The business opportunities section of an Impact Benefit Agreement (IBA) is often the hardest to negotiate. Indigenous nations want to build business capacity, and companies want reliable contractors for their projects. To achieve this balance, careful thought must be put into how the commitments are designed and implemented.
Even though the public data isn’t always great, it’s clear that mining companies spend much more on contracts with Indigenous businesses than they do on royalty and capacity building payments. The chart below, from the IBAInfo.org database, shows that total business spending at just 13 projects in Canada is much higher than total royalty and capacity payments for all mines across Canada.
Payments to Indigenous Businesses far exceed payments made to Indigenous Nations.
In fact, there are projects where the value of contracts awarded to Indigenous businesses can be 15 to 20 times higher than the payments made directly to the nation.
While contracts with Indigenous businesses don’t guarantee benefits to the impacted community (for many reasons), these opportunities can help Indigenous people and nations achieve economic independence.