How smart companies work with First Nations to get resource deals done

Most companies are doing it wrong. A few have figured out that respect gets results

British Columbia landscape with label reading Pipeline Goes Here

(Omar St. Pierre)

Sometime this fall, though probably not before the snow starts to fly at this high altitude and latitude, earthmovers will begin removing 30,000 tonnes of gold and copper ore per day from the treeless top of Todagin Mountain. Vancouver-based Imperial Metals is set to start operations at its Red Chris Mine; it took nine years and $622 million to get to this point.

Eighteen kilometres from the tiny Tahltan village of Iskut (one of the few places to refuel your SUV along lonely Highway 37), Red Chris is the point of a spearhead of development pushing into British Columbia’s sparsely populated northwest corner. The mine’s startup prompted BC Hydro to complete the $736-million Northwest Transmission Line this year, extending the North American electrical grid 400 kilometres north from Terrace, B.C. That line in turn enabled the construction of three run-of-river power plants in the area by AltaGas, an investment of nearly $1 billion.

“AltaGas has been an excellent company to work with. Same with BC Hydro and Imperial Metals,” Bill Adsit, former president of the Tahltan Nation Development Corporation, told a Vancouver business audience this summer. “You don’t hear about many blockades in our territory, simply because the relationships are strong.”

Of course, that was before Aug. 4, the day a tailings dam ruptured at Imperial Metals’ Mount Polley property, precipitating one of the worst environmental disasters in Canadian mining history. Within days, an activist group among the Tahltan, the Klabona Keepers elders society, set up a blockade at Red Chris. What was less well reported was the fact the barriers came down two weeks later, after Imperial agreed to pay for an independent engineering study of the tailings pond at Red Chris, by a firm of the Tahltan’s choosing.

The virulent opposition to the Northern Gateway pipeline and June’s Supreme Court of Canada decision in the landmark Roger William case have fuelled the impression that resource projects simply can’t get done in B.C. As national affairs columnist Jeffrey Simpson put it in the Globe and Mail shortly after the unanimous William ruling, “If you had a plugged nickel or several hundreds of millions of dollars, among the worst places to invest that money would be across the parts of British Columbia affected by last week’s Supreme Court ruling.”

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Former Encana CEO Gwyn Morgan and retired Newfoundland premier Brian Peckford—who both now live in B.C.—likewise lamented the William decision, which established aboriginal title to a 1,750-square-kilometre parcel of B.C.’s interior plateau claimed by the Tsilhqot’in Nation, for the first time in the absence of a treaty. The Gitxsan Nation upped the stakes in August when it served eviction notices to longtime operators in its claimed territory, like Canadian National Railway. The federal government’s approval of the Enbridge Northern Gateway pipeline in June just seemed to ensure the project will die a protracted, painful and, for Canada’s reputation among global investors, damaging death. If First Nations didn’t have veto power before, they appear to have it now. Resource development has ground to a standstill.

Only—it hasn’t. Major resource projects are proceeding across B.C., with active participation from local native groups. While Enbridge blundered badly in its attempts to garner First Nations support for its pipeline, others have found a way. Even ones initially opposed by First Nations and environmentalists, like Red Chris. Even ones with a huge footprint. (The Northwest Transmission Line cuts across the traditional territories of nine First Nations.) Smart companies are learning how to “get to yes” with their projects.

Perhaps no B.C. native community has seen as many project proposals as the Haisla Nation. Situated on the outskirts of Kitimat, on B.C.’s northern coast, the band claims traditional territory encompassing not only the would-be terminus of Northern Gateway but also an expanded aluminum smelter, three liquefied natural gas plants, a proposed oil refinery and more. The Haisla can afford to be choosy about which projects they support. But at the same time, Chief Councillor Ellis Ross doesn’t take the wave of private investment in his backyard for granted. “I can’t ignore the fact that the historic 60% unemployment level in my village has been addressed,” he says. “Finally, young people today are going out and getting mortgages; they’re getting cars and trucks, and they’re not dependent on the council to give them a house or to give them a job.”

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Ross firmly believes that only private-sector investment and sustainable economic activity can keep band members out of poverty—and ultimately give his people the self-determination they seek. “Instead of us being beggars in our own house, we can be an independent nation,” he says. “I hope we’re on the cusp of something better for our people.” And that’s only because the Haisla have developed working relationships with the province of B.C. (what is commonly referred to as a “reconciliation protocol”) and with many companies that already develop projects in Haisla territory or intend to do so.

Ross advises companies to open lines of communication early and gradually with First Nations where they seek to do business. “Don’t go there uninvited,” he says. The fatal flaw with projects like Northern Gateway is that the proponent comes in and gives a spiel on the project as a fait accompli. “Stop holding the project up like a carrot,” he says. Successful proponents go into initial meetings with aboriginal leaders prepared to listen as well as talk. “Research the nation thoroughly. Understand their political structure, their hereditary structure, their administrative structure. Are they in deficit? What is their clan and family structure? Everything applies,” he advises. “Do your homework.”

By now the Haisla have developed their own project-vetting capacity, which examines things like economic viability, environmental impact, possible infringement on rights and title, local benefits and the proponent’s commitment to see the project through. What they don’t want to see is a company establish relationships and obtain all its approvals only to sell the venture off on the open market.

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Simply put, the type of project a First Nation can support will further the goals of the community, Ross says. In fact, he sees the Haisla’s various impact and benefit agreements with companies as interim substitutes for the elusive treaties with the Crown that might settle B.C.’s nagging land question once and for all. “At the end of the day, you’re still achieving the objectives that you wanted to achieve, meaning employment, equity, land, training,” he says. “So for all those components of an agreement, do you really need to be at the treaty table to resolve rights and title 100%? Maybe someday you do, but for the time being, the components seem to be all there in the agreements we’re signing.”

Northern Gateway never came close to meeting the criteria for the Haisla’s consent. The benefits—including a one-size-fits-all 10% equity stake offered to First Nations along the route—came nowhere near to matching the risks for a band that has depended on salmon and eulachon runs for millennia. “We’ve watched the oil situation for 20 years,” Ross says. “There is no technology out there to pick up this oil.”

“Tim Hortons has an aboriginal relations strategy,” Bob Joseph, Jr. exclaims, wide-eyed, to about 300 members of the Vancouver Board of Trade. “C’mon, guys, if they have one…”

A likable, engaging speaker, Joseph singles out audience members for applause and cracks jokes that skewer native and white stereotypes, and emphasize a common humanity. His smooth, affable delivery is important, because he has some inconvenient truths to impart to his audiences of red-meat resource executives. Though he speaks their language fluently—he’s a university lecturer and corporate trainer—his message comes from someone who’s in line to one day become a hereditary chief of the Gwawaenuk Nation of northern Vancouver Island.

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Joseph’s presentations typically start with the fact that when Columbus “discovered” the Americas, there were already some 100 million people here, nearly as many as lived in Europe. They end with the nitty-gritty of how to approach and come to a mutual understanding with First Nations. There are etiquette issues. Learn the First Nation’s names for themselves, for individual people and places, and get the pronunciation right. Never refer to them as “stakeholders”—as the Roger William case made abundantly clear, their rights transcend that terminology. Understand that theirs is still to a large degree an oral culture; expect to participate in cultural ceremonies, and don’t cut people off when they are talking. It’s also a communal culture, where individuals are discouraged from promoting themselves as they might in the corporate jungle. Don’t use industry jargon or idioms that may be unfamiliar to people in the community. Government approvals in hand, next you want to negotiate impact and benefit agreements (IBAs) with the appropriate First Nations. First of all, an IBA should have an employment component, usually accompanied by a commitment to training aboriginal applicants, apprenticeships and scholarships. An IBA typically also has a procurement clause, whereby the company discloses all the major contracts to be put out and allows native-owned businesses to bid on them rather that just going to the contractors it’s worked with before. “We know we’re not going to get them all, but we want to have the opportunity to bid on all that we are capable of,” says Tahltan elder Adsit, who today sits on the board of BC Hydro. Throughout the process, there should be communications and a process for dealing with the hitches in the relationship that inevitably arise.

Sound like a hassle? “It’s cheaper to build these relationships than it is to go the other way,” says Joseph.

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Simon Nish, vice-president of sustainability for liquefied natural gas (LNG) developer BG Canada, goes further. Nish has worked on resource projects around the world, and most have involved extra-governmental relationships with indigenous populations, he notes, whether in Indonesia or Australia or the United States. That can have an upside and actually increase cost certainty for the project. “Assuming just two or three [of some 15 proposed] LNG projects go ahead, northern B.C. goes from a buyer’s market to a seller’s market for labour,” he says. Having the agreements in place with native communities—which in this part of Canada represent the greater portion of the local labour pool—can be a way of controlling costs down the road. “I’ve been through the Australian LNG boom, and I’ve never seen the level of preparedness as in northwestern B.C. We have joint venture partners in line so they are work-ready for when construction starts.”

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Companies should look at the shift in the legal landscape in favour of aboriginal title as a opportunity as much as a threat, agrees Bill Gallagher, a New Brunswick lawyer and author of Resource Rulers: Fortune and Folly on Canada’s Road to Resources. Projects that are “in the blender” on multiple fronts—say, landowners, municipalities and environmentalists are against it and key regulatory hurdles loom—can turn things around simply by getting local First Nations’ support. The native stamp of approval is “a key form of regulatory insurance,” Gallagher says. “If you get the natives onside, you can really change your brand.”

“We don’t want to stop development,” says Chief Fred Sam of the Nak’azdli Band, based in Fort St. James, B.C. The Nak’azdli are still working on an impact and benefits agreement with Colorado-based Thompson Creek Metals Co., but that didn’t stop the company from opening its nearby Mount Milligan gold and silver mine a year ago. Sam estimates between 30 and 50 of the 800 band members living on-reserve are employed directly at the mine and many more indirectly. As well, the Nak’azdli enjoy 12% of the taxes and royalties collected from the mine under an economic community development agreement with the province. Despite some past difficulties, the Nak’azdli today have a productive relationship with Thompson Creek, Sam says, and he expects to conclude their formal IBA by the end of the year.

Compared with the challenges of operating in many other parts of the world—Congo or Kyrgyzstan, for example—B.C.’s special circumstances are manageable, and company investments are secure, says Steve Robertson, Imperial Metals’ vice-president of corporate affairs. “It was very much in vogue to go international about 10 years ago,” he says. “We were criticized for our old-school views about staying home in B.C. back in the 1990s. We did stay here, and we’ve benefited from that…. We really feel this is a place where companies should want to operate. It’s worth the challenges that you have to go through.”