2021 marked new highs for reported payments made by mining companies to Indigenous communities in Ontario. Our analysis showed a total of $73.6 million in reported payments in 2021, an increase of 128% from payments disclosed in 2017.
This increase appears to be driven by new arrangements between mining companies and Indigenous communities, rather than a growth in resource shipment values. Between 2017 and 2021, the value of mineral shipments as disclosed by NRCan increased by less than 10%. At the same time, the implied royalty rate (measured by dividing ESTMA reported mining payments to Indigenous communities by Ontario mineral shipments as reported by NRCan) more than doubled.
Over the five year period there was significant growth in the number of mineral projects making payments to Indigenous communities, from 16 in 2017 to 23 in 2021. Since Indigenous community payments (such as milestone payments) often begin in advance of resource production, it is possible that the growth in Indigenous payments as against marginal underlying growth in mineral shipments may be followed by increased mineral production in the near future.
The growth in Indigenous government payments has been strong but consistent over the past few years, and has significantly outpaced underlying resource shipment values. The growth in projects recording payments may indicate that new projects are driving the overall implied Indigenous royalty, and are doing so at amounts significant higher than those seen for legacy mines. As agreements with Indigenous parties often include milestone payments, it is also possible that the value of Indigenous government payments have been increased by one-time payments that may not be replicated to the same degree in the future. Proponents operating in Ontario and Canada should be prepared for growing expectations around payments to Indigenous governments.
Our analysis is based on analyzing publicly disclosed reports made under the Extractive Sector Transparency Measures Act and the value of mineral shipments as disclosed by NRCan.