The Dominion - diamonds

What if Natives Stop Subsidizing Canada?

Tim McSorley — Tue, 08 Jan 2013 17:01:13 +0000

This piece was originally posted on the Media Co-op. For more #IdleNoMore coverage, click here.

MONTREAL—There is a prevailing myth that Canada's more than 600 First Nations and native communities live off of money—subsidies—from the Canadian government. This myth, though it is loudly proclaimed and widely believed, is remarkable for its boldness; widely accessible, verifiable facts show that the opposite is true.

Indigenous people have been subsidizing Canada for a very long time.

Conservatives have leaked documents in an attempt to discredit chief Theresa Spence, currently on hunger strike in Ottawa. Reporters like Jeffrey Simpson and Christie Blatchford have ridiculed the demands of native leaders and the protest movement Idle No More. Their ridicule rests on this foundational untruth: that it is hard-earned tax dollars of Canadians that pays for housing, schools and health services in First Nations. The myth carries a host of racist assumptions on its back. It enables prominent voices like Simpson and Blatchford to liken protesters' demands to "living in a dream palace" or "horse manure," respectively.

It's true that Canada's federal government controls large portions of the cash flow First Nations depend on. Much of the money used by First Nations to provide services does come from the federal budget. But the accuracy of the myth ends there.

On the whole, the money that First Nations receive is a small fraction of the value of the resources, and the government revenue that comes out of their territories. Let's look a few examples.

Barriere Lake

The Algonquins of Barriere Lake have a traditional territory that spans 10,000 square kilometres. For thousands of years, they have made continuous use of the land. They have never signed a treaty giving up their rights to the land. An estimated $100 million per year in revenues are extracted every year from their territory in the form of logging, hydroelectric dams, and recreational hunting and fishing.

And yet the community lives in third-world conditions. A diesel generator provides power, few jobs are available, and families live in dilapidated bungalows. These are not the lifestyles of a community with a $100 million economy in its back yard. In some cases, governments are willing to spend lavishly. They spared no expense, for example, sending 50 fully-equipped riot police from Montreal to break up a peaceful road blockade with tear gas and physical coercion.

Barriere Lake is subsidizing the logging industry, Canada, and Quebec.

The community isn't asking for the subsidies to stop, just for some jobs and a say in how their traditional territories are used. They've been fighting for these demands for decades.

Attawapiskat

Attawapiskat has been in the news because their ongoing housing crisis came to the attention of the media in 2011 (MP Charlie Angus referred to the poverty-stricken community as "Haiti at 40 below"). More recently, Chief Theresa Spence has made headlines for her ongoing hunger strike. The community is near James Bay, in Ontario's far north.

Right now, DeBeers is constructing a $1 billion mine on the traditional territory of the Āhtawāpiskatowi ininiwak. Anticipated revenues will top $6.7 billion. Currently, the Conservative government is subjecting the budget of the Cree to extensive scrutiny. But the total amount transferred to the First Nation since 2006—$90 million—is a little more than one percent of the anticipated mine revenues. As a percentage, that's a little over half of Harper's cut to GST.

Royalties from the mine do not go to the First Nation, but straight to the provincial government. The community has received some temporary jobs in the mine, and future generations will have to deal with the consequences of a giant open pit mine in their back yard.

Attawapiskat is subsidizing DeBeers, Canada and Ontario.

Lubicon

The Lubicon Cree, who never signed a treaty ceding their land rights, have waged a decades-long campaign for land rights. During this time, over $14 billion in oil and gas has been removed from their traditional territory. During the same period, the community has gone without running water, endured divisive attacks from the government, and suffered the environmental consequences of unchecked extraction.

Sour gas flaring next to the community resulted in an epidemic of health problems, and stillborn babies. Moose and other animals fled the area, rendering the community's previously self-sufficient lifestyle untenable overnight. In 2011, an oil pipeline burst, spilling 4.5 million litres of oil onto Lubicon territory. The Lubicon remain without a treaty, and the extraction continues.

The Lubicon Cree are subsidizing the oil and gas sector, Alberta and Canada.

What will Canada do without its subsidies?

From the days of beaver trapping to today's aspirations of becoming an energy superpower, Canada's economy has always been based on natural resources. With 90% of its settler population amassed along the southern border, exploitation of the land's wealth almost always happens at the expense of the Indigenous population.

Canada's economy could not have been build without massive subsidies: of land, resource wealth, and the incalculable cost of generations of suffering.

Overall numbers are difficult to pin down, but consider the following: Canadian governments received $9 billion in taxes and royalties in 2011 from mining companies, which is a tiny portion of overall mining profits; $3.8 billion came from exports of hydroelectricity alone in 2008, and 60 per cent of Canada's electricity comes from hydroelectric dams; one estimate has tar sands extraction bringing in $1.2 trillion in royalties over 35 years; the forestry industry was worth $38.2 billion in 2006, and contributes billions in royalties and taxes.

By contrast, annual government spending on First Nations is $5.36 billion, which comes to about $7,200 per person. By contrast, per capita government spending in Ottawa is around $14,900. By any reasonable measure, it's clear that First Nations are the ones subsidizing Canada. (2005 figures; the amount is slightly higher today.)

These industries are mostly take place on an Indigenous nation's traditional territory, laying waste to the land in the process, submerging, denuding, polluting and removing. The human costs are far greater; brutal tactics aimed at erasing native peoples' identity and connection with the land have created human tragedies several generations deep and a legacy of fierce and principled resistance that continues today.

Canada has developed myriad mechanisms to keep the pressure on and the resources flowing. But policies of large-scale land theft and subordination of peoples are not disposed to half measures. From the active violence of residential schools to the targetted neglect of underfunded reserve schools, from RCMP and armed forces rifles to provincial police tear gas canisters, the extraction of these subsidies has always been treated like a game of Risk, but with real consequences.

Break the treaty, press the advantage, and don't let a weaker player rebuild.

Idle? Know More.

The last residential school was shut down in 1996. Canadians today would like to imagine themselves more humane than past generations, but few can name the Indigenous nations of this land or the treaties that allow Canada and Canadians to exist.

Understanding the subsidies native people give to Canada is just the beginning. Equally crucial is understanding the mechanisms by which the government forces native people to choose every day between living conditions out of a World Vision advertisement and hopelessness on one hand, and the pollution and social problems of short-term resource exploitation projects on the other.

Empathy and remorse are great reasons to act to dismantle this ugly system of expropriation. But an even better reason is that Indigenous nations present the best and only partners in taking care of our environment. Protecting our rivers, lakes, forests and oceans is best done by people with a multi-millenial relationship with the land.

As the people who live downstream and downwind, and who have an ongoing relationship to the land, Cree, Dene, Anishnabe, Inuit, Ojibway and other nations are among the best placed and most motivated to slow down and stop the industrial gigaprojects that are threatening all of our lives.

Movements like Idle No More give a population asleep at the wheel the chance to wake up and hear what native communities have been saying for hundreds of years: it's time to withdraw our consent from this dead end regime, and chart a new course.

Dru Oja Jay is a writer, organizer, Media Co-op co-founder. Co-author of Paved with Good Intentions and Offsetting Resistance.

Barriere Lake Protest

DeBeers Victor Mine

Plan Nord Under the Microscope

dawn — Mon, 09 Jan 2012 09:48:35 +0000

Public involvement in diamond venture ends once gems are found

MONTREAL—Since the mid 1990s, every man, woman and child living in Quebec has donated the equivalent of $20 towards exploration costs for the province's first diamond mine project. But when a mine was finally discovered and the promised rewards for years of the province's investment began to be realized, the Quebec government sold the project to a private company. Not only that, but Quebeckers can expect to shell out even more as the now privately owned mine moves towards production.

According to documents obtained by The Dominion, all that’s left for the public after they invested over $157 million in the Renard Diamond Project is a 37 per cent stake in a private company, and token public representation on the company’s board of directors.

The diamond mine is today being hailed as a model operation by the Quebec government. But a deeper look into what this model would mean for Quebeckers casts a long shadow over the government’s economic policies.

For the last seven years, the sun has been shining over Quebec’s mining sector. Between 2009 and 2010, total mining investments in Quebec increased by almost 43 per cent, totaling $2.9 billion. Over the past six months, things have gotten so hot that the skin has started to peel off the hands of boardroom executives, geologists and international investors. The key moment came in May 2011 when Quebec Premier Jean Charest announced his now-famous legacy project, the Plan Nord.

The good times in the mining industry could last for the next 25 years, if Charest is to have his way. “The Plan Nord will lead to over $80 billion in investments... and create or consolidate, on average, 20,000 jobs a year,” reads the Plan Nord website. The idea behind the plan is to "stimulate" the energy, mineral resources, forest and wildlife sectors, as well as those of tourism and "bio-food" production.

The Renard Diamond Project is one of 11 mega-mining projects proposed as part of the Plan Nord. Unlike most of the other mining projects, the $675 million Renard project is the only mine venture whose development involved a serious public partnership approach—the rest of the projects are private sector initiatives.

The Renard Diamond Project got its start in 1996 in the Nord-du-Quebec region, about 600 kilometres north of the great Lac-St-Jean, as a 50-50 joint-venture between Diaquem—a wholly-owned subsidiary of crown corporation Quebec Society for Mining Exploration (SOQUEM)—and Ashton Mining of Canada Inc—a wholly-owned subsidiary of Rio Tinto plc.

Founded in 1965, SOQUEM is a holdover from the “maitres chez nous” (masters in our own house) economic doctrine which saw the creation of many Quebec-owned corporations. At one point, SOQUEM was an exploration powerhouse, employing more than 1,500 people and at the forefront of geologic mapping.

After 45 years in the business, SOQUEM’s mandate has shrunk to supporting specific projects only. In the first quarter of 2011, SOQUEM—now a 50-employee entity—was swallowed up by the mammoth Investissement Quebec (IQ), the Quebec government's investment arm.

Fifteen years down the risky road of exploration, the Renard Diamond Project promoters discovered a field of kimberlite intrusions—volcanic rock known to contain diamonds—with a mineral reserve of 18 million carats. Exploration risks stem from the fact that anomalistic (diamond containing) geological formations are hard to find, and expensive to analyze.

Ashton Mining was bought out and the Renard Project is now under the Stornoway Diamond Corporation flag. “Excluding potential deposits, we evaluate the life duration of the project at at least 25 years,” Ghislain Poirier, Vice President Public Affairs at Stornoway told a local newspaper last winter. The plan for the mine includes two 100-meter-deep open pit mines, one 600-meter-deep open pit mine and several underground mines. The Renard mine would be Quebec’s first diamond mine.

Stornoway released its conclusive feasibility study in November 2011. According to the company, the mine will begin commercial production by 2016. Mine permits, community hearings and negotiations with the Cree Nation and other local communities have yet to be completed.

Public money for a private mine

Beyond the celebratory press releases, the course of events in the boardrooms and corporate headquarters linked to the deal has been anything but usual. In December 2010, a sudden and unexpected transaction occurred. Just as the public finally stood to make a return on the $57 million it invested in exploration, IQ sold its stake in the Renard project to Stornoway.

The transaction left IQ with a minority share of Stornoway, and a meager two per cent revenue royalty on net smelter returns on future production. Three senior IQ administrators joined Stornoway’s 11-member board. IQ also agreed to provide Stornoway with an additional $100 million to fund mine construction.

“They're just being nice to the company,” said MiningWatch Canada’s Jamie Kneen.

IQ spokesperson Chantal Corbeil refused to comment on the rationale behind this divestment.

“They are not allowed to reveal what's being discussed on the board, not even to Cabinet,” said Kneen of the three IQ board members now serving Stornoway. “The public is not represented in this mining project,” he said.

Before the Renard mines produce a single diamond, the people of Quebec have already spent $157 million, and been left without representation that will guarantee a return on their investments in the actual mine development. But according to IQ’s Corbeil, the good news is that IQ owns 37 per cent of Stornoway, and if the company is successful, the government will cash in royalties and taxes. Royalties of two per cent on net returns amount to very little. Had the royalty been applied to both net returns and extracted value, it could have amounted to a more significant sum.

Without diving too deep into economic detail, it's worth noting that 100 per cent of exploration costs are tax deductible in Quebec, and a significant portion of them are reimbursable. In other words, beyond the $157 million already committed, additional fiscal incentives are handed to Stornoway through tax credits and exploration reimbursements.

Diamonds will come out of the ground at the Renard mine site until the company signs an agreement with the Cree of the Otish region. Stornoway is currently negotiating an Impact and Benefits Agreement (IBA) with the Cree Nation of Mistissini and the Grand Council of the Crees.

“The Cree Nation has adopted a mining policy,” said Cree negotiator Abel Bosum. “This policy makes clear what our conditions are for supporting a mining project on Cree land. It also sets out who needs to be part of negotiations to make a mining project work: The Cree Nation, the local Cree community and/or the Cree users of the land.”

In addition, Route 167 will need to be extended 243 kilometers, from the town of Mistissini to the Otish Mountains. Finally, a 165-kilometre Hydro-Quebec transmission line will also have to be built, connecting the Nikamo sub-station to the future Renard sub-station.

Premier Charest has already made an infrastructure announcement through which Plan Nord is to pump $287.6 million into Route 167. Stornoway is expected to put $44 million into the pavement effort.

Proponents of this infrastructure spending argue that these expenses will also benefit a conservation megaproject, carried out by the Ministry of Sustainable Development, Environment and Parks (MDDEP) in collaboration with the Mistissini Cree Nation, which plans to establish the 11,000 square kilometre Albanel-Temiscamie-Otish National Park, at the end of Route 167.

This major northern infrastructure spending bumps public expenditures to $444.6 million.

Figures for the cost of setting the electricity line to power the Renard project are not yet public, as Hydro-Quebec is still in the process of completing its pre-project study. Details of preferential electricity rates—a standard Hydro-Quebec practice—are not available yet either. It is expected, as announced in the Plan Nord, that Hydro-Quebec will pay the bill. The exact corridor and final design of the 165-kilometre line, should be ready by the fall of 2012, as confirmed on the phone by Richard Simard, manager of community relations at Hydro-Quebec.

“I can't tell you the cost, I don't have the cost,” the Hydro-Quebec manager told The Dominion, when pressed for an estimate of total expenditures. “But one thing's for sure,” Simard said.

“As far as I can remember, this is the first time that we build such a long line.”

Old Rules for a New Game

The Renard mine site is just one project encompassed by the ambitious Plan Nord, which covers a territory of 1.2 million square kilometers, encompassing crown, Cree, Innu, Inuit and Naskapi lands.

“The Cree support the Plan Nord for now,” said Abel Bosum. But even the largest official Cree organization is not giving the government a blank check on Plan Nord.

“We support it, [on] the condition that we can conclude a reasonable and fair settlement on governance issues, that the Cree vision of the Plan Nord in different sectors—even beyond mining—be taken into account and that we participate in its planning and development in the respect of the Cree way of life,” Bosum told The Dominion by phone. Bosum invoked section 22 of the James Bay and Northern Quebec Agreement to underline the fact that his nation, like other northern First Nations, has the right to a review process on major projects, and expects proper consultation.

The scope of Plan Nord and its potential impacts on rural and Indigenous communities is mind-boggling, as is the money to be made: its release is timed with growing demand and higher prices for precious metals. What may come as a surprise, however, is that the laws and regulations that will guide mining activities under Plan Nord are more than 140 years old.

The Mining Act of Quebec, first minted in 1880—and almost untouched since—prioritizes mining activity over other types of land use.

“The law is wrong because it has priority over many other laws on land development,” said Ugo Lapointe of the Coalition for Better Mining in Quebec. “What we denounce are the great powers that are given to mining corporations, compared to the power of municipalities, First Nations and citizens."

Quebec’s mining law is currently under review. A new Quebec-wide standard known as Bill 14 is about to be adopted though it satisfies neither opposition parties nor civil society groups.

If the rules of the game seem old fashioned, consider the royalty regime. The government recently increased the royalty rate from 12 per cent to 16 per cent of net profit on a mine-by-mine basis: an improvement, it may seem, but only on the surface, since net profits are lowered with accounting tricks, as the Auditor General of Quebec revealed in 2009.

Building an economic strategy as big as Plan Nord around antiquated rules of the game has led some to speculate that the Quebec government is stuck in a colonial model of development.

“Mining in 2011 continues to be a colonial development, like in 1870,” said Martine Ouellet, Parti Quebecois spokesperson and Official Opposition critic on mining and shale gas. “It's pitiful to watch the Liberal Party [of Quebec] perpetuate this colonial development to the advantage of foreign multinationals, instead of to the benefit of the Quebecois.”

The mass transfer of funds from public to private hands isn’t unique to the Renard Diamond Project. Plan Nord's first action, which covers the years from 2011 to 2016, proposes making $2.1 billion in investments. Of the total, $500 million will be taken from the pockets of IQ and dumped into private sector projects.

The next months will reveal how much more money will be pumped into the Renard Diamond Project, further calling into question the economic strategies behind Plan Nord.

Frederic Dubois is a reporter and interactive documentary maker. Questions? Comments? Drop us a line: info@mediacoop.ca.

Renard Project

Renard Project Map