Mining Economies, Mining Families: Extractive Industries and Human Development in the Eastern Subarctic. Stephan Schott Anteneh Belayneh RESDA 2015

Transcription

1 Mining Economies, Mining Families: Extractive Industries and Human Development in the Eastern Subarctic Stephan Schott Anteneh Belayneh RESDA 2015

2 Research Team and Partners Funded by Arctic Net and the Nunatsiavut Government, researchers: Stephan Schott, School of Public Policy and Administration, Carleton University Thierry Rodon, Northern Sustainable Development Research Chair and Department of Political Science, Laval University Ben Bradshaw, Department of Geography, University of Guelph Jean-Sébastien Boutet, Nunatsiavut Government Harry Borlase, Director, Non-renewable Resources Division, Nunatsiavut Government Jean-Marc Séguin, Mining Coordinator, Makivik Corporation Research Assistants Anteneh Belayneh Katelyn Laurence Lefevbre

3 Outline Motivation of project Research Objectives Expected deliverables Impacts of Mining on Local communities in Literature Voisey s Bay mine Research Methods

4 Motivation of project Twofold: academic interest and initiated by regional authorities (Nunatsiavut Government, Makivik Corporation) 1. Academic interest The role of extractive industries in development outcomes is an unsettled and somewhat contested question (Bebbington et al., 2008; Graulau, 2008) Most of the available evidence is based on regional or national studies in the developing south Development models inadequate for capturing the complexity of intra-community and intra-household dynamics (Hinojosa, 2013) Unique geographic specificity of Arctic and subarctic economies affected by non-renewable resource activities

5 Motivation of Project Case studies highlight impacts and activities at particular locations or by different companies, but comparative or evaluative research about community development (CD), either by region, commodity, country, or otherwise is rare (Kemp, 2009). Lack of research about local-level practice in mining reflects the general trend that business and development remains profoundly under-researched (Kemp, 2009). Full scale of economic impacts linked to extractive industries poorly documented Debate surrounding the role of northern mining in economic and social development remains very much unresolved

6 Motivation of the Project 2. Regulatory and Economic Development Interest To assess the role of mining activities in business development To understand the revenue flow cycles and regional leakage To understand the contributions to the finance of subsistence harvesting To assess the realization of IBAs and draw lessons for future negotiations

7 Research objectives To establish a mining impact evaluation method, adapted to the north, that serves to appraise the local economic benefits to businesses resulting from the operating mines in Nunatsiavut and Nunavik Model the dynamics of household and business economies linked to the Voisey s Bay and Raglan mines Investigate the dynamics between the land-based and mining-based economies in Nunatsiavut and Nunavik Compare experiences and policies in mining between communities in both Nunavik and Nunatsiavut Determine the direct, indirect and induced impacts of mining activities on local communities

8 Methodology Three year project Conduct focus groups and surveys with businesses Undertake a comprehensive literature review regarding the impact of mining on community and business development and compare it to experiences in Nunavik and Nunatsiavut Map links between businesses, households and mining companies Conduct focus groups and surveys with households

9 Expected Deliverables Qualitative and quantitative analysis of household and business surveys Suggestions to improve the Inuit workers and businesses participation in mining activities Recommendation on how to capture local benefits derived from such developments Provide a predictive tool for assessing the potential economic impacts of future industrial projects Future considerations for IBA negotiations Mining policy for Nunatsiavut Recommendations to improve local business involvement to fully capitalize on mining opportunities

10 Literature on Economic Impacts - Fiscal revenue windfall Positive Impacts Negative Impacts Increase in budgets of local communities Increase in public spending Improved infrastructure Increased provision of public good Dependent on responsiveness of politicians to local populace Could lead to corruption Migration to major centres Fly-in, fly-out migration

11 Literature on Economic Impacts Positive Demand Shock Increase in nominal wages, participation rate, hours worked and employment rate May increase real wages and real income depending on labour mobility and housing supply May be positive spillovers to other industries Migration of workers and increase in the price of nontradable goods such as housing (Aragon et al., 2014)

12 Documented Economic Impacts of Mining Increased Employment, Improved wages, Increased tax revenue, Infrastructure development (Ejdemo, 2013; Goldcorp, 2015) Higher level of indirect and induced impacts at the regional level compared to the local level (Ejdemo, 2013) Competition for labor between other industries or activities Increased inequality as the incomes in the mining sector increase relative to the incomes in other sectors (Rolfe et al., 2011) Flow-on effects such as an increase in housing prices Real Estate Institute of Western Australia reported a 11.9% annual increase in housing prices as a result of approximately 1000 new arrivals per week in Perth, Australia in 2013 (REIWA,2013) Infrastructure improvements serve the exclusive interest of extractive industry and not any other local interests (Fessehaie and Morris, 2013) Potential specialization in mining sector at expense of other sectors (Aragon et al., 2014)

13 Obstacles to mining induced development For Mining Companies Confidence in local suppliers Lack of incentives to buy locally or use local suppliers Long standing relationships with offshore suppliers Lack of understanding of the diversity of indigenous groups and their differing views on what constitutes economic development (Dockery, 2014). For Local Businesses Limited access to finance Limited understanding of international demand Differing standards and expectations Cultural differences in lifestyle, corporate culture and communication (Dockery, 2014)

14 Voisey s Bay Mine Nickel was discovered around Voisey s Bay in 1993 Agreement signed between Stakeholders Inco Ltd (Now Vale) Federal government Provincial government The Innu nation The Labrador Inuit association (Nunatsiavut Government)

15 Expectations from Mining Development in Voisey s Bay During the negotiations, Inco was understandably most interested in recouping its investment and maximizing its financial returns (Gibson, 2006). For the provincial government a key issue was to have the ore processed in Newfoundland and Labrador so more of the valueadded benefits of resource exploitation would be retained in the province and other longer term spinoffs might be captured (Gibson, 2006). For the people of northern Labrador, the fundamental acceptability of the undertaking was a deeply divisive issue but certainly, any possible acceptance would rest on confidence of there being lasting gains from extractive use of traditional Inuit and Innu lands (Gibson, 2006).

16 Research methods Focus Groups Focus groups with business leaders/entrepreneurs from various communities Kuujjuaq Salluit Kangiqsujuaq Nain Rigolet Makkovik Goose Bay Help design a business survey to be implemented in all four communities Compare what is in literature with actual experiences of businesses New insights for academic literature and for business relations

17 Focus Group questions 1. What are the economic effects of the Voisey s Bay mine? Have the operations been beneficial to businesses and the community?

18 Focus Group Questions - continued 2. Can you talk about your company s current and past involvement with the Voisey s Bay mine? What portion of your business activity can be attributed directly to the Voisey s Bay mine? What portion of your business activity can be attributed indirectly to the Voisey s Bay mine? What options do businesses have if they do not have the capacity or size to supply equipment to the mining companies? How has your business been affected as the mine transitioned from the construction to the operation phase?

19 Focus Group questions - continued 3. What has been the effect of the Voisey s Bay mine for your business? Has the number of employees changed? Have you changed any physical features of your business? Is it easier or harder to recruit and/or retain qualified personnel? Is there a shortage of qualified personnel due to mining operations? Is there increased competition for labour due to the presence of mining operations? Has access to qualified personnel changed at any stage of mining development (construction vs operations phase)?

20 Group Discussions Group discussion by all businesses: experiences and business relationships with major mining companies in the respective regions, lessons learnt, best practices, challenges and how to address them in the future Groups will be separated for focus groups but will have an opportunity to share their experiences not just with us but with each other