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ISSUE 04 | OCTOBER 2011

Building Better

BRIDGES Indigenous Interests & Mining

4 CAMA Interview 4 CREECO Companies Miners & Neighbours: 4 Cementation 4 Goldcorp 4 New Gold 4 NovaGold 4 Kitimat Solution

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99% vision 1% aluminium THE HAISLA NATION AND RIO TINTO ALCAN: A STRONG ALLOY Over the years, Rio Tinto Alcan, a global leader in the aluminium industry, has been fuelled by dreams of a better future. Together, people of the Haisla First Nation and Rio Tinto Alcan are taking these dreams one step further with a historic legacy agreement and are now actively supporting each other toward a common vision: a cleaner environment for future generations.

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ISSUE 04 | OctObEr 2011 B

New Vanguard Media Inc. | A Better View 3310 South Service Road, Suite 300 | Canada Vanguard |Media Inc. | A Better| 905.667.2313 View Published by | New NVMinc.com info@nvminc.com 3310 South Service Road, Suite 300 | Burlington ON | L7N 3M6 | Canada NVMinc.com | info@nvminc.com | 905.667.2313 Published by | Aaron Weafer | aweafer@nvminc.com | 905.667.2313 Published by

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Publisher | Aaron Weafer | aweafer@nvminc.com | 905.667.2313 Editor | David Hicks | dhicks@nvminc.com | 519.393.8002 Editor | David Hicks | dhicks@nvminc.com | 519.393.8002 Wall Friesen | jaywall@nvminc.com creative Director Assignment Editor || JayDana | dfriesen@nvminc.com | 604.220.4588 Designer | Kate Shaw | kshaw@nvminc.com | 647.919.7911 Creative Director | Kulvir Singh | contact@creativenerds.com Design intern | Emma Allain Web WhiteCloudMarketing.com Web Services Services || WhiteCloudMarketing.com

great content, Delivered Free! You can get The Global Commodities Report, jammed with corporate stories, analyst insights and policymaker interviews, delivered monthly, right to your inbox. Subscribe here. get your Story Out there Everyone loves a good story. What about yours? We’re always looking for companies, projects and perspectives to write about and promote in the pages of The Global Commodities Report. Tell us your story. Advertise It’s not just who you know, it’s who knows about you. Talk to our advertising placement experts about getting your contributions the attention they deserve. About us New Vanguard Media Inc. is a global digital publishing company celebrating ingenuity and sharing successes in business development as they benefit economies, communities, employees, owners and investors. New Vanguard is raising the ‘business profile magazine’ model to a new level with all-digital publications characterized by high standards: solid content that tells the good news, dynamic graphic design, reliable SEO

practices, and advertising integrity. New Vanguard’s premiere digital journal is The Global Commodities Report covering the minerals, energy and agriculture sectors. Opinions expressed by our writers and interviewees do not necessarily reflect the policies of New Vanguard Media. Editorial content is derived from personal interviews, corporate presentations and internet sources and believed to be correct at the time of writing: its accuracy, especially regarding financial and corporate information, cannot be guaranteed. Caveat investor. reprints & Permissions All material is © New Vanguard Media Inc. You may quote from our publications with credit and/or weblinks back to the issue you are referencing. Where material is reprinted by New Vanguard Media by permission from other primary sources, please credit/weblink the primary source; secondary credit and links to New Vanguard Media are appreciated. $

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C3NTENTS ISSUE 04 | October 2011

Welcome to the “Meeting Minds, Making Mines” CAMA conference edition of The Global Commodities Report.

EDITORIAL 07

It Takes Work to Build a Bridge But by all accounts it’s worth it.

MINING 08

interview The Man In The Middle and The Moose In The Room

Heading into the 19th annual Canadian Aboriginal Minerals Association conference, “Meeting Minds, Making Mines”, its President, Hans Matthews, sees much done and much to do.

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interview A Reasonable 1,000,000 Ounces a Year

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First Nation Rising - By Jeff Borsato The Cree Regional Economic Enterprises Company helps build companies and communities among the Cree First Nation. Cree leaders are especially keen to engage aboriginal youth.

We talked to NovaGold Resources President & CEO Rick Van Nieuwenhuyse about operating in Alaska and northern BC, the involvement of indigenous peoples, and working with major mining partners.

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36 30

Social License Renewal

36

Going Underground

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interview Both Sides Now - Colin Webster of Goldcorp

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The Right Footing: Rio Tinto Alcan and the Haisla First Nation

With a meteoric rise in gold production ahead of them, $5billion New Gold Inc. is staying grounded in their host communities and environmental settings. It takes time and commitment, but it’s right.

Cementation Canada takes creative approaches to their underground mine construction projects, community relations, training and safety, making them one of Canada’s top employers.

Partnering with First Nations communities takes time, perspective and skill. Canada’s second-largest gold producer created a portfolio to help keep those relationships healthy and productive.

With a $2.5 billion upgrade in the works, it was time to re-engineer the social relationship as well.

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TahlTan Drilling ServiceS corporaTion

Specializing in lightweight heli-portable diamond core drills suited to meet the specific needs of northwestern BC, we are proud to be a part of Copper Fox’s ongoing success at Schaft Creek. 250.877.3013 • Telegraph Creek, BC

Tahltan Nation Development Corporation TNDC.ca 6

THE GLOBAL COMMODITIES REPORT

Black Hawk Drilling BlackHawkDrilling.ca


From the Editor

The CAMA Edition It takes work to build a bridge but it’s worth it. We get to speak with so many high-calibre people in the mining, energy and agriculture sectors who are making a difference to how their industries perform, innovate and relate to stakeholders. When we set out to create a progressive magazine that would engage forward-thinking companies and organizations and tell the good news about the resource sectors, the concept called for a fully online publication. (Which it is, and we have some exciting developments to tell you about … soon.) We just didn’t plan on ever physically printing the magazine. CALLING CAMA but while scouting for stories, we came across the canadian Aboriginal Minerals Association (cAMA). Immediately we saw how cAMA’s mission to bridge the needs and interests of First Nations communities with those of mining companies lined up with our editorial and design focus on resource development that is innovative, sustainable, responsible and inclusive. One conversation led to another, and now we are excited to align a special printed edition of Gcr with the 19th annual cAMA conference, “Meeting Minds, Making Mines: Aboriginal community and resource Development in a Growing Economy”, November 6-8, 2011 in Vancouver bc. We trust you’ll enjoy the interviews and articles relating to organizations and companies that are leading the way in collaborative and mutually prosperous relationships between the dynamism of mining companies and their First Nations partners, hosts and neighbours. One of the themes that kept coming through while writing, editing and compiling this issue was the importance of bridge-building people who have lived both sides of the equation: First Nations attachments and mining career aspirations. that’s got to be a healthy, helpful dual-perspective, though I know it isn’t always easy.

online readers around the world. We hope you’ll enjoy both versions of The Global Commodities Report, physical and/or virtual. “BUT WAIT, THERE’S MORE!” the extended, online edition of this issue of Gcr includes additional stories about communities, companies and organizations in canada, canada and the United States that are making a difference, each in their own way, to the life and work of people engaged with the resource sector. From the cAMA conference in Vancouver to an Ontario salt mine, US corn ethanol to Aussie iron, a major aluminum smelter upgrade to the world’s deepest mine, and more gold and copper than you can imagine. So if you’re flipping through this magazine, we hope you’ll also visit us online to see the bigger picture at the-Gcr.com GCR PEOPLE We’re also pleased to introduce Dana Friesen, our new Assignment Editor and Pacific-Standard-time Guy who’s out beating the global bushes for story ideas. And Kulvir Singh is our new Designer, who is picking up the task of telling the Gcr story through design and layout. Our good friend and designer/illustrator Jay Wall has moved on to focus on special projects particularly in community activism – thanks, Jay, for getting us off to such a great start. And once again, our appreciation goes out to the readers, business leaders and community contacts who keep giving us positive responses to the content and design of Gcr and the niche we are carving, no, excavating: telling the good news in resources with engaging content and dynamic design. Keep digging, David Hicks Editor

Our kudos to the indigenous and industry leaders as they compare successes and challenges at “Meeting Minds, building Mines” in Vancouver, and our

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The Man In The Middle and The Moose In The Room Hans Matthews and CAMA Heading into the 19th annual Canadian Aboriginal Minerals Association conference, “Meeting Minds, Making Mines”, its President, Hans Matthews, sees much done and much to do.

As a Canadian First Nations member and a veteran of the mining industry, Hans Matthews knows the minds of both miners and indigenous peoples. He studied Geology and Earth Sciences at Brock University in St. Catharines, Ontario, and the University of Western Ontario in London. During his mining career he worked for companies ranging from juniors to majors such as Sherritt Gordon, Placer Dome, Noranda and Xstrata, doing everything from claim staking to mining to raising capital. He then created the Canadian Aboriginal Minerals Association 20 years ago, as a notfor-profit Aboriginal corporation, and moved back to a First Nations Reserve 15 years ago. CAMA’s 19th annual “Meeting Minds, Making Mines” conference is being held in Vancouver, November 6-8, with over 50 corporate sponsors. The CAMA founder and President spoke with The Global Commodities Report from their offices just north of Sudbury on the Wahnapitae First Nations Reserve. The Global Commodities Report: You have a considerable mining career and a First Nations background – how did you come to be a facilitator between them? Hans Matthews: When the Oka Crisis happened in 1990 in Quebec [a 78-day armed standoff between Mohawk First Nations and the local municipal, Quebec provincial and Canadian federal governments, involving both the provincial police and armed forces, over a proposed land development on disputed lands] I saw how my mining co-workers frowned upon (to put it politely) Aboriginal land interests. They felt like the whole

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country was going to lose out with mining interests moving away to South America, that the Aboriginal communities were causing uncertainty over lands, and so on. So in 1991, I contacted some of my native friends who were community leaders and economic development people to see if we could bring the two parties together. We contacted about 350 native communities and asked them to respond to a survey asking if they wanted an organization that would help them work with mining and minerals companies in employment, environment and so on. The response was very positive, so we listened and formed the Canadian Aboriginal Minerals Association. And we’ve been going strong since.

GCR: With lots still left to do. HM: Right. Our original business plan was to be out of business, because if everything went well there wouldn’t be a need for a national association, everything would happen locally, everyone would be happy and the world would be a better place to live in. [smiles] But we are still around. GCR: Did you have any governmental backing or guidance or input? HM: No, zero. We vowed not to take a dime of government money or have the government involved in the mandate and administration of the association. At the time, we saw that a lot of community associations depended heavily on government programs. We said, “You know, that

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is a very inefficient process – why don’t we tackle it at the grass roots level? It’s the companies and the communities who are affected so our objective should be to get those people involved in funding and driving the organization.” GCR: With membership fees around $50, you’re not exactly on a membership drive. HM: It just barely covers the cost of stamps and maintaining our website. We knew that communities couldn’t afford a lot and didn’t want them to use monies that could be allocated to social programs or economic programs in order to be a part of us. Our measure of success was how many ‘marriages’ we created. To illustrate, when we started our association there were four or

five agreements between the Aboriginal communities and mining companies – today there are close to 200. We are not claiming to be responsible for that, but many Aboriginal communities have told us that we contributed to it. GCR: How popular is the annual CAMA conference? HM: Attendance started with 50 people in 1993 and we anticipate over 1,000 this year. Our membership hovers around 300. Our focus is on the conference and the task of bringing the parties together. We have Directors from Quebec to BC, and one in Oklahoma; and work with many communities throughout Canada, in South Africa, Mongolia, Australia, Ecuador and Peru. We are sharing practices around the world.


GCR: Consulting?

nities and companies.

HM: Yes. In our travels, we are quickly learning that communities around the world have the same needs, and so do mining companies whether it be certainty and security of investment or access to resources or shareholder value, whatever. The communities generally want a legacy for their children, a really strong youth component and a focus on future generations, as well as safe drinking water, safe environment, infrastructure and such. We can say, “While Canada is still far from perfect, this approach has worked well in Canada.”

GCR: On your website you talk about “moving from consultation to consent.” Is there a next phase that you are moving towards from consent?

Just a few months ago we were in Mongolia and the herders and communities were amazed at

“It gets serious. One mining company lost $100million for every year of delay due to the non-settlement of a land claim.”

the similarities, even in some of the cultural aspects, between Canadian Aboriginal groups and Mongolian herders. And then the same in Australia. GCR: With concrete results from your input? HM: Oh, yes. For example, a South African company flew people from a local community to Northern Ontario to visit other communities to see what they are doing; and also company executives were coming into communities to see what was going on. You know it’s not a costly thing, it provides certainty, including for shareholders, and they see that for the amount of effort, time and money it’s worthwhile. That was the idea for Annual conferences, as these facilitated ongoing dialogue for international commu-

HM: The word “consent” comes from different contexts. The most recent UN Declaration on the Rights of Indigenous Peoples contains articles for the free, prior and informed consent of communities on resource projects. Not just consultation. The regional use of the word consent comes from what was implied or documented in the negotiation of [Canadian] treaties where there was a spirit of a nation-to-nation relationship, mutual consent of the parties to share. At a local level, many communities now see Impacts/ Benefits Agreements between themselves and mining companies as a form of consent. That’s where our organization plays a role as an instrument of consent. GCR: Sounds like a moving target. HM: It can be. One of the interesting things about the Canadian and Australian legal systems is that it continues to evolve in response to the Supreme Court. In many cases when there is a Supreme Court decision in favor of an Aboriginal group, or against, it often has an impact on policy regulation and eventually statutory changes. You might be aware that the Government of Ontario has recently proposed changes to the Mining Act, which is statutory – the references to Aboriginal “consultation” increased ten-fold in the latest version, versus the old version. It will be interesting to see the next chapter in community and mining industry relations when references are made to “consent” in the UN declaration. GCR: Did Canada actually sign that? I thought we were holdouts. HM: Yes, Canada just signed on November of last year. About a week after our last conference. There may be another, I believe New Zealand, hasn’t so far because they have their own unique situation with the Maori. GCR: What ongoing issues are primary at this point in terms of either economic opportunity or environment? It tends to come down to those two things, right? HM: Yes, though the larger issues are land issues and within that there are land titles, access

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to lands, ownership of lands, loss of land, loss of use of land‌ A big one in Canada is outstanding land claims – there are well over a thousand now. When we started the Mineral Association there were maybe a couple of hundred. This creates a sense of uncertainty for both parties. There are other issues in the North relating to resource development projects around other types of land claims such as Specific and Treaty Land Entitlement where lands that were supposed to have being given to, or attached to, or awarded to a tribe or a band of Indians as part of their reserve were not given. For example, there are treaty land entitlement formulas where the government may have failed to add lands as reserve populations grew (acreage per family) and other kinds of treaty land entitlements. Mismeasurement of reserves and other land claims are present in Northern Ontario, Northern Saskatchewan, Northern Alberta and elsewhere. How the Crown [federal government] reacts or how quickly the Crown negotiates can frustrate the community as well as industry. Our role as CAMA is to try, without prejudice and with the acknowledgement of these claims, to still get on with business. Can we proceed with development without derogation and delegating from Aboriginal rights and titles? GCR: You moved back to the Reserve. Did you grow up on the Reserve? HM: No, my family grew up on Reserve, but I lived down in Toronto. Then I moved back to the Reserve and saw a great opportunity. Wahnapitae First Nation is surrounded by mining companies so our community currently has about six or seven agreements now with mining companies. Through our arrangement with mining companies, we are fortunate that our unemployment rate is close to zero and our revenues from mining are quite significant so we don’t have to go cap in hand to government. GCR: So independence from government, is that a goal? HM: For many communities, that is an objective but keep in mind, community leaders will assert that the government does have a duty to the community. After all, in my treaty area for example, there were millions of acres taken away at $4 per person a year annuity. In the Sudbury area alone mining has generated over $150billion in revenue at todays metal prices [and a signifi-

Hans Matthews (right) and CAMA Vice-President, Jerry Asp.

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cant tax for governments] and for the communities in this treaty area it has generated nothing. So do Aboriginal communities really want to let the government off the hook? GCR: You have this perspective having worked with companies both large and small in various places, so you’ve lived the corporate side of the business as well. You’re bringing that mix, not just advocating for First Nations people but understanding the sensitivities, the needs and even the blind spots on the corporate side. HM: That’s right, I was in senior positions with these mining companies before leaving the indus-

try and I have a good understanding of the challenges – including such things as raising capital, initial public offerings, the limitations on spending exploration funds because of tax deductions, and the importance of shareholder communication, public relations and so on. So I feel comfortable in sitting down with any mining CEO to discuss how his/her company’s needs can be met by working with Aboriginal communities. GCR: How do you find you’re received on the corporate side? HM: There is a two-edged sword there: the other question is how I’m perceived in the Aboriginal community. Because they equally could look at me and say, “You are pro-mining because you’re a geologist.” The mining company could say, “You

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live in a Native community and you run an Aboriginal resources association so you’re obviously siding for the Aboriginal people.” What I say is, “Take a look at our twenty-year track record, talk to any of those companies, or any of those communities.” GCR: We interview a lot of companies and it seems like they are “getting it.” Do you think so? HM: The parallel concept is like in the ’60’s and ’70’s: as a mining company, environment management was something you did it or didn’t do. You might design your project or tailings ponds or water crossings so you wouldn’t have an im-

pact on the environment, but you didn’t have to. And it is almost the same approach today with Aboriginal participation – there is no big hockey stick telling mining companies you must go talk to those communities. There are some provinces now requiring mining companies to consult in order to get their permits, mostly as a way of helping the government meet its own duty to consult, with very little to do with the obligations of the mining company in a practical sense. But it gets serious. For example, we helped one mining company who acquired a project for several billions of dollars, and for every year of delay due to the non-settlement of a land claim (delays in permitting), it cost that company $100million. We provided a liaison to firstly change the federal land negotiations team and secondly, to


carry on with negotiations toward an Impacts/ Benefits Agreement. Or for junior companies that have to spend their flow-through share funds by February of the following year – if they’re kept from spending it, then the tax benefit doesn’t accrue to the shareholder. We are at a threshold now where mining companies are actually putting a cost/benefit analysis to working with Aboriginal communities. And the Canada Revenue Agency pre-approves expenses allocated for Aboriginal consultation, which affects flow-through shareholders. So it’s not just a CAMA or a mining company or

“There are well over a thousand land claims now. When we started the Minerals Association there were maybe a couple of hundred. This creates uncertainty for both parties.”

a Supreme Court of Canada but it is everyone now who is saying, “Alright, lets take a real look at this Aboriginal engagement issue.” GCR: You have helped bring things this far where has been a shift in the mindset on the corporate side, communities are starting to get agreements and see benefits. What do you see as the task ahead? More of the same, or something different? HM: I don’t think the land claim picture is ever going away soon. It’s like the elephant in the room – or up here they call it the moose in the room. Depending on how the Federal Government develops policy, it could get even more aggravated. There are going to be some test cases like the Ring of Fire mineral region in Northern Ontario and many more.

GCR: Are you optimistic? HM: That’s like asking me, If two people meet on a blind date, will they leave holding hands? I don’t know. While the community and mining company have a desire to have a relationship, there may be circumstances beyond the influence and control of the parties. GCR: What about willingness on the community side, do you see an issue where they need to come around? HM: In response many communites are increasing their level of technical awareness. For example, [miners] are considering constructing a processing facility in our traditional territory, 20km north of my community. From our community skills base and experience in mining, our band is in a much better position because we have four environmental Master’s students on our staff, I’m a geologist, we have full GIS (geographic information system) programming and map making, and we have botanists and other expertise. So we can say to the mining company, “Feed us whatever information you want, whether it’s a 10-page document or something a metre thick, we will review it.” Many communities don’t have those resources. What would you think if a mining company came to a neighbourhood in Burlington or Montreal and said, “Here’s 10 boxes of a report – could you get back to us in 30 or 45 days with your comments?” Communities need more expertise, considering that more than 40% of the 2,000-or-so reserves in Canada are within 200km of a past mine or producing mine. Which is why profits from the CAMA conference go to build the needed skills in Aboriginal communities through contributions to local colleges, universities or Aboriginal students.$

aboriginalminerals.com 1-800-443-6452

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NovaGold Resources and its partners are developing several gold and copper projects that could catapult them from zero production straight into the middle tier of North American producers. We talked to President & CEO Rick Van Nieuwenhuyse about operating in Alaska and Northern British Columbia, the involvement of indigenous peoples, and working with major mining partners.

NovaGold Resources Inc. won’t produce any gold for another six to eight years, but it’s not too early to hold out a pithy corporate production goal: One Goal: Low-cost million-ounce-a-year gold producer.

“I think it’s reasonable to have a 10-year goal,” says Rick Van Nieuwenhuyse, President & CEO. “We have two large scale projects and a highgrade project, significant partners, and plans that could produce that much gold, with significant amounts of copper and silver as additional levers to offset costs. And that’s not including any future success in exploration – which I believe we are bound to have given our track record.”

corner of British Columbia; and the recently acquired San Roque project in Argentina (NovaGold70%/Marifil Mines30%).

The projects and partners to which Van Nieuwenhuyse is referring are Donlin Gold (NovaGold 50%/Barrick 50%) and Ambler (100%) properties in Alaska; Galore Creek (NovaGold50%/Teck 50%) and nearby Copper Canyon (NovaGold 70%/Teck 30%) in the northwestern

EXPLORATION UPSIDE

These projects combined give NovaGold a net proven & probable reserve of 19.5 million oz. of gold metal, and 20.4 million oz. (gold equivalent) of silver and base metals. And lots of exploration upside. All of which makes a million ounces a year appear achievable.

Actually, its Donlin Gold property in Alaska (at the feasibility stage and already one of the largest undeveloped gold mining projects in the world) is projecting 1.3 million ounces per year,

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with the exploration potential to double in size. At Galore Creek in BC, studies are pointing to reserves of 6.8 billion pounds of copper, 5.5 million ounces of gold and 102 million ounces of silver over an 18-year mine life. Ambler, projected to be an underground mine in Alaska is shaping up for an annual average of 67 million pounds of copper, 80 million pounds of zinc, 12 million pounds of lead, 11,000 ounces of gold and 866,000 ounces of silver, with a mine life of 25 years. 18 THE GLOBAL COMMODITIES REPORT

Copper Canyon, near Galore Creek, is in exploration but so far pointing to inferred deposits containing 592 million pounds of copper, 1.3 million ounces of gold and 18.4 million ounces of silver. When those projects kick in, successively, those will be big surges of revenue. Not that the company is slacking off on exploration: they’ve been adding an average of more than 2.4 million ounces of gold resources every year for the last 13 years. At total acquisition and discovery costs of less than $4 per ounce of gold.


The Global Commodities Report: You have massive production streams ahead of you, but you refer to yourself as an exploration guy. Rick Van Nieuwenhuyse: I grew up in Alaska so I have a natural affinity for things in Alaska and the North. I’ve worked a lot of my career up there. I still feed my exploration fix by putting together deals like our Ambler project. GCR: In fact, you tripled your resource base at Donlin after your buy-in agreement with [then-owner] Placer Dome in 2001.

about fifty years of experience, and under him we’ve been putting together mining, engineering, environmental and metallurgy, building out our team. The other thing is we do rely heavily on our partners’ expertise – Barrick operates 26 mines around the world and we are certainly happy to benefit from that experience. Same with Teck, they being the largest Canadian diversified mining company. Both Barrick and Teck are great partners to have on our side.

RVN: Yes, working on one of the largest gold deposits in the world ever is pretty exciting. And that is what Donlin is – it’s literally one of the largest gold deposits in the world. One doesn’t often get the opportunity to be involved with a project of that scale.

Practically, we believe that you can add the most value to shareholders by advancing your projects. But exploring is still a great route to add shareholder value quickly, like we just demonstrated with Ambler. After acquiring Ambler, we have continued to build that project out adding ounces of gold+silver and pounds of copper+zinc.

Likewise with Galore Creek – it’s a very large copper, gold, silver porphyry and you don’t get to sink your teeth into one of those every day.

GCR: We recently wrote about the Copper Fox project, not too far from your Galore Creek property – they are also working with the Tahltan Nation.

So on the construction and production side, I have a COO, Gil Leathley, a very senior guy with

RVN: Yes. The Tahltan have decided as a First Nation that they like mining, that it has brought

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“It takes a bit of effort and cost up front, but the outcome is you’ve developed a local workforce.”

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a net benefit to their region and they want it done properly – probably similar to a lot of local communities. They just want to understand what is going on and be involved in the decisionmaking process. And that is the way we have approached working with the Tahltan and in working in Alaska. It is a little different in Alaska, because in Alaska the Native corporations actually own the surface and sub-surface rights, whereas in Canada, and specifically with the Tahltan, they have an Aboriginal Right and Title. Our approach is to work with the Tahltan to develop a mine in a way that is also going to be beneficial to the Tahltan as well as our shareholders. The best way to do that is get the Thaltan involved early and often. GCR: How early is “early”? RVN: When Galore Creek came up, my first meeting wasn’t in Victoria to meet with the BC government – I flew to Smithers and drove to Dease Lake and met with the Tahltan leadership. Since then we’ve met often and benefit from having a great working relationship. The project had some challenging years but when you work your way through challenging times and come out the other side with a stronger bond, that is a great thing. GCR: It becomes part of your shared history. Providing you come out the other side together. RVN: Exactly. Everyone learns. GCR: How does it work in your Alaskan projects? RVN: In Alaska the Native Corporations own the land so it is different. Alaskan Federation of Natives is a big organization that deals with policy level issues. On the industry side you have the Council of Alaskan Producers and the Alaskan Miner Association, which certainly have Native Corporation representation. There is a good, open dialogue in both forums. In Alaska the Native Corporations are very pro-business. GCR: Does that simplify things? RVN: It does, but we still have a commitment to consultation and communication. At Donlin we have no less than 56 remote Alaskan Native villages to relate to in an economically challenged region where we’ll create 1,500 to 3,000 jobs during construction and 600 to 900 jobs during production.

GCR: So, I’ll ask point-blank: Is Community Relations, particularly Aboriginal Relations, a cost of doing business? Or better, good business practice? Or something higher minded? RV: Yes, it is good business practice, but I also think it is more of a broader, general public and industry awareness that it isn’t going to work any other way. A more holistic approach to doing business. GCR: Do such “soft values” play well in the market? RVN: It’s a “win” all around, actually. Developing a good rapport and working with First Nations and Alaskan Native Corporations adds value for our shareholders, as well as for the First Nations members and Alaskan Native corporation shareholders. GCR: How does that play out in practical terms? RVN: To illustrate, in working with the Calista Corporation in Alaska, they didn’t have a drilling company. Okay, if we are going to be drilling for the next 15 to 20-plus years, let’s help them form one – bring in a contractor we trust and that knows what they’re doing and have them form a joint venture on the Calista lands. We also did this with the Tahltan with an environmental company because we are going to be doing environmental monitoring for the next 20 to 30 years. So we helped set up a 50/50 joint venture between Rescan Environmental Services and the Tahltan Nation Development Corporation: Rescan Tahltan Environmental Consultants. It takes a bit of effort and cost up front, but then the outcome is you’ve developed a local workforce over a period of five years that are traveling 50 miles or 100 miles to work rather than, say, a thousand miles from Vancouver or the lower 48 states. There is also a huge social benefit in fact that local people are involved with the project. One, they are making money; and two, on the environmental side they are doing the work so they are ensuring that you are doing things right, because they are doing the monitoring. GCR: And those results go to … ? RVN: The Environmental Performance Committee, made up of three Tahltan and three company representatives.

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GCR: You formed the company in ‘98, how did you find these projects? rVN: Exploration is a bit of a treasure hunt, so yes some didn’t work out and others not as well as we wanted. but certainly on Donlin, Galore and Ambler we hit the mother lodes with all three. And we are very excited about a new project down in Argentina, in the rio Negro province. that one is early stage yet, but we’ve already started to hit some very significant drill intersections over significant thicknesses - we are not talking about little skinny zones. We are talking about over tens of meters, if not hundreds of meters of drill thickness. At NovaGold, I believe we are good at exploration, and putting deals together. In addition, I think we do a great job in another key area of business and that is working successfully on community engagement whether it be Alaskan Native corporations or First Nations or, in the case of Argentina, getting the local business community and citizens involved. It’s probably one of the provinces less familiar with mining than, say, Santa cruz. So there is a learning curve for both parties.

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GCR: You had personal experience with Placer Dome but what about the effect on your company of working with majors like Barrick and Teck? Who is operating? rVN: they are actually both 50/50 joint venture companies but we’re not shy about using their expertise. In the case of Donlin, the team is probably 80% barrick people, and with teck at Galore, more like 70/30. but in both cases there are corporate boards of four people: two from NovaGold and two from barrick or teck. GCR: Ambler is quite different, being an underground mine and wholly owned. How is this going to change your company? rVN: It’s early days for Ambler, we’re going to continue to explore and we are very excited about a new exploration target called bornite where we are currently drilling. In the end I don’t know whether we will develop that ourselves in partnership with NANA, or follow a similar model of bringing in a partner – time will tell. GCR: Given that mining is cyclical, commodities


NovaGold Integrated Report 2010

NE GOAL

LOW-COST MILLION-OUNCE-A-YEAR

GOLD PRODUCER

are cyclical, and you are looking at a few years out, are you at all concerned about being caught on the wrong side of that wave? rVN: We certainly have a bit of an odd market right now with commodity prices at or near alltime highs and equities are, I would say, lagging. there is an expectation in the market that prices are going to come down and every time you turn around they go up. Gold has certainly done that, copper has certainly done that. We are still in the $3.50 to $4/lb. copper range and yet the producers are being valued at $2.25-2.50. So that disconnect has to correct. I look at supply and demand and we continue to under-produce copper. copper producers have, for the last five years running under-performed by an average of 17% and this year is shaping up to be no better – that’s 17% less metal than planned. And yet on the demand side India, china, Indonesia and Southeast Asia are consuming more. those markets are about big numbers: 8-9% growth in china and India.

rVN: the gold price chart for the last 10 years has seen a nice ramp-up. More recently it has gotten a little noisy with increased volatility and major spikes both up and down. Over the last three months, gold has gone from $1,450 to the $1,900s, back down to $1,750 and then up to $1,850 and back down to $1650. those are pretty big swings. but it hasn’t gone to $600 dollars. In my view, the longer the financial woes of Europe, United States and Japan continue, and the longer governments continue to print more money, the more hard asset values will go up – and that is good for NovaGold.$

NovaGold Resources Inc. novagold.net Stock symbols: tSX:NG; NYSE AMEX:NG

GCR: What about gold, in terms of supply, demand and the cyclical nature of commodities?

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THE GLOBAL COMMODITIES REPORT


First Nation Rising by Jeff borsato

The Cree Regional Economic Enterprises Company helps build companies and communities among the Cree First Nation. With ďŹ ve companies under its auspices serving growing industries and a growing populace, Cree leaders are especially keen to engage aboriginal youth

“We want to be seen as a national player, to show canadians that First Nations people can stand among the best businesses out there.� that was the message Jack blacksmith, President of the cree regional Economic Enterprises company (crEEcO) had when asked what his vision is for the largest First Nations economic collective in canada. resource development has sparked renewed interest in northern canada and First Nations people have sought to benefit from exploration and development taking place in their communities. taking a proactive and long-long term approach, the cree Nation of Quebec sought out clearly defined and legally secured rights over a host of economic activities taking place in northern canada. With the signing of the James bay Northern Quebec Agreement (JbNQA) in 1975, the cree gained important political, social, economic and cultural rights. A board of compensation was established with representatives from nine cree bands to receive, administer, use and invest compensation contemplated under the JbNQA. crEEcO was born from this collective body to maximize employment and act as an economic engine to the cree Nation of Quebec.

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Cree Construction and Development employs upwards of 800 during peak construction periods.

With the signing of the James bay Northern Quebec Agreement (JbNQA) in 1975, the cree gained important political, social, economic and cultural rights. A board of compensation was established with representatives from nine cree bands to receive, administer, use and invest compensation contemplated under the JbNQA. crEEcO was born from this collective body to maximize employment and act as an economic engine to the cree Nation of Quebec. Incorporated in 1982, crEEcO acts as a holding company for five cree corporations that focus principally on development in the cree communities of Northern Quebec: the cree construction and Development company, Gestion ADc, Air creebec, Valpiro and Eeyou baril. crEEcO President Jack blacksmith stresses the importance of these majority cree-owned companies. “cree peoples used to be on the exterior of development taking place in our communities, crEEcO was developed to give access to cree’s business opportunities and create sustainable jobs in the community.” Asked where he sees crEEcO in the future, blacksmith highlighted the important role of 26

THE GLOBAL COMMODITIES REPORT

cree youth. “In 15-20 years we hope to see the youth taking a bigger part in crEEcO’s activities, not just in First Nations communities but across the country.” Assisting youth via job programs and efforts in schools, crEEcO helps raise awareness of the opportunities available in their communities. Asked what makes crEEcO unique among First Nation’s organizations, blacksmith noted, “What makes us unique is that our board of directors is all cree and most member companies are almost entirely cree owned.” CREE COMPANIES A founding member of crEEcO is Air creebec. Established in 1982, Air creebec focuses on flight service to various First Nation communities and mine sites in Quebec and Ontario. In what became the largest commercial transaction ever undertaken by canadian aboriginals, the cree became 100% owners of Air creebec in 1988 after buying out their partner’s share in the company. Matthew Happyjack, President and cEO of Air creebec, spoke proudly of the importance of being entirely cree-owned. “We


are very proud to be Cree-owned and hope others can follow our footsteps.” His vision for the future of Air Creebec points to “Continuing improvements and expansion of the passenger side of business while staying focused on increasing contracts in Quebec’s minerals industry.” Working closely with Air Creebec is its service arm, Valpiro. Providing ground and aircraft service operations, Valpiro ensures the gears of CREECO’s machinery continue turning without a hitch. Air Creebec works with CREECO showing Crees greater opportunities as tomorrow’s air traffic controllers, flight mechanics and pilots, and helping expand the ranks of Crees in all sectors of the Quebec economy. Among the largest construction companies in Quebec, The Cree Construction and Development Company (CCDC) is CREECO’s largest partner. Owned entirely by The James Bay Cree, CCDC employs upwards of 800 workers during peak construction periods. President William MacLeod points to the CCDC’s achievements.

“CCDC has built its expertise, resources, knowledge and capacity to compete among the large construction companies in Quebec.” Access to large bonding requirements and ISO Certification were significant achievements to MacLeod. “These are not easily attained or retained by a First Nation company, but we understand the aspirations of the clients we work for, especially in First Nation communities.” With over half of senior staff belonging to aboriginal groups, MacLeod stresses the importance of First Nation members taking leading roles in the booming resource development sector. “The development in hydro [electric] resources, mining, and infrastructure is predominantly in the north, where our communities are located. We work closely with First Nation groups impacted by these developments so they can share in this growth.” Large construction projects pose a variety of risks to both environment and people. Speaking to the added responsibility of working with many employees who hail from his own community, MacLeod points to their health & ISSUE 04

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safety efforts. “ccDc’s catering arm, Gestion ADc, was second in health & safety of all the construction and catering companies working at the seven-year Hydro-Quebec development project.” NORTHERN GROWTH Developing and delivering catering and janitorial service projects, Gestion ADc provides opportunities for cree at construction and mine sites across Quebec. In fact, Gestion ADc was named to Profit Magazine’s 100 fastest growing companies in 2008. Operating as a supplier to ccDc’s larger projects, Eeyou baril is a recent addition

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THE GLOBAL COMMODITIES REPORT

to the crEEcO family and is headed by reggie Neeposh. Highlighting the development taking place in northern Quebec, Neeposh notes, “canada is in a great position to benefit from global natural resource demand and northern canada is where these resources are available.” Neeposh stresses the importance for crEEcO to convince aboriginal youth to return to their communities and participate in the economic development taking place. “I believe that other companies will gradually take that route considering the increase of population in the communities, more jobs opportunities and increased


demand for goods and services.” Other crEEcO businesses include a new Quality Inn & Suites (with another on the way), Eeyou Eenou realties and Eeyou Power (renewable energy), and crEEcO’s insurance department insures over $2billion in Eeyou Itschee territory assets. Since the 1975 signing of the JbNQA, the cree population has more than doubled and development has outpaced growth rates in other parts of canada. crEEcO’s continued growth reflects the community’s development and their success

for future crees and First Nations people.$

Cree Regional Economic Enterprises Company Ouje-bougoumou, Quebec creeco.ca

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Robert Gallagher New Gold 30 THE GLOBAL COMMODITIES REPORT President & CEO


Social License Renewal With a projected meteoric rise in gold production ahead of them, $5billion New Gold Inc. is staying grounded in their host communities and environmental settings. It takes time and commitment, but it’s right. Despite a heady pace of gold production, with two- and four-fold production increases in the offing, New Gold is keeping their aboriginal and community relations, environmental, sustainability and health & safety principles front and centre. Right out of the gate, Vancouver-based New Gold Inc. emerged from a three-way amalgamation in 2008 with a leap into gold and copper development and production. Three years in, their goal for 2011 is to produce 380,000 400,000 ounces of gold from their properties in Australia, Mexico and the United States, with three more projects slated: the New Afton mine near Kamloops BC is on track to double New Gold’s average annual cash flow when it starts up next year; the El Morro development in Chile should add even more revenue beginning in 2015, and the ensuing Blackwater property in central BC shows signs of being much larger still. That’s a promising growth strategy; in terms of defence, New Gold has also focused on driving down their cash cost producing gold from almost $600/oz three years ago to $354/oz this year. “Something that helps there is that although the costs of our inputs are rising

(some dramatically) our secondary copper and silver production act as natural hedges,” explains Robert Gallagher, President, CEO and Director. “So as input costs rise so do our copper and silver revenues.” CONTEXT IS EVERYTHING But the realities of mining are more than resources, methods and balance sheets. “It’s easy enough to get your licenses from the government, and once you have got them it is pretty hard to lose them,” says Gallagher. “But our social license, basically your acceptance from the communities around you, can be harder to obtain and, if you don’t have the right attitude, just as hard to keep.” With over three decades in mining, Gallagher sees that industries across the board have changed with societal expectations. “I’ve worked in Indonesia, Venezuela, the Philippines and Honduras, as well as Canada, the US and Australia. Many companies used to feel they were fulfilling their responsibilities by providing employment – just what was happening ‘inside the fence.’ Now expectations have evolved greatly and you find with modern communications, the internet, NGOs nearby… everybody is motivated to do the right thing for their host communities

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and the environment, not just what’s cheapest or most profitable,” he says. “Personally I get the most satisfaction from how we positively impact communities and change the lives of people for the better forever. The concept of a triple bottom line [financial, environment and social] is often talked about… maybe that’s my fourth bottom line, the lasting impacts on individual people.” In BC, New Gold is finding ways to work with two local First Nations bands as the New Afton project nears production next year. Anne Wallin, the onsite HR Manager says, “I find it’s personal interaction that makes the biggest difference. That can be as simple as making sure when any band member calls, we call them back to answer their questions. And we have a First Nations Coordinator on site and she works closely with the bands. “We also have a joint Implementation Committee for the bands’ participation agreement that has representation from both bands and answers questions at the grassroots level. We go above and beyond the letter of the law and go to the spirit of what the legal agreement says. It is about getting to the heart of what is meaningful and what will make a difference in the lives of the people that you are impacting.” Preparing any local community for mining jobs is not as easy as asking who has a driver’s license; there’s a lot of education needed. “We held quite a few community meetings to explain what underground mining is about, the safety concerns, the positions we will have, the skills required, etc.,” says Wallin. “Then the federal government came forward with training funding and we were part of forming a non-profit organization called the British Columbia Aboriginal Mine Training Association, and that has worked really well.” This fall, at the annual Canadian Aboriginal Minerals Association conference in Vancouver, Wallin will speak on New Gold’s relationships with the bands, the Training Association and Thompson Rivers University in nearby Kamloops. CAMA is driven by Hans Matthews, who spent years working for major and junior mining companies before creating the Association. “With his long career working in, and working with, the mining industry, and his First Nations heritage, Hans provides an invaluable link,” says Gallagher.

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KEEP IT PERSONAL “Anywhere in the world, the key is personal interaction. That’s how anyone decides whether to trust somebody. When someone comes along and says, ‘Don’t worry about your traditional lands and hunting and cultural heritage sites,’ they can sign off but they really don’t know, and they won’t find out for years into the future. The only way you can develop trust is to demonstrate that you have been a responsible operator elsewhere and be able to look them in the eye and talk to them and understand them, their concerns; and help them understand you as a company, what your concerns are and your limitations. That takes personal interaction.” One method at the New Afton project is a quarterly ‘Meeting of the Chiefs’ – two First Nations Chiefs and Gallagher as CEO. “We discuss any issues that are outstanding or any concerns, any hot buttons, and then do something social – we got them out to an outdoor hockey game last winter and they reciprocated in the spring by taking me out to play golf. You need both business and relationship.” NO GUARANTEES But there’s no hassle-free guarantee. New Gold’s Cerro San Pedro mine in Mexico faced vocal opposition locally, a fair bit of negative (if vague) internet chatter and some bureaucratic confusion despite significant investments in local services and infrastructure. “Fortunately, most of that’s behind us,” says Gallagher. “But there will always be people who don’t like mining and don’t think the costs are worth the gains. And the internet is a great place to make whatever claims you want. But at Cerro there has never been any breach of standards – it is an absolutely clean operation. “Our mining operations are open pit and some people object to that as pollution. However, we were permitted because the project was judged as more than worth the impact given the benefits we are creating. There was one technical land use issue from 1993, well before we or our predecessor company were involved, but recently the municipal government clarified the law and cleared the way for permitting.” (The area has been mined since the Spanish in the sixteenth century.) “We have another six years of mining at Cerro as things stand, but we are drilling the underground extensions and hope to extend the mine life, continue employment and production and our connection with the community.”


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LEAVING WELL For Gallagher “and all through our corporate culture, from the mine site to the boardroom,” environmental and social impact issues are at the forefront. “I sometimes joke that when I started mine managers were engineers and geologists – now they are social scientists.

engineering and environmental solutions mining

“but there’s no other way to do business. Mines have a finite life and are not a renewable resource – we feel that we will be judged successful if we finish a mine, reclaim the impacted areas and the local people can say, ‘Well, the mine is gone, but we are better off because they were here.’” $

environment

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New Gold Inc. Vancouver, british columbia newgold.com Stock symbols: tSX:NGD.cA, NYSE Amex:NGD

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36 THE GLOBAL COMMODITIES REPORT


Going Underground Cementation Canada, an engineering and construction firm, takes creative approaches to their underground projects, community relations, training and safety … adding up to repeatedly being named a top Canadian employer. Unless you’re an insider, mining still carries connotations of being a rough ’n’ ready industry, so the general public might be surprised to hear that cementation canada, an underground mine engineering and construction company would repeatedly be named a top canadian employer. In fact, the Financial Post, named cementation a top 10 canadian Employer for 2009, and Mediacorp dubbed them one of canada’s top 100 Employers five times. but for roy Slack, in his role as President responsible for the North and South American operations of the global cementation group, such kudos simply affirm the company’s approach. “Part of our mission statement is to be an employer of choice,” he says. “I am a fan of [these programs] because it makes you do two things: evaluate yourself, and look at the other top 100 companies. Each year it helps us improve.” Interesting, when factors like ‘work space’, ‘atmosphere’ and ‘sociability’ are being weighed by tenderfoot media companies. “How we treat our people on site is very important to us,” says Slack. “When you are dealing with miners working on a project, if their equipment is in good condition and their work area is well kept and if they are staying in a camp with good provisions, everyone is happier, more effective and safer. “We recently went 17 months with no lost-time injuries. this year we have two lost-time injuries – of low severity, but they are still lost-times. but our US operations just celebrated 5 years of no lost-time injuries so they have done very well. 85% of our projects are zero lost-time and 65% have no medical aid injuries

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Shaft sinking operation by Cementation. either. So we are working very hard at that and I’m very proud of our results. “During the downturn we didn’t get the Top Employer nod, I think mainly because our employment numbers shrank and mining companies were hard hit by the economic downturn.” GLOBAL PICTURE Slack himself was first employed in mining as a summer job in northern Ontario, which prompted him to switch his university major from psychology to mine engineering. He spent the

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1980s working for contractors and then started his own company. The UK-based Cementation group hired Slack to find them an acquisition, but wound up having Slack start up a new firm in 1998. Cementation’s US operations are wholly owned by Cementation Canada and together the groups employ about 1,500. Slack also has operational oversight of the South American operations, though they’re under the UK division’s ownership. “The global Cementation business does over a billion dollars a year in revenue –the


let us operate. They know that we understand our market and our culture so they let us manage our businesses.” VARIETY, VARIETY Cementation’s client list reads like the Who’s Who of Canadian mining: GoldCorp, HudBay, NewGold, Kinross, XStrata, Vale, Rio Tinto et al. “That’s certainly intentional,” says Slack. “We have a diversified list of both clients and commodities and that is on purpose. Mining is cyclical and if there is a slowdown in base metals we still operate in gold and silver, diamonds, salt and potash. So our commodity base is very diversified. Early in the growth of our company we were very dependent on a couple of base metals, so we made a point of diversifying in both commodities and clients. “I believe the global Cementation organization is the largest of its kind in the world. You know, it is over a billion in revenue, with 16,000 employees globally, so it is a big organization. We are certainly one of the leading contractors in North America, both in terms of size and in the complexity of the projects we do.” For example, their Piccadilly Project in New Brunswick is a large project for Cementation. “It is a twin shaft project for a potash mine for PCS Mining,” says Slack. “And it is a designbuild project, so we have done the engineering on it and are managing the construction so it is a large turnkey project. “One shaft is about 850 meters down now, the other shaft is about 600 meters and going over a thousand, but there are some stations and other underground works in there as well.”

North American group represents about $350 million of that.” In 2004, Cementation was bought by the Murray & Roberts Group, a 109-year old Johannesburg engineering and construction company operating in Southern Africa, the Middle East, Southeast Asia, Australasia and North and South America. “Murray & Roberts is a large company doing over $4 billion a year in revenue,” says Slack. “They are based in South Africa, a mining country, so we have a parent company that really understands our business and they

Northgate Minerals’ Young Davidson gold property south of Kirkland Lake, Ontario, is another interesting turnkey project. “We are unique as a contractor as we have an established engineering group internally so we can do design-build work. So we are designing the shaft and the infrastructure there and managing the construction. But we proposed an innovative solution for them – a 5.5m. bore hole shaft excavated by mechanical means. Instead of drill-and-blast, which we usually do, the rock is being cut by a raise bore machine. “We start at the top, drill a small pilot hole down to the bottom and then connect a large reamer to the bottom. Then pull the hole back up to full size. By doing it this way, we have saved them

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quite a bit of time and money – they are quite happy about that.” (Photo opposite: This is the same machine that Cementation had on the mine rescue operation after the 2010 mining accident trapped miners in Chile – a Strata 950 raise bore machine.) Another project of interest is the Resolution copper operation near Phoenix, Arizona, for Resolution Copper. “This is a very large project and it has gone very well in terms of safety and schedule. It’s in a traditional, old-time mining area but it is all new development. The main shaft is 28 ft. in diameter and 6,200 ft. deep. And then we are also refurbishing an existing shaft as part of the project design.” INUIT PARTNERSHIP In April 2005, Kitikmeot Corporation, representing an Inuit group, and Cementation Canada signed a unanimous shareholder agreement to form a new company, Kitikmeot Cementation Mining & Development (KCMD). “In 2004, I met with the principals from Kitikmeot Corporation to explore possibilities in the North. They were looking for a mining partner and we wanted to establish a long term relationship not a one-project thing, we wanted to make training a key part of it, and we looked for opportunities to work together.”

Raise bore machine.

As a result, KCMD has two projects in, or adjacent to, the Kitikmeot Region. The first is the Diavik Diamond Mine, located in the Northwest Territories where they built underground exploratory declines. Now KCMD is also involved in underground diamond production as well. The second, more recent, project is at the Hope Bay gold mine with Newmont Mining located in the Kitikmeot Region on Inuit-owned land. KCMD is under contract to Newmont to carry out the underground development for this major project, which began in October, 2010. “Wherever we work in the North, we want to provide opportunities to Northerners, First Nations and Inuit people,” Slack says. “But our work is specialty work requiring specialized skills. So we developed the New Miner Training Program in 2004 – this utilizes our First Nation partners and gives them basic training within the first year to become miners. “I’ve certainly learned from the Kitikmeot expe-

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Wherever we work in the North, we want to provide opportunities to Northerners, First Nations and Inuit people. rience. I think our company has. We understand the issues better and understand our partners better.” NATIONAL INPUT Cementation has also been involved with CAMA (Canadian Aboriginal Minerals Association) over the last several years. “I think it’s important, if you’ll let me get a little bit philosophical about mining in general,” he says. “Mining in Canada is provincially managed (except for the nuclear industry and uranium.) So the mining industry is somewhat fractured in Canada – groups become local. And the same can be true for First Nations, despite their federal interaction. The CAMA concept is to look at both mining and First Nations challenges on a national basis, which I think is healthier for all concerned. “I like that concept because it would be so easy to do an Ontario one and a BC one, and there are groups like that. But I don’t think they get the same benefit of the experience as, say, the Kitikmeot have in the Arctic and various Inuit groups in Newfoundland. Everyone is dealing with similar issues but looking at different solutions. Discussions on a national basis are going to help everyone.” Cementation is also working with the Mining Industries Human Resources Council, trying to establish a national format for mining training. “Right now, every provincial group has a different program and different requirements. But MIHR has created the first program for national certification. So this would be very beneficial for the First Nations, it is good for us (because we work across Canada and it allows our people to move around) and something that will help our industry nationwide.” $

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Both Sides Now the Global commodities report interview with colin Webster of Goldcorp Inc.

In Canada, where Aboriginal governance is a federal, nation-to-nation relationship, and resource development is under provincial jurisdiction, let alone the cultural dynamics, partnering with First Nations communities in mining projects takes time, perspective and skill. Canada’s second-largest gold producer, Goldcorp Inc., created a portfolio to help keep those relationships healthy and productive. colin Webster is Goldcorp Inc.’s Director of Aboriginal, Government & community relations, canada & USA. We spoke with him at his toronto office, just before heading out for meetings with a First Nation community north of Sioux Lookout, Ontario. The Global Commodities Report: Colin, you are a Mining Engineer, how did you wind up with a title like Director of Aboriginal, Government & Community Relations, Canada & USA? colin Webster: there are both professional and personal aspects. Professionally, I graduated from Queen’s University in Kingston, Ontario and have been in the mining industry for almost 20 years. My experience has been primarily on the environmental side of the business. I entered environmental consulting in 2004 with my own consultancy business called blue Heron Solutions for Environmental Management. My

partner and I started that together and built it into a small and successful boutique firm with 12 people. We provided services primarily to the mining industry, resource developers in general. With my mining expertise I focused on project development, permitting, and reclamation & closure. All have a significant community engagement component to them. Inherent to this type of work is the First Nations engagement component. that is the professional side of it. the personal side of it is my mother was born and raised in a First Nation community in Quebec, Kitigan Zibi Anishinabeg. being of First Nation descent, this role that I carry out is very dear to my heart. GCR: With your mother’s heritage, did you spend much time on the Reserve growing up?

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with Goldcorp before and joked that if they want this kind of help full-time, let me know. So they did. I’d been interested in this area for a long time and it was clear that they wanted to do this and do it well, which was very important to me. I didn’t want to be brought in just to “deal with an issue” – I wanted to be heard, be listened to, make things happen, make changes. They convinced me that they wanted to become leaders in this area, created the position and I started in October 2009. GCR: How do you spend most of your time? CW: Our region encompasses five operating Goldcorp mines and one development project – three are in Ontario, and the development project is in Quebec. Those four sites entail a First Nations engagement component, so I work with the site teams, provide guidance, advice and consistency across the region in terms of how we engage those communities. GCR: And you have two properties in the United States. CW: Yes. On the US side there is more on the [mainstream] community side. We have a corporate social responsibility (CSR) mandate that we’re formalizing and are working towards ensuring that our CSR efforts, across the entire company, line up with external standards.

CW: Yes, I visited quite a bit as a child, but I didn’t grow up there – it wasn’t my reality. I grew up in Kirkland Lake, a northern Ontario mining town. GCR: Your environmental business was successful, in an in-demand field. Why switch? CW: In 2009, I was providing an introductory Aboriginal Relations course to some Goldcorp representatives who were in the process of figuring out how to engage some of the First Nations communities in their neighborhood. I’d worked

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US relations with First Nations are fundamentally different than in Canada. Very simplistically, in Canada, as an industry proponent who is delegated procedural aspects of consultation, you are at the forefront of the relationship. If we had a new US mine or mine expansion and needed to consult with Native Americans, we would go to the government and they would conduct the consultation on our behalf. GCR: What would you hope for? CW: My hope is that we will be viewed as being the company of choice, a company that is willing to work with Native communities. GCR: In Canada, how big a piece is indigenous or community engagement for your onsite staff? CW: We have management representatives at all of our sites who are doing this work as part of their responsibilities. Each site has its own budget (we are very decentralized as a company) so

“M co N


Maximizing social and economic returns to the First Nations We have the mandate to provide services and economic opportunity - including employment, training and advancement to the Cree Nation of Eeyou Istchee and beyond with the ultimate goal

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the sites are responsible for setting up their own budgets and executing on those budgets. Each site also does it slightly differently. Some have dedicated Aboriginal Affairs or First Nation Managers while at other sites a lot of times it’s part of their role. GCR: Now with community and Aboriginal roles, those interests don’t always line up exactly, do you find yourself having to navigate different priorities? CW: At times, but it seems to be happening less and less. The non-Aboriginal communities where we operate are recognizing that they have to engage the Aboriginal population as well – there’s an awakening on the community side. With companies forming First Nations partnerships and engaging Aboriginal communities, people are trying to understand what that means.

“My hope is that we will be viewed as the company of choice, willing to work with Native communities.”

GCR: I suppose that what companies are doing is another occasion for communities and First Nations peoples to bump up against each other and get to know each other better. CW: Yes, sometimes it’s how we can be involved in bringing the two together. GCR: Why can’t a mining company say, Look we are engineers here to do our work, we can hire some people and do some training but really we are going to stick to our knitting? CW: That is just not the way people do business anymore, it isn’t enough to generate economic activity. People don’t just work there – they live there. It’s far too complex a situation to be exclusive. You have to bring everything together in

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order to be successful. GCR: How do you view the responsibility on the First Nations or Aboriginal side of relations. What do they need to be working on to help these relationships work? CW: The resource industry brings great opportunity to communities. I think First Nations would be well served focusing on economic development, the opportunities that are abundant in mining and how those communities can take advantage of those, direct employment and training opportunities and business development. The industry is looking out into the future and seeing a labor shortage. First Nations populations and demographics align very nicely as a future workforce for the industry. GCR: Is that why you’re sponsoring the youth forum at the CAMA (Canadian Aboriginal Minerals Association) conference this year?

Snapshot

Goldcorp

CW: Yes, we felt that was an important area to sponsor. Aboriginal youth are near and dear to my heart, and I see them as being a big part of the mining industry down the road. So the earlier we engage them the better off we are going to be in the long term.

Market Cap: $39billion

GCR: How do you actually bring together these two different mindsets and two different sets of priorities, apart from being physically on the same piece of dirt?

Operations: 20 mines, 22 joint ventures

CW: There is a variety of opportunities that can be bridged. But you have to be able to see both sides to see where those opportunities lie. It does take time but today’s mining industry has to be inclusive, otherwise you are going to have opposition that is vocal and consistent.

Locations: Ontario, Quebec, South Dakota, Nevada, Mexico, Honduras, Guatemala, Dominican Republic, Chile, Argentina

GCR: What do you see as regulatory or government roles in these relationships? CW: They have an interesting relationship because it’s a nation-to-nation, government-togovernment relationship with the First Nations. That relationship can be rocky and it can also be very good. A lot of times the industry’s perspective is that we are caught in the middle of a historical and complex situation. Industry comes in wanting to move things forward and there are all of those relationship sentiments that come into the room when you are talking with First Nations.

Annual Revenue: $4billion

Gold Production: 2.7Moz. projected for 2011 Reserves: Gold (Moz.) Silver (Moz.) Copper (Mlbs.) Lead (Mlbs.) Zinc (Mlbs.)

P&P M&I Inferred 60.1 25.7 20.5 1,300 458 117 5,406 598 1,534 7,275 2,580 229 17,575 8,269 608

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GCR: You come in regarding a mineral resource, which is provincial, but you’re dealing with an Aboriginal community, which relates federally. That must get complicated. cW: It does, but I sense on the government side a willingness to look at how industry can facilitate stronger relationships, and how industry and First Nations manage to work together. GCR: What do you think your relationships offer Governments? cW: Well, we live it in real day-to-day experiences. I feel there’s room for more sharing in terms of how their relationships and our engagements work and how governments could play a role supporting the engagements between the industry and First Nations. GCR: One of your corporate presentations says that education drives growth. Obviously short-term training is good because you want employees through the gate. But education, that’s a longer term investment. cW: Yes. If you look at the demographics of the Aboriginal population in canada, youth is the fastest growing group, and the communities have a younger average age. So there is opportunity there for a future workforce. If we go back to the government contribution for a second, there needs to be a more substantial role for government in the education of Aboriginal people. GCR: Problems in the youth sector are well known. Do you see education and the prospect of careers helping? cW: Yes, and it’s starting but there is still a long way to go. Goldcorp has some informal youth engagement programs and we are working on more formal lines. We are also looking at other strategic partnerships to help that along.

the relationship – once you have a strong relationship you can get a lot done. Great things. but it takes a lot of time and energy, and a lot of face time. And it doesn’t necessarily move as quickly as you would hope if you are on the industry side. So the two timelines don’t always coincide. but if you can solidify the relationship, you can get along for quite a long time and grow together. As a good example, the Musselwhite Agreement that was developed in 1996 was one of the very first Aboriginal Impact benefit Agreements negotiated in the country and is still considered by many as “best practice”. [Musselwhite (Goldcorp, 100%) is a fly-in underground gold mine in northwestern Ontario producing nearly a quarter-million ounces of gold annually.] that agreement was established in 1996 and it was founded in a relationship that exists to this day. GCR: What do you think the industry can learn from the Aboriginal community? Besides being environmental boots on the ground, understanding the way the terrain works. cW: the First Nations view on environmental protection and how it interacts with everything is something that the industry is starting to look at and awaken to. that we’re not working independently, we interact with society, we interact with communities, we interact with the environment, we interact with each other and we are all part of this thing called Mother Earth. GCR: Now, when you are talking about engineering, finance and marketing people, when something like Mother Earth comes up does that actually reach them? cW: It goes a little better than you’d think. I’ve been in the industry for 20 years and I see industry recognizing the connections.$

but I do feel that anything that is done has to be community-driven – supported by a chief of council, supported by the Elders, supported by the leadership in the community and the youth themselves. And do the legwork to make it successful. GCR: Do you get pushback from communities saying, Wait, wait, wait, this is going too fast. Or on the mining side, Why aren’t we getting any action here? cW: Good question. bridges take time to build. First Nations communities are very much about

Goldcorp Inc. Vancouver, british columbia goldcorp.com Stock symbol: tSX: G; NYSE: GG

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50 THE GLOBAL COMMODITIES REPORT


The Right Footing Rio Tinto Alcan and the Haisla First Nation

The Kitimat aluminum smelter was built smack in the middle of the claimed traditional territory of the Haisla First Nation back in the oblivious 1950s. With a $2.5 billion upgrade in the works, it was time to re-engineer the social relationship as well. A long overdue formal agreement, called the “Haisla Nation – Rio Tinto Alcan Legacy Agreement”, has been achieved between Rio Tinto Alcan, the owner and operator of the aluminum smelter at Kitimat, British Columbia, and the Haisla First Nation, both of whom reside at the headwaters of the Douglas Channel in northwestern BC. While the first relationship protocol and series of meetings between the parties began just over a decade ago, the current relationship took work, but both parties ratified the 30-year renewable agreement in support of the aluminum operations at Kitimat. This smoothes the way for Rio Tinto Alcan to move ahead with its three-year, $2.5 billion modernization project and facilities upgrade, establishes a Legacy Trust Fund for Haisla community development, and opens up opportunities for Haisla members

to participate and benefit via training, employment and procurements. The resulting Legacy Trust Fund will receive annual payments and be managed by the Haisla Nation Council and their Trust Fund management company. The funds will be applied to social, economic and community development in the Haisla community. Colleen Nyce, Manager, Corporate Affairs and Community Relations at Rio Tinto Alcan (and also Manager Communications and External Relations for the Kitimat Modernization Project), says that the new technology being installed in Kitimat will be the first application of the company’s proprietary AP40 aluminum production technology, which proffers to boost aluminum production capacity by almost half (from 282,000 tpy to 420,000 tpy capacity) while

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EXPERTS IN THE FIELD.

A wide range and depth of experience in mining & exploration, forestry, road construction and commerical contracting. A proven track record of completing difficult projects on schedule and under budget. And a dedication to managing, meeting and exceeding expectations. Rainy Lake Tribal Contracting is an experienced team of drillers, labourers, drivers, operators and innovators. We have a reputation for versatility and effective performance in the field that maximizes our customers’ bottom line – every time.

LTD.

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Generic Brochure.indd 1

THE GLOBAL COMMODITIES REPORT

Rainy Lake Tribal Contracting www.rainylaketribalcontracting.ca 11-09-30 2:47 PM


Haisla Nation - Rio Alcan Legacy Agreement - official document signing in Vancouver, BC.

reducing overall emission intensity by close to 50%. “And that includes a GHG reduction of half a million tonnes a year,” she says. “It’s a significant investment for the company but it is certainly a win for all the other players as well - the environment; the region; the Haisla Nation; and the province of british columbia.”

D.

AN AWKWARD START You could say it’s about time. When the Alcan operations at Kitimat were originally built in the 1950s, in the heart of the Haisla traditional territory, it was in an era when indigenous peoples’ interests weren’t on the radar for corporations and governments, and there was little thought given to the impact on the Haisla. When Alcan opened the smelter in 1954, it attracted a surge

of about 10,000, primarily non-aboriginal workers and residents to the sparsely populated area. both sides admit that the relationship has been strained at times. When the facilities upgrade was first announced in 2006, the Haisla approached the company about using this as an occasion for both parties to put relations on a better footing. the agreement took three and a half years to negotiate and was ratified by the band membership by just over two-thirds in 2010. the agreement accomplishes three things. “First, it settled the past,” Nyce says. “the parties coexisted all these years primarily without paying much attention to the other. Yes, there ISSUE 04

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was friction along the way, but that has now been put behind us. Second, it establishes our current intention to work together, including employment, training and business opportunities. And third, the establishing of a cooperative relationship keeps our eyes on moving forward to the future – this is a 30-year commitment with 10-year renewal options.” Nyce says that most of the short-term opportunities will be during the construction phase where Haisla members will gain opportunities for industrial work experience and procurement contracts. When asked how represented the Haisla are in the current Rio Tinto Alcan workforce, she admits, “I would say the number of Haisla workers in our current operation is rather low in comparison to the general population. There are many reasons for this, one of which is lack of education and training capacity which is being addressed by our joint ownership of a local training school, Kitimat Valley Institute. There are a lot of effort and initiatives taking place as a result of our new relationship with the Haisla Nation and we feel quite confident that the new opportunities being made available to the Haisla will generate a lifetime of sustainable work and

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business opportunities.” The downside of increased technological efficiency through the Kitimat Modernization Project admittedly will be that the permanent operating personnel needs will actually shrink from 1,400 to 1,000. But Rio Tinto Alcan notes that no layoffs are involved. “While the next three years of construction will see an on site temporary workforce peaking at about 2,000, the permanent operation will gradually reduce by natural attrition (retirements),” Nyce says. “What’s great about all of this is not only will we have a bright new shiny world class smelter that is productive, efficient and environmentally friendly, but we will have secured the aluminium industry in British Columbia for many more decades to come”.$

Rio Tinto Alcan Kitimat, BC riotintoalcaninbc.com


PARTNER. PERFECT. TOGETHER, DUZ CHO AND LEDCOR ARE MEETING MINDS, MAKING MINES. The Duz Cho Ledcor relationship is a great example of how working together can create constructive results. We have a long standing partnership in the mining sector in Northeastern BC and are now taking those positive working experiences forward in pursuit of other ventures such as wind energy development. For more information, contact: Todd Sams, Manager, Business Development: todd.sams@ledcor.com Rodger McLean, Opportunity Development Manager: rodger.mclean@ledcor.com Jim Humphreys, General Manager: jhumphreys@dcclp.com

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The Global Commodities Report Q4  

Special Edition for the CAMA Conference

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