• What are Impact and Benefit Agreements (IBAs)?

    Back to Q&A List

    An Impact and Benefit Agreement (IBA) is a formal contract outlining the impacts of the project, the commitment and responsibilities of both parties, and how the associated Aboriginal community will share in benefits of the operation through employment and economic development.

    What are Impact and Benefit Agreements (IBAs)?

    An Impact and Benefit Agreement (IBA) is a formal contract outlining the impacts of the project, the commitment and responsibilities of both parties, and how the associated Aboriginal community will share in benefits of the operation through employment and economic development. Mining companies negotiate impact and benefit agreements (IBA) in order to secure access to minerals on or near land claimed by Aboriginal communities through potential or established aboriginal or treaty rights.

    Overview of Impact and Benefit Agreements

    In Canada’s mining sector, impact and benefit agreements (IBAs) are an essential part of corporate-Aboriginal relations. They are often a final, legally binding agreement that stems from an initial memorandum of understanding and are developed through consultation and negotiation between the miner, Chief and Council of the band and their respective attorneys. They may also be referred to as participation agreements or benefit plans.

    An IBA outlines any negative effects that may occur as a result of commercial mining activities, and the steps to be taken by both parties to ensure those impacts are mitigated. Moreover, they help to formalize how local residents and Aboriginal communities will share in the benefits of mining projects. [1, 2] As of 2012, Natural Resources Canada listed more than 180 agreements with Aboriginal peoples at various stages of the mining lifecycle.

    Legal Duty or Good Business?

    While there is no law that requires IBAs in every case, the Supreme Court of Canada has affirmed there is a duty to consult with Aboriginals who may be affected by projects occurring on or near their traditional land. Although the duty to consult is the responsibility of the Crown, mining companies may find that it is in their best interest to work with Aboriginal groups and ensure adequate consultation and accommodation.

    Explicitly legislated requirements for IBAs are found in only two specific cases: the Nunavut Land Claims Agreements – concerning all of Nunavut – and the Inuvialuit Final Agreement which concerns the northern coast of the Northwest Territories. While these agreements concern specific parcels of land, “the negotiation of IBAs is now considered to be a de facto, albeit unwritten, regulatory requirement in the North.”[2] Though legally binding, there has been no litigation on IBAs to date. [3].

    The Emergence of IBAs

    Although not legally required, IBAs have evolved in part to reduce uncertainty and potential delays in developing mining projects. Companies are seeking to solidify support for the projects, while Aboriginal groups seek community support, recognition, respect, and various economic and social advantages such as employment, investment, and funding among other things. IBAs can help both parties achieve these goals. [3, 4]

    While Aboriginal groups do not have a veto, their support or opposition can significantly affect the rate at which a project is approved. Accordingly, it is often in the best interest of mining companies to ensure that community members agree with any project – a process that is typically done through an IBA.

    To some degree, IBAs reflect fiduciary obligations inherent in consultation practices, and are emblematic of what can be produced through adequate talks. [5] Vital to these negotiations is a frank discussion addressing the adverse effects development of an area will entail. These may include:

    • disruption of animal migration, game trails, trap lines and fishing areas;
    • increased local population and economic competition;
    • interruption of traditional economies;
    • possible health impacts;
    • additional infrastructure necessary to mine (eg. roads, buildings etc.)

    In facilitating mutual agreement and understanding about how these effects can be handled, an IBA can grant a developer comprehensive access to a specified region and its resources; or build support in exchange for the provision of social and economic benefits to a local Aboriginal community. [3, 6] Many of these community and environmental issues are also addressed through Environmental Impact Assessments that are required prior to mine approval. Sandra Gogal, the Miller-Thompson partner specializing in Aboriginal consultation in the mining sector, notes, “IBAs often include mitigation or remedial measures over and above those commitments made during the environmental assessment process.”[5]

    Common components of Impact and Benefit Agreements

    When entering negotiations, three factors are considered: Objectives, circumstances and development opportunities. Objectives are typically the same across all projects: Companies want support for the project itself, while Aboriginal groups desire community support and recognition. Of course, the circumstances of each IBA – how the factors of the project and the land in question influence negotiations – vary from case to case. Development opportunities are usually tailored to the specific circumstances of the community. The mining company may need to build or resurface the only road into town, construct better health and education facilities or improve access to utilities such as electricity.

    Although IBAs necessarily vary from case to case, they tend to include similar conditions. These include:

    • Labour provisions: Aboriginal peoples may be preferentially hired, fulfilling an agreed upon number of Aboriginal employees; training for these jobs could also be provided through local classes and apprenticeships or with scholarships and bursaries
    • Economic development provisions: Recognition and support of relevant local Aboriginal businesses through preferential contracting, as long as said business is cost competitive, efficient and timely; possible partnerships with Aboriginal businesses to structure joint initiatives; the creation of a registry of Aboriginal businesses to update the company and monitor Aboriginal content to meet preference requirements
    • Community provisions: Support and affirmation of Aboriginal rights and historic/cultural connection to land; funding for youth, social programs, community projects and physical infrastructure; facilitation of on-going communication between parties through establishment of committee meetings
    • Environmental provisions: Establishment of environmental planning and monitoring committees; reclamation commitments; efforts to minimize activity in culturally sacred areas; recognition that the company will not apply for more permits after IBA negotiation has finished
    • Financial provisions: Monetary compensation arrangements; fixed or variable cash payouts; funding agreements with an established monitoring committee
    • Commercial provisions: project certainty through acknowledgement of adequate consultation; dispute resolution and enforcement clauses if either party were to break the contract; and confidentiality.

    Beyond the benefits and terms agreed upon by the negotiating parties, IBAs have an inherently beneficial capacity building  element to them as well. The decision-making opportunity gives locals more control and input into natural resource management. Communities can take pride in their ability to negotiate and manage IBAs independently, as well as the economic autonomy mining development can bring.

    Limitations, drawbacks, and areas for further research

    Despite their benefits, there are also limitations to IBAs. First, the confidentiality clauses normally built into IBAs limit their transparency. Although confidentiality is done to protect sensitive financial information, it limits the ability of different Aboriginal groups to share information and learn from the experience of others. It also makes it more difficult to independently evaluate IBAs and their outcomes for communities. Evaluation now and into the future is no easy task and the development of these and other agreements is still emerging.

    Another issue linked to the confidentiality of IBAs is referred to as a “distributional” issue. [3, 7] In some cases, the benefits gained by these agreements may be distributed unequally across the community, with the majority remaining in the hands of those in charge. This issue could be the result of community governance structures or local class divisions.

    The Public Policy Forum argues that in light of this and other issues, the public sector should be more involved to clarify concerns about the environment and community spending.[8] However, this must also be balanced with the desire of Aboriginal communities to autonomously make decisions and enter into agreements on resource management within their territories. Aboriginal involvement is integral both to acquire provisions addressing community concerns, and to exemplify a level of autonomy over decisions on their land.

    Another important consideration is whether or not components of agreements are realistic. [3, 7] Employment targets mean little if the community does not have the ability to provide appropriate training. In response to these limitations, the standard for establishing IBAs is evolving to include more Aboriginal partnerships, community well-being considerations, and informed disclosure.

    iThis is not the same as determining the adequacy of consultation. Although AANDC and the provinces have developed consultation guidelines, the need to consult, depth of consultation and how this duty is fulfilled is often the subject to judicial interpretations. See Beckman v. Little Salmon/Carmacks First Nation [2010] SCC 53.

    iiCapacity building – sometimes called capacity development – describes a process through which individuals, organizations and communities strengthen their own capabilities to achieve development objectives. The phrase is defined in various ways by programs of major international development organizations including the World Bank and the United Nations Development Programme . In the context of Aboriginal communities in Canada, capacity building may refer to the development of community abilities as a whole such as building of knowledge and skills around community-based justice or health projects, training and education programs, or management of information.

    Case Study: Diavik Diamond Mine

    The Diavik Diamond Mine in Canada’s Northwest Territories operates on a 20km2 island in Lac de Gras. The mine is a joint venture between the Harry Winston Diamond Corporation and Diavik Diamond Mines Inc. (DDMI) – a subsidiary of Rio Tinto – and has established a relationship of trust, recognition and respect with the surrounding indigenous groups: The Yellowknives Dene First Nation (YDFN), the Lulsel K’e Dene First Nation (LKDFN), the North Slave Métis Alliance (NSMA), the Kitikmeot Inuit Association (KIA) and the Tlicho (Dogrib) Treaty 11 Council.

    DDMI has made three formal commitments with these communities in the hopes of being a leader in safe and responsible diamond production. It began with a Socio-Economic Monitoring Agreement signed by the government of NWT and endorsed by surrounding Aboriginal groups. This established an advisory board composed of Aboriginal, government and company stakeholders which served to monitor the broad progress and impacts the mine had socially and economically. Next, an environmental monitoring agreement was signed with the same parties – in addition to the Federal government – to ensure mutually agreed upon environmental management practices were implemented. Finally, individual participation agreements (PAs) were signed with each of the five neighboring Aboriginal communities.

    In 2000-2001, negotiations with each of these groups led to the completion of five individual Aboriginal Partnership Agreements – all guided by the Socio-Economic Monitoring Agreement.[9] To better foster mutual responsibility and the achievement of shared objectives, each Aboriginal group agreed to complete and maintain a human resource inventory and business registry. This ensured DDMI had access to a clear record of Aboriginal human capital and Aboriginal-owned businesses so they could fulfill agreed upon hiring and sourcing arrangements. Joint implementation committees were also established to outline responsibilities and timelines to reach project related employment and business development targets.

    The time and effort put into five individual agreements demonstrates the company’s recognition of the importance of consultation in spite of a lack of regulation mandating it. And successes thus far in employment targets, northern purchasing and Aboriginal training show commitment and good faith on the part of all participants. Diavik’s own 2011 Socio-Economic Monitoring Report reports that more than a quarter of total employment (313 people), and business spending ($124.8 million) is accounted for by Aboriginal peoples and their businesses. The company has also tried to build local capacity and diversify economic opportunities through training, education programs, and the creation of new economic sectors such as diamond cutting and polishing. DDMI also supported more than 100 community initiatives in 2011, with over $375,000 put towards events such as 150 Canadian Championship Dog Derby, the Lutsel K’e Spring Carnival and a wind study to assess the feasibility of a wind turbine for local power generation.

    The cooperation between these parties has given a great deal of certainty to both the company and the surrounding Aboriginal groups. While each partnership agreement may differ, the monitoring agreement and its report help give an idea of what they entail. Despite these reports, it is difficult to evaluate the degree of success of these agreements due to their confidentiality, lack of outcomes-based reporting and the long-term nature of investments in education and economic diversification.

    Show References


    1Hipwell, W., et al., Aboriginal Peoples and Mining in Canada: Consultation, Participation and Prospects for Change, 2002, The North-South Institute.

    2Sosa, I. and K. Keenan, Impact Benefit Agreements Between Aboriginal Communities and Mining Companies: Their Use in Canada, 2001, Canadian Environmental Law Association, Environmental Mining Council of British Columbia, CooperAcción.

    3Fidler, C. and M. Hitch, Impact and Benefit Agreements: A Contentious Issue for Environmental and Aboriginal Justice. Environments Journal, 2007. 35(2): p. 21.

    4Qureshy, S., Landlords and political traps: How mineral exploration companies seek access to first nation territory, 2006, Carleton University: Ottawa, Ontario.

    5Gogal, S., R. Riegert, and J. Jamieson, Aboriginal Impact and Benefit Agreements: Practical Considerations. Alta. L. Rev. , 2005-2006. 43: p. 129-157.

    6Chuck Willms, et al., Chapter 214 - Aboriginal Issues, in Canadian Mining Law, From the Second Edition of the American Law of Mining, C. Higgins, Editor 2007.

    7Prno, J., Assessing the Effectiveness of Impact and Benefit Agreements from the Perspective of their Aboriginal Signatories, 2007, The University of Guelph: Guelph, Ontario.

    8Shanks, G., Sharing in the benefits of resource development - A study of first nations and industry impact benefit agreements, P.P. Forum, Editor 2006: Ottawa, Ontario.

    9Missens, R., L.P. Dana, and R. Anderson, Aboriginal Partnerships in Canada: focus on the Diavik Diamond Mine. Journal of Enterprising Communities: People and Places in the Global Economy, 2007. 1(1): p. 54-76.

Connect:  RSS