First Nations Consultation: A Crucial Step for Mining Companies

Last week, Grand Chief Derek Nepinak of the Assembly of Manitoba Chiefs said that rising frustration from Canada’s First Nations population could prompt Native people to block resource development in the country. Nepinak also demanded that First Nations be given more of a say over what happens to resources on their land.

First Nations issues continue to grab the national spotlight in Canada, and numerous demonstrations by the Idle No More movement have called for greater respect for Native rights in the country. “These are demands, not requests,” said Nepinak in a January 10 Reuters article. “The Idle No More movement has the people — it has the people and the numbers — that can bring the Canadian economy to its knees. It can stop Prime Minister Stephen Harper’s resource development plan.”

First Nations opposition raises questions about consultation

Opposition from First Nations communities has caused problems for a number of resource projects. A recent high-profile example is Enbridge’s (TSX:ENB,NYSE:ENB) proposed 1,200-kilometer Northern Gateway pipeline, which would pump oil from Edmonton, Alberta to the BC coast. The line, which would run across land claimed by Aboriginal bands, has attracted opposition from some Native groups, which argue that there has not been enough consultation about the project.

Cases like that, along with rising demands from First Nations for greater control of natural resources, have raised questions about how miners should approach development on traditional Native lands.

“An important thing to understand is that the legal duty to consult rests with the Crown, not industry,” said David Camp in a January 11 phone interview. Camp is a partner at the Vancouver office of law firm Borden Ladner Gervais (BLG) and mainly practises in the area of Native law.

“However, businesses typically take the initiative,” he added. “And it’s very appropriate for them to do so, because they will likely have a long-term relationship, and the company obviously knows the project best. The company and the band will typically negotiate a mutual benefits agreement — there are various names for it — and once they’ve agreed to that, the band will tell the Crown that consultation is not needed.”

An “entirely gray area”

Another thorny issue is what constitutes consultation and what happens if local bands do not give their consent for a mining project. “First Nations do not have a legal veto over a project,” said Camp. “As a practical matter, they may cause delays to a project to the point where the commercial opportunity is lost. But if it goes to court, they will have a hard time saying the Crown has failed to properly consult if the First Nation itself has withdrawn from or obstructed the consultation process.”

He added, “if they seek to overturn a Crown decision, the Crown will have to defend its record of consultation, which includes offering appropriate measures of accommodation. Industry needs to work with the Crown to make sure the Crown has the best possible record of consultation.”

“An important thing to keep in mind is that this is an entirely gray area,” added Fred Pletcher, another partner at BLG’s Vancouver office and chair of the firm’s national mining group. “Projects have gone forward without consent, but permitting is an easier process if you have the support of local bands. Still, each project is fact specific and band specific. There are a wide range of factors — right down to the personalities involved — that weigh on the issue.”

What both Pletcher and Camp see happening is a move to consult earlier in the exploration process. “Everybody has seen projects run into trouble due to this,” said Pletcher. “No one is taking a cavalier attitude about it. Companies realize that consultation is not something that can be done in a couple of days, and that it is a long-term effort. I think they are approaching it in the right way.”

Pletcher also pointed to recent changes to mining regulations in the province of Ontario that require First Nations consultation early on, before any work beyond collecting hand samples can be done on a property. “Ontario has taken the first step in bringing consultations forward into the exploration phase and putting it into law,” he said.

Greater transparency would be a plus

So where does the process go from here? Camp, for one, would like to see a move toward greater transparency. “One of the most interesting developments I’ve seen is Alberta’s discussion paper, where they talk about whether impact-benefit agreements should be made public. I think it would be helpful to know what other companies are doing; it would make for a healthier, more transparent system,” he said.

 

Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.

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