Intervenor: vol. 26, no. 2 - 3, April - August 2001

CELA Conducts Research on Impact and Benefit Agreements

As part of its collaboration programme between mining communities in Peru and Canada, CELA is currently conducting research on impact and benefit agreements (IBAs)[1]. These agreements are signed by mining companies and First Nations communities in Canada to establish formal relationships between them, to reduce the predicted impacts of mines and to ensure that communities benefit economically from mine development. In the past, IBAs were mostly negotiated between the government and mining companies to provide employment for local people. Today, they are commonly negotiated directly by First Nation parties and companies and address a wide range of issues, such as employment, training, royalties, environmental protection and reclamation, independent monitoring, social and housing programmes, the protection of burial and sacred sites, and cross-cultural training for non-aboriginal employees coming into town.

In Canada, IBAs are negotiated for different reasons. When a deposit is located on aboriginal land, First Nations may demand that an agreement be negotiated before "surrendering" the land to the Crown for mineral development. Some land claim agreements such as the Nunavut Final Agreement explicitly require that an IBA be negotiated before a "major development project" can take place on aboriginal land and even set specific guidelines about agreement contents. In other instances, the government may demand an IBA for a particular mining project, as was the case with the Ekati mine in the Northwest Territories, whose approval was made contingent on the negotiation of an agreement between the Australian company BHP and local communities.

Despite decades of experience negotiating IBAs in Canada, there is very little literature available about their content, the factors that determine their success or failure, and the extent to which communities have been able to enforce them. This is largely due to the fact that many IBAs are treated as being confidential, which prevents First Nations from learning from each other's experience and avoiding costly mistakes.

CELA research will produce a report, and possibly a video, adapted to the Peruvian context that can be used by non-governmental organizations (NGOs) and indigenous communities in Peru to promote the negotiation of similar agreements. In Peru, where there is a long mining tradition and a large indigenous population, the laws regulating the negotiation process between indigenous communities and mining companies are heavily biased in favour of the latter. For example, through the servidumbre[2] system, companies can effectively claim indigenous land for mining purposes in exchange for what is usually meagre compensation. Likewise, the fairly new environmental assessment legislation in Peru has been criticized for not allowing appropriate community consultation or access to information. The good news is that the Peruvian communities affected by mining are becoming increasingly organized nationwide, networking and building capacity at the grassroots level.

The first presentation on CELA's findings will be made in Espinar, Cusco, where BHP operates a polymetallic mine. Despite the fact that this mine has been operating for 20 years, the population of Espinar still lives under impoverished conditions that include lack of running water, electricity or health services and high levels of unemployment. A recent independent monitoring exercise conducted by the communities and the Peruvian NGO CooperAccion found that the four main local sources of fresh water contain significant amounts of metals and are not in compliance with WHO standards for drinking water. In addition, community members complain about a series of irregularities in the purchase of land for mineral development, both when the mine was owned by the State and after its privatization in 1996.

BHP recently initiated the construction of a new oxide plant for the mine. It is also conducting further exploration works in the Tintaya open pit mine and a pre-feasibility study for another deposit located in nearby Antapaccay. In this context, the success of the people of Espinar in defending their rights will depend on how united the community is, how much legal and technical support they receive, and whether they find the political leverage necessary to put pressure on the company to meet their demands. CELA expects to use the experience and testimonies of Canadian First Nations and legal experts collected in our research to strengthen the position of Peruvian communities in this negotiation.


1 Also called benefit agreements, socioeconomic agreements, participation agreements, cooperation agreements, etc.
2 Servidumbre is the right to use the land without owning it. According to Peruvian law, when a company wants to develop a mine it has to negotiate the purchase of land with the local community that owns it communally. If the parties have not reached an agreement within a 30-day period, the government can determine the compensation to be paid to the community, a price usually based on the land's agricultural value, and grant the company servidumbre. The community is displaced or relocated.

Irene Sosa was CELA's principal researcher on this International Programme.