Chapter XII: “Complexity, Governance and Canada's Diamond Mines” – Patricia J Fitzpatrick (Waterloo)
Complexity, Governance and Canada's Diamond Mines
The discovery of indicator minerals in the Slave geological province in 1989 began a staking and development rush that, in a little over a decade, saw Canada becoming one of the world’s largest producer of diamonds. The impact of this development introduced a whole new dynamic into the northern political economy. Moreover, if the mineral industry wished to produce diamonds, it needed to operate within a completely different political and social environment than had traditionally been the case. Broken Hills Proprietary Diamonds Inc (BHP) owned the first operational diamond mine in Canada, and Diavik Diamond Mines Inc. (DDMI) owned the second mine. An examination of the development and operation of the DDMI project illustrates how institutions have been evolving to reflect the dynamic Northern power relations. Governance of the mining industry in the Northwest Territories is influenced by rapid diamond development, evolving environmental assessment (EA) processes, and Impact and Benefit Agreements — all of which have come about in a broader political economic era often referred to as a “new staples” economy. This era reflects increasing complexity whereby institutions must now respond to a diversity of forces and actors. The following discussion of institutions such as the West Kitikmeot Slave Society and the Environmental Monitoring Advisory Board reveals an emerging picture of a new political approach to northern staples-based economy. The new diamond projects are proceeding in a way that is qualitatively different from historical practices that govern resource development in Canada. The very existence of EA, which, in addition to economic factors, requires consideration of the biophysical and socio-economic impacts of a proposed development before regulatory approval, is a tangible illustration that Canada operates in a “new” staples economy. Given the complexity of this “new” economy, a different analytical framework is required; Berkes offers a useful approach for investigating the mandate, the constituency and associated representation, and activities of each institution all of which is operating within a complex biophysical and socio-economic environment. [1]
Mining, by definition, is a staples-based sector. Recognizing both the finite nature of mineral development, and the policy issues associated with a staples based economy, policy actors in the mining industry are adopting new innovative practices to address cumulative impacts of development, and mitigate negative structural economic issues that mark a staples-based economy. These innovations, including fly-in, fly-out operations with northern and Aboriginal hiring targets, requirements to undertake primary processing in the North, attempts to develop “value-added” economic activities, and adaptive management techniques all mark the development of a “new” staples economy. To respond to these changing dynamics, institutions governing mineral development are attempting to provide a strong foundation for balancing the social-ecological environment with political and economic realities. These institutions strengthen the capacity for balancing system components, including economic diversification, prior to the depletion of resource endowments and economic competition from lower cost staples regions.
The Northwest Territories Policy Community
Natural resource development is an important component of the economy of the NWT.[2] Although the modern economy of the NWT originally relied on the fur trade, the economic resource based has shifted to other forms of resource development. Non- renewable, staples resources, including mineral and oil and gas development, are one of the strongest economic-generating activities in the NWT. For example, in 2001, non-renewable resource development contributed $585 million, or 24 per cent, to the Territory’s GDP. In addition to these activities, renewable resources, including hydro power generation, tourism, agricultural and traditional economic activities play modest roles in the NWT wage economy.
Beyond resource development, the public sector has been an important employer for Territorial workers. Between 1999 and 2001, the public sector accounted for just over 25 per cent of the Territory’s GDP.[3]
Despite the role of the public sector in the NWT’s GDP, the continued (and growing) contribution of mining to overall wealth generation in the Territory offers evidence that staples, particularly mineral and oils and gas, remain an important component of the economy. As noted by the Department of Renewable Resources “[t]he economy of the Northwest Territories (NWT) is inextricably linked to mining.”[4] This trend shows little sign of changing, as recent mineral discoveries (diamonds), and oil and gas exploration have contributed to recent growth in GDP. “Non-renewable resources will continue to be the focus of economic activity in the Territory in the years to come. Diamond mining, the natural gas industry and mining exploration have already breathed new life into many communities bringing income and employment and providing revenues for governments.”[5]
The mineral policy community in the Northwest Territories (NWT) and Nunavut (NU)[6] reflects a unique set of constituents with diverse values and needs. These territories include roughly 37% of Canada’s landmass, encompassing a large ecological environment of taiga and tundra. In terms of population, however, the NWT and NU house less than 0.2 percent of Canada’s people. The residents of this region include numerous Aboriginal Cultures, including the Tlicho (formerly Dogrib Dene), the Yellowknives Dene First Nation, the Lutsel K’e Dene Band and Metis people In addition to the indigenous peoples, a number of other groups including the federal government (e.g. the Indian and Northern Affairs Canada, Environment Canada), territorial government, non-governmental organizations (e.g. the Canadian Arctic Resources Council, the NWT and NU Chamber of Mines), and specific project proponents serve as advocates for other northern interests, thereby resulting in an increasingly complex set of interactions between actors and institutions. An examination of these relationships leads to a very different dynamic than has historically been the case in the northern staples economy. Primary actors include Aboriginal organizations, the territorial government, non-government organizations, and mining proponents.
Aboriginal organizations
As discussed elsewhere[7], different Aboriginal communities share a unique relationship with the land and water. It is this relationship and the relatively high percent population of Aboriginal people in the Territories that merits particular consideration of the relative of power of these policy actors with respect to natural resource management. Since the early 1970s, legislation, treaties and legal challenges have served to clarify (and strengthen) the rights of Aboriginal people over the land and resources within their traditional territory.[8]
In terms of legislation, section 35 of the 1982 Canadian Constitution establishes that Aboriginal people have treaty rights, and therefore, access to resources.
35 (1) The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed.
Drawing on this section, the judicial system has been employed as recourse when Aboriginal rights are not respected. Recent decisions such as Sparrow[9] and Delgamukk[10] reaffirm relationship with the land; while infringement of these rights is possible on the basis of compelling and substantive legislative purposes, to do so, the crown must demonstrate “Aboriginal participation in resource development, consultation and in restricted circumstances, consent, and fair compensation.”[11] Given this judicial mandate, Aboriginal organizations have experienced and ever-increasing role in resource development.
Historic treaties, and modern day land claims settlements are designed to address the Aboriginal title to land areas. In the north, negotiations involve two categories of settlements. Comprehensive land claims agreement are negotiated where Aboriginal rights to the land have never been ceded;[12] in these agreements Aboriginal people give up their claim to their traditional land use and settlement areas in return for “legal title to selected lands, cash payment, rights to manage natural resources, hunting, fishing and trapping privileges, and the formation of economic development corporations.”[13] Specific land claims are negotiated in areas where treaties were previously negotiated, but the obligations under that treaty were not fulfilled.[14] Table 1 lists the settled specific and comprehensive claims for lands situated in the territorial north (including the Yukon, Northwest Territories and Nunavut).
Of particular interest to this discussion is how land claims agreements address natural resource management. As noted in Table 1, the early 1990s saw the settlement of four land claims agreements within the geographic boundaries of what was then the Northwest Territories. Each of these and subsequent agreements provide for a system of land, water, and environmental management inclusive of representation by delegates of the affected claims block. These management boards, comprised of tripartite membership (with federal, territorial, and Aboriginal appointments) have, in fact, strong aboriginal representation.[15] Despite structural shortcomings, (representatives are to serve as individuals, and not representatives of appointment organizations, the advisory nature of the boards, etc.), White believes that the boards represent introductory efforts at power-sharing and cross-cultural governance. [16]
The all but universally held view is that the claims boards do represent important instruments of Aboriginal influence over important land, environment and wildlife decision.
As such, affected Aboriginal organizations exercise increasing role in resource development on their traditional territory.
Beyond the management of natural resources, land claims agreements contribute to additional factors that influence development in the North. Initial cash settlements for the surrender of traditional lands can foster economic development.[17] Agreements provide provisions for revenue-sharing when wealth is generated on traditional lands, through sharing of royalties, and the negotiation of impact and benefit agreements between the proponent and the affected organization(s) (as discussed below). [18] These provisions increase the economic capacity of Aboriginal organizations to become engaged in secondary and tertiary industries associated with the development.
Despite these changes that ensure that Aboriginal organizations are no longer at the margins of resource management issues, a long list of issues of power and control remain unresolved in the North.[19] The steps briefly described above are important but insufficient remedies to issues regarding Aboriginal title, nationhood, access to and management of land and resources, issues that must be navigated in the near future. Furthermore, as noted by Poelzer, each Aboriginal Organization has its own context – each has a localized approach to, resources for, and capacity regarding specific environmental issues. [20] Multiple, different Aboriginal policy actors come to the negotiating table with their own particular agendas. Notwithstanding these cautionary notes, the reaffirmation of treaty rights, the progressive settlement of outstanding land claims, and changing dynamics related to how natural resources are addressed in these agreements have significantly increased the relative power of Aboriginal organizations over resources in their traditional territory. This power shift has influenced patterns of northern governance and, inevitably, its political economy.
Territorial Government
In order to understand the changing dynamics of the staples economy, it is worthwhile considering the changing dynamics in the northern governing institutions. Formal, institutional government in the Territories is complex. As noted by Dickerson, “[b]y definition, a territorial government is a government in transition.” [21] Clancy details the history of governance in the Northwest Territories, from the 1940, when the Territories “remained a federal colony, still awaiting representative and responsible government,” to the present. [22] Through that time, there has been a “steady devolution of financial and executive powers on to the NWT’s Assembly.”[23] To date, the Territorial government has acquired control over almost all powers of Provincial governments with two noted exceptions: full participation in Constitutional reform, and control of Crown and (and financial resources associated with the land).[24] Although there is a commitment by the federal government to further devolve to the powers to manage land and natural resources, this commitment remains outstanding.[25] This unresolved relationship between the federal and territorial governments affect the relative power of each level of government, and has the potential to affect the interaction of the two levels of government in issues concerning crown lands, including diamond development.
Beyond the Federal-Territorial rapport, 1990s saw the development and implementation of the Nunvut Final Agreement, with the creation of a distinct Nunavut Territory. As noted by the Canadian Institute for Resources Law, this division has “has tremendous implications for both federal and territorial responsibilities in the North.” [26] Clearly, the increasing role of Aboriginal people in natural resource management provided through the settlement of outstanding claims (as discussed above) affects the governance of these issues. Beyond this provision, however, negotiations surrounding the changing legal regimes and relationships required by the territorial division occurred during the course of early diamond development. As such, another layer of complexity influenced the development of Canada’s diamond mines.
Negotiations surrounding the roles and responsibilities of federal and territorial governance institutions marked the period of early diamond development in the North. These changing jurisdictions affect the relative power of each actor, and as such the dynamics between levels of governments.
Non-Governmental Organizations
A non-governmental organization (NGO) is a label assigned to multiple types of organizations whose sole comment attribute is that they are not government.[27] In the broadest sense, NGOs can include industry and business associations, interest groups, research/teaching organizations, labour unions, and media. For the purpose of this discussion we will focus on two categories: interest groups (specifically environmental NGOs) and business and industry organizations.
As with Aboriginal organizations, many environmental NGOs occupy a specific niche and use their own unique political approaches.[28] A number of environmental NGOs are active in environment management issues the Northwest Territories, including the Canadian Arctic Resources Council, Ecology North, the Canadian Nature Federation, World Wildlife Fund and the Canadian Parks and Wilderness Society.
It is difficult to evaluate the relative influence of environmental NGOs on resource management. On a macro scale, Wilson observes that “the movement has filed to bring about the kind of changes that most ecologists of the 1980s and 1990s agreed were required by the end of the millennium.” [29] While this is true, Harrison, among others, observes that environmental NGOs have played a role in shaping government environmental policy. [30] “The entire structure of federal and provincial laws governing the use of Canadian land, water, and air bears the strong imprint of environmental organizations.”[31] Furthermore, Greer-Wooten notes that NGOS are “widely regarded by industry opinion leaders as representing legitimate public interests, staffed by knowledgeable persons”, and are indeed providing a greater role in decision-making, particularly through positions on advisory boards. [32] Wilson however, suggests that environmental NGOs operate only in the peripheral zones of the environmental management communities. [33] These broad, and seemly contrary, assessments suggest that the relative power of environmental NGOs requires consideration on a case-by-case basis.
Beyond environmental NGOs, business and industry associations are also active in the northern policy community. Business and industry associations differ in mandate from environmental NGOs in that these NGOs represent industry/private sector interests. The NWT and NU Chamber of Mines, and the Yellowknife Chamber of Commerce are two associations who are active in northern resource management. Like environmental NGOs, however, the relative power of these policy actors requires consideration on a case-by-case basis.
Proponents
Proponents serve as the fourth category of policy actor involved in the mineral industry. Although linked with business and industry associations, in that proponents represent private sector interests, these policy actors are unique in that they have a financial interest in resource management, on a case-by-case basis. As such, it is important to consider the degree to which proponents have power in institutions that govern their investment.
The new diamond economy of the North, therefore, developed in a very different political and economic environment than the one traditionally associated with mining as discussed by McAllister in Chapter 11. At the turn of the 20th century, governments took an active role in promoting mining as a nation-building tool. They were not preoccupied with concerns related to maintaining biophysical integrity of valued ecosystems or the place of Aboriginal peoples at the decision-making table, or the effect of non-governmental organizations raising concerns about the impact of resource development. Moreover, they did not have their activities take place under the glare of international media attention. All these factors were in place as a new kind of staples economy was developing at the turn of the 21st century. Resource development necessitated the incorporation of a group of policy actors that had agendas, needs, and requirements qualitatively different from those of the traditional resource developers and producers. Governments needed to respond with a more flexible and inclusive regulatory approach.
A discussion of the DDMI project illustrates how the changing power dynamics of the key policy actors affects staples-based development. As noted above, the inclusion of an EA process necessitates consideration of development issues beyond economic return. As the second EA of a diamond mine in Canada, the comprehensive study of this project drew from existing institutions such as the West Kitikmeot Slave Society to contribute to the capacity of policy actors to participate in the EA. Activities in the assessment and regulatory process strengthened vertical linkages between institutions, and allow for increased input in the design and implementation of public participation, follow-up, and monitoring programs. As a result, industry found itself working within a different political and economic environment from which it was historically accustomed. To review these changes, discussion must first begin with the first diamond mine, the BHP NWT Diamonds Project.