CRITICAL ISSUE 13:

Local Procurement and Local Content Policies

The Issue

BAs can include sections that detail a community’s expectations around how benefits can be structured through local content or procurement requirements. Local content is the value that an extraction project brings to the local, regional or national economy beyond the resource revenues. Whereas local procurement refers to the purchase of goods and services from suppliers within the region(s) close to a company’s operations.

In BC, the LNG industry spends billions of dollars on goods and services. This purchasing power can be used to reinforce economic development for First Nations and support strong communities if it is spent with local suppliers.

Throughout the life-cycle of an LNG project, opportunities exist for First Nations to engage in providing a wide range of goods and services required such as: project design, financial management, site clearing, site design and engineering, employee housing and food services, traffic control and transportation, infrastructure development, first-aid, communications, bookkeeping, environmental monitoring and human resources management – (Vickers et al., 2021).

The First Nations’ Major Projects Coalition notes that the main benefits for First Nations governments taking advantage of contracting and procurement opportunities are the resulting jobs and income for community members, developing long-term capacity to participate in the economy and building the skills, capacity and experience for First Nation’s enterprises to service other clients over the long term (Vickers et al., 2021).

Although strong local content and local procurement clauses should deliver benefits to First Nations-owned and operated enterprises, there are a number of systemic barriers such companies face such as a lack of prior experience with complex bidding processes or procurement requirements (Gibson and O’Faircheallaigh, 2015, 164-166). Another systemic barrier is ensuring a skills capacity and training pipeline within First Nations’ communities that can service the areas of LNG operations whether they are specific to the parent company or subcontracted out.

BAs should be seen as a nested governance tool that should plug into integrated resource planning and long-term community and/or local policy-planning processes. Long-term community planning and monitoring is significant because resource-dependent economies are particularly sensitive to boom-bust cycles, which can dramatically affect the implementation of local content and local procurement clauses.

Abbreviations

AEM – Agnico Eagle Mines Limited

ASDF – Ahafo Sustainable Development Forum

AWBEN – Aboriginal Women’s Business Entrepreneurship Network

BA – Benefit Agreement BC British Columbia

BCFNDGI – BC First Nations Data Governance Initiative

BMZ German Federal Ministry for Economic Cooperation and Development

BNL – Barrick Niugini Limited

BSA – Benefit Sharing Agreement

CBA – Community Benefit Agreement

CDA – Community Development Agreement

CIRNAC – Crown-Indigenous Relations and Northern Affairs Canada

DIO – Designated Inuit Organizations

EIA – Environmental Impact Assessment

EMB – Environmental Management Board

EWB-MSV – Engineers Without Borders Canada - Mining Shared Value Initiative

FNFTA – First Nations Financial Transparency Act

FNLNGA – First Nations Liquefied Natural Gas Alliance

FNNBOA – First Nations National Building Officer’s Association

FPIC – Free, Prior and Informed Consent

GIZ – German Development Agency

HIA – Health Impact Assessment

IA – Impact Assessment

IBA – Impact Benefit Agreement

ICMM – International Council on Mining and Metals

IFC – International Finance Corporation

IFI – International Financial Institution

IIBA – Innuit Impact Benefit Agreement

INAC – Indigenous and Northern Affairs Canada

IOL – Inuit-Owned Lands

ISC – Indigenous Services Canada

KitIA – Kitikmeot Inuit Association

KivIA – Kivalliq Inuit Association

KLC – Kimberley Land Council

LIA – Labrador Innuit Association

LLG – Local Level Government

LNG – Liquefied Natural Gas

M&E – Monitoring and Evaluation

NADeF – Newmont Ahafo Development Foundation

NLC – Northern Land Council

NLCA – Nunavut Land Claims Agreement

NTI – Nunavut Tunngavik Incorporated

OSR – Own-Source Revenue

PJV – Porgera Joint Venture

PSAB – Procurement Strategy for Aboriginal Business

QIA – Qikiqtani Inuit Association

SEMC – Socio-Economic Monitoring Committee

SML – Special Mining Lease

TCS – Tax Credit Scheme

UNDRIP – United Nations Declaration on the Rights of Indigenous Peoples

Key Terms

Benefit Agreements

In this guide, the term Benefit Agreement (BA) is used as an umbrella term for agreements that vary in scope, scale, sector and types of parties to the agreement.

Depending on the emphasis, there are over 25 terms that are used to refer to the concept of benefit agreements (See Box 1). Within the literature the concept of benefit agreements (BAs) is varied and tends to be defined as a governance arrangement or as a mechanism for being a ‘good’ corporate citizen and securing a social licence to operate (Sarkar et al., 2010). Woodward & Co. and the Nanwakolas Council (2009) propose a definition that is more centred on the perspective of Indigenous Peoples:

Benefit agreements describe a written agreement that is the outcome of a consultation process about a proposed resource extraction, project or development that has the potential to impact the Aboriginal rights or interests of one or more Aboriginal groups in Canada.

Box 1: Benefit Agreements Lexicon

Accommodation Agreements

Benefits Sharing Agreements

Community Contracts

Community Development Agreements

Community Development Initiatives

Community Joint Venture Agreements

Cooperation Agreements

Development Agreements

Empowerment Agreements

Exploration Agreements

Impact Benefit Agreements

Indigenous Land Use Agreements

Interim Measures Agreements

Investment Agreements

Landowner Agreements

Market Access Agreements

Participation or Partnership Agreements

Project Support agreements

Shared Responsibilities Agreement

Social Responsibility Agreements

Social Trust Funds

Socio-economic Monitoring Agreements

Standard-setting or Certification Agreements

Indigenous

The term Indigenous is a broad term that captures First Nations, Métis and Inuit communities. It is often used now to replace Aboriginal, which is also a broad term that has been historically used to denote First Nations, Métis and Inuit, and is legally defined in section 35(2) of the Constitution Act, 1982 as follows: “In this Act, the ‘Aboriginal peoples of Canada’ includes the Indian, Inuit and Metis peoples of Canada”. The term “Indian” is a statutory term legally defined in the federal Indian Act.

For the purpose of this guide, the term Indigenous is used interchangeably with the term First Nation(s) and does not refer to Inuit or Métis. If the terms Aboriginal or Indian are used, they apply to specific policies, legislation or organizations, direct quotes from a study or publication, or the term used in a given country context.

Government /State

Reflecting language- in-use by Indigenous Peoples, the guide uses the words government and the state interchangeably. In other communities of practice and disciplines, the term “state” is understood as an organisation or political community with a defined territorial jurisdiction, with specific administrative, legislative and legal bureaucracies through which the state’s power is exercised, where as the “government ” is composed of individuals who control the state apparatus and employ the power of the state at a given time.

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