indigenous peo-ple could be overridden by anyone who chose tosquat on the land.)

• Some advocacy groups can make it difficult formining companies to develop a relationship withlocal communities. In these circumstances, it isimportant that mining companies actively engagewith the advocacy groups and encourage them to be

more effective by building the capacity of the localcommunity to interact with resource companies inthe developments that affect it.

• While there is a potential for the company to beseen as a surrogate government, it must resist thetemptation to take up the role of government,whereby decisions are made on the community’sbehalf. Instead, the company needs to involve andwork with governments and government agencieson a frequent and consistent basis, building govern-ment capacity where necessary.

• A developer may not have sufficient in-house capac-ity to deliver community programs on a sustainedlong-term basis. It therefore needs to work withexperienced and proven national and internationaldevelopment organizations to deliver communityservices.

• Every effort should be made to minimize the impo-sition of Western values and to firmly anchor com-pany activities in the national culture. Themanagement of issues and their recognition asissues are often culturally embedded. It is necessaryfor the company to consult with communities inidentifying issues, to adapt its approach to problemsolving to the cultural context, and to make accom-modations between two very different time framesfor conducting business.


Mr. Gavan ColleryManager, Corporate Affairs (Projects)WMC LimitedPO Box 860KMelbourne, VIC 3001Australia

Tel: (+ 61.3) 9685-6103Fax: (+61.3) 9685-6077Email: [email protected]

Or visit the following web site:

WMC Limited: www.wmc.com.au

All photos courtesy of WMC Limited except where otherwise stated.

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