Benefits, in the context of this Bill, are anything that can help residents of the NWT, Indigenous groups, or the GNWT do positive things for the territory broadly, or local communities specifically, with wealth and economic activity created by the mining sector.
These could include things like:
- Community investments (i.e. infrastructure)
- Using local businesses for services
Benefits are provided by proponents — the companies who are looking to mine in the NWT — through their operations.
You may have heard of Impact Benefit Agreementsbefore.
These are a type of agreement negotiated confidentially between Indigenous governments and proponents for natural resource projects. Currently, there is nothing in legislation requiring them, though all mines operating in the NWT today have negotiated them.
They allow Indigenous governments to make confidential decisions on what is most important to their communities, and come to an agreement with the proponent on how to best manage and create local opportunities from major mining projects.
Generally, they negotiate two things: Impacts and Benefits.
Impacts can broadly be seen as negative things a community feel mining projects could cause. Some common examples could include lost hunting or fishing opportunities. In Impact Benefit Agreements, generally there are measures for the proponent to help make up for those impacts in some way.
Benefits are understood to mean measures to improve community outcomes beyond these baseline mitigations. For example, a proponent might agree to support community education, build an access road or build a community arena.
The list of possibilities which could be included in agreements of this kind for impact mitigation and benefits provision is long, and the specific activities could sometimes seem to overlap with benefits.
A mine is proposed in the traditional territory of an Indigenous government. Through the Environmental Assessment process, it is recommended that an Environmental Monitoring Board be established to monitor the environment in the traditional territory.
That Environmental Monitoring Board would require staff to run properly, which creates jobs for the Indigenous community.
The Environmental Monitoring Board itself would be a measure to address Impacts because the board is being established to help protect the environment surrounding the mine throughout production and cleanup.
The jobs created by the Board within the local community could be considered a Benefit — something that benefits the communities above-and-beyond the baseline.
Impacts Vs. Benefits and the Proposed Mineral Resources Act
by the Land and Water Boards of the Northwest Territories.
What is being proposed?
For the first time, this Bill would propose requiring through legislation that a Benefits Agreement be negotiated by a proponent with Indigenous Governments or Organizations identified for each mining project. This is not just a first for the NWT, but Canada — and stands out among many other international examples
in natural resource legislation.
A Benefits Agreement in the context of this proposal means a written agreement between an Indigenous government and the company which wants to start a major mining project which formalizes how benefits will be provided.
How will this be done?
Companies would need to prove to the Ministerin charge of the legislation — as proposed, the Minister of Industry, Tourism and Investment — that they have signed a Benefit Agreement with the identified Indigenous government(s) before that project could start production.
Those looking to develop a mine will also need to let the Minister know when they have started negotiating a Benefit Agreement with Indigenous governments.
The territorial government will not be negotiating these Benefit Agreements on behalf of Indigenous governments — Indigenous governments will have the freedom to do so based on their wants and needs, and proponents can make offers based on their project’s characteristics.
The goal of this provision is not to just get communities back to where they were before a mining project. It’s to help bring noticeable improvements without duplicating any other processes in the regulatory system.
Requiring benefits to be negotiated with Indigenous governments before a project goes forward will enshrine in legislation the necessity for companies to work closely with Indigenous governments to see through successful
Negotiations on Impacts are not proposed to be legislated under this Bill because a process already exists to identify and address them through the
Mackenzie Valley Resource Management Act and the process set out for the Inuvialuit Settlement Region under their Final Agreement.
The territorial government is not proposing to take part in negotiating benefits with Indigenous governments because the desired Benefits will differ
from community-to-community, and what companies provide will vary project-to-project.
What is being proposed?
The Bill would provide the power for the Minister to make requirements, including targets for benefits that stay in the NWT, for a mining project to go forward. This is a new requirement under legislation, but has been a matter of policy for a long time.
How will this be done?
The current practice is for the proponent and GNWT to negotiate a Socio-Economic Agreement, and have the Minister responsible — as proposed, the
Minister of Industry, Tourism and Investment — sign the agreement.
You may have heard of these because all mines currently operating have negotiated them with the GNWT. They cover things like:
- Local hiring
- Contracting of local businesses
- Cultural well-being and traditional economies
- Community well-being
- Net-effects on government
- Public Reporting and Engagement
The new process would likely look quite similar, but the legislation as it stands does not say what kind of tool (i.e. agreement) would be required. Exactly what kind(s) of tool or agreement(s) will be decided in regulations, and could evolve based on new information or changing operating environments.
The GNWT must to act in the best interests of all NWT residents. Making sure residents see local benefits from mining projects is an important part of that duty.
Legislating agreements to provide benefits to NWT residents requires companies to negotiate these agreements.
Leaving the kind of tool or agreement open gives the territorial government the power to choose whichever mechanism makes the most sense at that time so the measure addresses the broad interests of the NWT.
What is being proposed?
It is proposed that the existing royalty regime is incorporated under the future regulations of the Mineral Resources Act.
However, this proposed legislation would give the territorial government the power to provide greater transparency than under the current Mining Regulations. It also brings reporting in-line with the federal Extractive Sector Transparency Measures Act (ESTMA).
The proposal continues to include measures for valuing minerals produced in the territory for the purposes of royalty administration.
The ability to undertake royalty rate reviews continues to be enabled by the proposed Bill.
Regulations would set rates. No review has been completed, and therefore no new rates have been proposed. This will be a future project.
How will this be done?
The GNWT’s Diamonds, Royalties, and Financial Analysis division will continue to coordinate the valuation of minerals mined in the NWT, receive payments, and complete the necessary reporting on royalties paid. They would also lead any reviews of royalty rates in the future.
Any future review of the royalty rates would have to consider all fees paid by mines, the royalty structure and other taxes such as corporate, property, payroll,
and fuel taxes. These would compose a fulsome review in the future.
Precisely what additional information will be required to be disclosed will be set out under the supporting regulations. However, bringing the regulations in-line with ESTMA will mean greater latitude for public disclosure of information collected under that Act.
Enabling the territorial government to choose what information should be disclosed about royalties is good practice. It gives the flexibility to update regulations to respond to the best interests of the NWT.
Updating the legislation to include mention of ESTMA is important in modernizing the legislation to fit with today’s expectations.
Maintaining the GNWT’s authority to review mining royalties in the future as part of a fulsome fiscal review is a tool for good long-term planning.
A royalty review was not completed as part of developing this legislation because the royalties will be defined in the regulation, not in the Act.
Undertaking a detailed fiscal review often takes many years on its own. South Africa, for example, took roughly three years to complete their fiscal review.
When performing such a review it is good practice to review all revenues from producing mines — not just royalties.
Getting stand-alone, homegrown legislation in place through the proposed Mineral Resources Act was the right priority to set the stage for that kind of review.