Mining companies have been proactive when it comes to helping Aboriginal people find work on their minesites.
They now seem to be shifting the focus to creating businesses in Aboriginal communities that can, initially, service their sites but later, maybe take on a life of their own.
If international experience is anything to go by, a great deal of success can be had in this sphere.
Representing the northwestern Alaskan Inupiat people is the NANA Development Corporation. It finished the 2011 financial year with $US1.8 billion in revenue. It is operating on four continents.
One of its subsidiaries even services Air Force One. It also is the largest supplier of offshore oil and gas services in the Gulf of Mexico.
NANA has paid out 85% of its profits since formation in dividends to its shareholders.
That is streets ahead of Aboriginal mining-based corporations in Australia that are starting to win big business but are a long way from that sort of diversity.
Chamber of Minerals and Energy Western Australia director Nicole Roocke said there certainly had been a shift in the mining world towards Aboriginal enterprise development.
“For a while the focus was on getting people into employment,” Roocke said. “My observation is that there has been an increasing shift towards supporting enterprise development as well as employment.”
But Roocke said Australia had been much later in starting down this path.
That view is shared by NANA president Helvi Sandvik. She told a recent American Chamber of Commerce in Australia lunch that Australian indigenous businesses were probably 30 years behind NANA.
It should be noted, however, that no Australian aboriginal corporations have received the sort of assistance NANA did.
NANA, which, these days, has about 12,700 shareholders who are all of the Inupiat people, was a beneficiary of the largest land claim settlement in US history.
The US government wanted access to the oil reserves below the North Slope and had to deal for it.
NANA, which is charged with making sure that settlement continues to benefit the Inupiat, came out with $US44 million in cash. That was back in 1971.
More importantly, Alaskan natives also received title to their lands, both on the surface and below the surface, which was to prove lucrative later on.
Another thing in NANA’s favour is a US government system that gives some preference to US indigenous corporations tendering for government work.
Even so, the road to success has not been smooth. That NANA survived and thrived when some of its peers fails pays testament to that.
Its story could also provide some pointers to the way forward for Australian indigenous businesses.
“We had to develop a business model that provides for today but also for future Alaskan generations that will inherit ownership,” Sandvik said.
While NANA is a for-profit corporation, its owners are not allowed to sell their shares. They are instead passed on to future generations.
One of the challenges NANA faced in the early days was how to ensure employment for its shareholders, many of whom had the barest of education.
This meant the company’s first investments were in the hospitality sector, in areas such as cleaning and catering. Such businesses also provided the flexibility that would allow the Inupiat to easily go back to a subsistence lifestyle.
“That’s who we are,” Sandvik said. “It’s a tough life but we like it.
“We needed to find out how to let that lifestyle continue. It’s all about making our own decisions.”
A major turning point in NANA’s history was a period of re-examination it undertook in 1995.
Back then all of the company’s businesses were focused on Alaska and 80% of those were in the oil and gas industry. Oil prices were falling and production rates from the North Slope were declining.
“We looked at where we’d come from,” Sandvik said. “We hadn’t gone belly up yet. Some of our peers had.
“We realised we had to invest in businesses that would bring better returns to the bottom line.
“Cleaning and catering were not going to deliver a lot of dividends.”
This led NANA to invest in an Alaskan engineering company and also led to what Sandvik believes was a crucial partnership with Canadian company Colt Engineering. It brought not only access to greater work but also some valuable lessons about how to move into a more technically demanding, but financially rewarding, area.
That tie up was driven by BP, which had operations on the North Slope. Sandvik said BP wanted Colt to do some work for it but in Alaska it had to do business with a native corporation.
“BP suggested we get together,” she said.
NANA was able to learn to better run its own engineering corporation through its partnership with Colt.
That partnership continued after Worley Parsons bought out Colt.
There are some similar stories in Australia. Pilbara earthmoving contractor Ngarda’s joint venture with Leighton Contractors and Doorn-Djil Yoordaning’s ties to Macmahon are a couple.
It is understood the major miners are keen to see such arrangements develop and encourage their suppliers to pursue them where practical.
Doorn-Djil Yoordaning chairman Noel Bridge said the ability of Aboriginal communities to enter into such business arrangements was often linked to the land rights agreements they struck with resources companies.
“There’s been some really good agreements that provide good foundation or building blocks in my opinion,” Bridge said.
“Whether they can achieve the sort of levels of NANA is another story. But I think there’s substantial opportunity there.
“It’s not just the opportunity to provide education or job outcomes but probably, just as importantly, it’s an opportunity for some prosperity and wealth creation that can be a longer term outcome.”
While NANA had good success through its canny partnering, its community received another fillip in the form of the Red Dog mine.
“We were blessed by God with one of the largest zinc deposits in the world,” Sandvik said.
The mine is operated by Teck. While it provides a handy royalty stream to the Inupiat, it is the job opportunities that are particularly valuable.
Sandvik said 52% of the employees at the mine were NANA shareholders.
Interestingly, NANA insisted the mine be set up as a fly-in, fly-out operation. There were a number of Inupiat villages around the area that had not been exposed to western influences and it was feared that creating a mining town there would spoil that.
“We’re looking at changing that approach,” Sandvik said. “That FIFO life is rough.”
NANA does not have any operations in Australia as yet but it is looking.
Sandvik said NANA was looking to partner with aboriginal firms and pass on the knowledge it had gained, while learning from those firms at the same time.
The corporation was first invited to come by the Australian government just after then-prime minister Kevin Rudd made the apology to the Aboriginal people.
Australian Indigenous Chamber of Commerce chairman Warren Mundine believes the mining boom could be a boon to some Aboriginal communities.
However, he also is pragmatic about the problems many of these communities will face.
He addressed a lunch in Perth last year that had representatives from 10 of the top mining and construction companies.
“What everyone is discovering is [fostering indigenous businesses] is like aboriginal employment,” Mundine said.
At the employment level miners discovered they had to put a lot of effort into getting Aboriginal people job ready.
“They are finding that at the corporate level too,” Mundine said.
Mentoring is one way of addressing this lack.
Another problem, Mundine said, was in capacity.
Like all that are looking to enter the mining industry, Aboriginal businesses have to face the capital hurdle. Just setting up a bare bones earthmoving operation can run into the millions.
“The scale of the mining and the energy industry is just amazing,” Mundine said. “If you are producing 5 million tonnes of ore today, in the next few years you are looking at producing 50Mt. That’s the growth in the industry.
“For contractors that’s a big step. You are having to upscale. That’s a lot of investment and a lot of training and a lot of getting people on board.
“That is across the board in Australia. It’s worse for indigenous groups because they are coming from a much lower scale.”
This article first appeared in the February 2012 edition of Australia’s Mining Monthly magazine
