Community agreements

Community Agreements

Our community agreements are negotiated agreements with Indigenous Peoples, local communities and others. Not every mining or extractives company forms agreements, but we feel they are important in part because they demonstrate respect and commitment to inclusive engagement with communities and land-connected peoples.

These agreements, often the result of many years of engagement, document not only mutual obligations that are both enforceable and auditable, but also codify ‘the how’ – the behaviours expected from our employees and contractors. They help reduce potential effects of a project on communities and their environment. And they help make sure benefits are shared directly with those affected, and empower communities to make decisions about how those benefits are used.

Ultimately, agreements are a mechanism for accountability and provide companies and communities with mutual performance indicators that cover all stages; from exploration through to project planning and operations, including after closure.

Our agreements also provide beneficiary payments, deliver social and economic outcomes and engage with Indigenous groups in cultural heritage, employment, business development, and training and education activities. In Australia, for example, our land access agreements allow us to compensate, via trust funds and other mechanisms, Traditional Owners for the operations and presence we have on their land.

We also have robust management systems for monitoring compliance, and to track and review implementation outcomes. Often, monitoring is done with or by our communities – for example, at our Diavik operations, in Canada, a panel of scientists and local Indigenous people gather every three years to assess our environmental impact and ensure we continue to deliver on our agreement.

Community Agreements

Leading Agreement Making in the Mining Industry

Our approach to engagement with Aboriginal people and Torres Strait Islanders was fundamentally reshaped by key legal events in Australia with the High Court’s Mabo decision in 1992, and the introduction of native title legislation, which recognised native title to land in 1993. Under this law, the ‘right to negotiate’ provision facilitated a culture of agreement making in Australia.

We were proud to be the first mining company in Australia to embrace native title to land and to form agreements with Traditional Owners. Today, we have many such agreements globally.

In Canada, our first agreement was at the Diavik Diamond Mine, where, in 1999, we signed a Socio Economic Monitoring Agreement (SEMA) with the North West Territory government and the five impacted Metis, First Nations and Inuit communities. This was followed by the signing of individual Participation Agreement with each of the communities in 2000 and 2001.

The development of new assets, such as Oyu Tolgoi in Mongolia, has also allowed us to explore agreement processes in a context that went beyond Indigenous groups to land-connected peoples more broadly.

What Our Agreements Cover

  • Land access provisions and consent to certain activities
  • Financial benefits
  • Local employment and training opportunities
  • Economic development and business opportunities
  • Social, cultural and community support
  • Environmental co-management
  • Cultural heritage management, protection and protocols
  • Governance and procedural arrangements, including implementation provisions

Making Agreements

All actions related to an agreement and its implementation are termed ‘agreement processes’. This includes consultation, negotiation, ratification, implementation, monitoring, evaluation and review.

Because our agreements can cover such different aspects of our operations, be developed at different stages of the mining life cycle and are subject to different local and national laws, we do not follow a single agreement-making process. However, we do adhere to common principles and commitments:

Principles and Commitments
  • Engaging in an inclusive way

    The agreements include provisions that stipulate which community members should be involved in the agreement-making process and consulted on impacts and opportunities. We know that mining can be complex, and so we aim to explain our business and processes in ways that are accessible to a broad set of stakeholders. We take care to engage in ways that are culturally appropriate, and that we communicate clearly and openly.

  • Building a strong understanding of the community

    We conduct detailed assessments – involving both government and community groups – to identify the local social, economic, heritage and legal context of each community. This includes assessing possible impacts of our operations on local people – and what opportunities we can bring too. We also build an understanding of relevant community groups, including their goals and expectations, governance structures and decision-making process.

  • Planning and implementing for mutual benefit

    Once we have built a strong understanding of the local context, possible impacts and opportunities, we develop agreements that align our vision and goals with those of the local community. We communicate regularly with our communities, and implement our commitments in ways that contribute to their socioeconomic development.

  • Monitoring, evaluating, reviewing and improving

    We set targets and indicators to monitor progress and performance against our agreement obligations. Often community members are involved in designing the monitoring system, agreeing on appropriate indicators, undertaking measures and collecting data.

    We establish monitoring oversight committees that include not just our employees, but representatives of the community and independent bodies like NGOs and specialist environmental and social experts too. This brings transparency, impartiality and credibility to our monitoring reports. We use a variety of tools such as social risk assessments, communities review and complaints processes, as well as independent review mechanisms to agree and implement improvements to existing agreements and their outcomes.

    In addition to ongoing monitoring and evaluation of outcomes, we also conduct comprehensive independent reviews of the agreement itself. Since agreements can extend across the whole life of a mine, these reviews are conducted at defined intervals and provide a point-in-time assessment for the appropriateness and effectiveness of objectives, governance structures and policies related to the agreement.

  • Reporting and communicating

    Our agreements touch all areas of our operations – from managing environmental impacts to procurement. We integrate our agreement commitments into operational plans and reports, and clearly communicate our obligations to the relevant teams.

    We also report on our Group-wide social performance in accordance with the Global Reporting Initiative, the International Council on Mining and Metals' Sustainable Development Principles, and the UN Global Compact and the Extractive Industries Transparency Initiative.

Agreement Types

The form of agreement we reach depends on the needs and circumstances of the operation and local communities – including their socio-economic priorities – as well as the national and local legal context.

The most common agreements we form are:

  • Cultural heritage agreements
    Agreements between us and land-connected peoples explaining what steps will be taken to manage cultural heritage.
  • Land access (for exploration) agreements
    Agreements between us and a private landholder outlining each party’s land access rights and responsibilities.
  • Impact Benefit Agreements (IBAs) in Canada (also known as Participation Agreements)
    Agreements negotiated in the context of resource development that establish how affected Indigenous people will benefit from project development – including training and employment benefits, business opportunities, environmental monitoring, cultural heritage, among other things.
  • Indigenous partnership agreements
    Agreements made with Indigenous groups that cover broader socio-economic and social issues, and included opportunities for contracting, employment, training, business development, environmental protection and other items.
  • Minerals development agreements
    Agreements between us and governments detailing everyone’s roles and responsibilities in relation to minerals development projects – including the payment of royalties and taxes, and other obligations.

Some types of agreements are specific to particular jurisdictions. For details of various types of agreements and treaties in different jurisdictions – Australia, Canada, New Zealand and South Africa – visit the Agreements, Treaties and Negotiated Settlements website, a University of Melbourne initiative supported by the Australian Research Council and Rio Tinto.

How We Approach Negotiations

We conduct community agreements in good faith, and approach agreement negotiations based on the International Finance Corporation’s principles. These include:

  • Involvement of legitimate representatives
  • Willing engagement free from coercion or intimidation
  • Joint exploration of key issues of importance
  • Use of participatory approaches
  • Accessibility in terms of timing and location
  • Provision of sufficient time for decision-making
  • Mutual respect and sensitivity to cultural and other differences
  • Flexibility, consideration of multiple options, and willingness to compromise
  • Documented outcomes
  • Equal access to the best available information

Roles and Responsibilities of Key Parties in Agreements

  • Developer
  • Community
  • Government
  • Provide resources
  • Participate in good faith
  • Deliver on commitments and use agreed processes
  • Align programmes
  • Participate in good faith
  • Honour commitments and agreed processes
  • Actively participate in governance
  • Participate in programme delivery

National/sub-national

  • Create an enabling framework
  • Deliver on commitments
  • Coordinate government programme delivery

Regional/local

  • Provide representation
  • Participate in governance
  • Participate and partner in programme delivery

What a Successful Agreement Looks Like

A successful agreement:

  • Is perceived by all parties as voluntary and not imposed on the parties
  • Involves all of the people who can demonstrate themselves to be the land-connected peoples
  • Has been negotiated by legitimate representatives
  • Sustains implementation and performance over time, even when there are changes in company personnel and leadership
  • Acknowledges potential price fluctuations of commodities over the life of the agreement
  • Stands the test of time and is reviewed and amended as necessary, with the full support of all parties
  • Is able to be changed and improved (if all parties agree) when things are not working and supports joint adaptation and problem-solving when challenges arise
  • Has clear commitments and benefits for both parties with a focus on long-term goals rather than short-term gains
  • Delivers on agreed commitments and builds in incentives for all parties to ensure that agreement commitments are upheld
  • Involves agreement-making processes, content and implementation approaches that are consistent with human rights principles
  • Proactively considers future generations
  • Is based on a genuine relationship and mutual trust between parties so that the agreement implementation is driven by its spirit and intent, not legal references
  • Provides flexible frameworks for working together rather than rigid formulas for individual action
  • Acknowledges the importance of cultural heritage and an understanding of legacy and historical issues and their effect on religious responsibilities, spirituality and culture
  • Benefits the community as a whole rather than particular individuals

Laws that Guide Agreement-Making

  • Australia
  • Canada
  • Mongolia

What is native title?

Native title is the communal, group or individual rights and interests of Aboriginal people and Torres Strait Islander people in relation to land and waters, possessed under traditional law and custom, by which those people have a connection with an area which is recognised under Australian law.  

The recognition of native title led to the establishment of the Native Title Act in 1994. This provides the legal framework for the recognition of rights and interests of Aboriginal people and Torres Strait Islanders such as new applications for native title and the negotiation of Indigenous land use agreements.

Sources: National Native Title Tribunal, Australian Government Federal Register of Legislation 

Indigenous rights and treaties

Indigenous rights are collective rights of distinctive Indigenous societies, recognised and affirmed by Section 35 of the Constitution Act 1982, flowing from their status as the original peoples of Canada. While the Constitution does not define Indigenous rights under Section 35, they can include ownership rights to land, rights to occupy and use lands and resources, self-government rights, and cultural and social rights.

Treaties are agreements made between the Government of Canada, Indigenous groups, provinces and territories, and resource companies that define ongoing rights and obligations of all parties, on areas like include consultation and participation requirements, participation in land use and management, and resource revenue sharing.

Source: Government of Canada website, Crown-Indigenous Relations and Northern Affairs Canada

The Minerals Law of Mongolia (Article 42.1) requires minerals exploration and mining license holders to “work in cooperation with the local administrative bodies and establish agreements on issues of environmental protection, mine exploitation and infrastructure development in relation to mine development and job creation.”

In compliance both with national legal requirement and Rio Tinto standards, after years of rigorous consultation with the local stakeholders, in 2015 Oyu Tolgoi signed off the Cooperation Agreement with the local government representatives on how the parties will work together towards the local sustainable development. The Agreement covers the thematic areas such as environment, water and pasture management, social infrastructure, local economic development, education, health and cultural heritage management.

View details of the agreement >

 

Under the agreement, Oyu Tolgoi will make an annual financial contribution to the Gobi Oyu Development Support Fund (DSF) – jointly established by Oyu Tolgoi and the community in September 2015 and independently managed to support community programmes and projects in the Umnugovi aimag.

Compensation and Benefits

Mining projects and operations change the life, livelihoods and landscapes of people connected to the land involved. Through our agreements, we work closely with host communities to ensure they receive a fair share of benefits. A good benefit process accurately determines the rightful recipients and then provides benefits fairly, following terms the recipients themselves help develop.

And by providing benefits, like employment, training, and supporting regional economic development, we can providing lasting value and positive outcomes to the communities where we work. Another way we secure long-term benefits for communities is by creating future income streams, such as endowment funds, foundations and trusts. These are built to suit the specific needs of the local community, and can sometimes align with local and regional development plans too.

Financial payments – for the purposes of compensation, benefits or both – can take many forms. For example, payments may be made based on operational outcomes, such as a percentage of profit, or royalties linked to production.

For example, at our Weipa operations, in Queensland, Australia, we established the Western Cape Communities Coexistence Agreement Charitable Trust, with the majority of annual funding placed in long-term secure investments. And at our Kitimat aluminium smelter in British Columbia, Canada, we partnered with the Haisla Nation to buy and operate the Kitamaat Valley Education Society, which serves other local employers and helps build skills within the local community.