Presenation on Mining, Indigenous communities and regional development, made at the meeting of Minteral Development in the Arctic held on 30 april 2018 in Kotzebue, Alaska. Presentation by Chris McDonald, Economist, Regional and Rural Development, OECD. More information: http://www.oecd.org/cfe/regional-policy/mining-regions.htm & http://www.oecd.org/cfe/regional-policy/indigenous-communities.htm

1. MINING, INDIGENOUS
COMMUNITIES AND REGIONAL
DEVELOPMENT
Chris McDonald
Centre for Entrepreneurship, SMEs, Regions
and Cities
Mineral Development in the Arctic
Kotzebue, Alaska, 30th April 2018

2. 1. Context and background
2. Evidence about regions with a mining specialisation
3. Policy implications
4. Next steps
2
Presentation outline

3. (1) Context and background
3

4. • The OECD provides an international forum for governments to work together to share
experiences and seek solutions to common problems – it has 35 member countries, and
also works closely with a number of partner, accession and non-member countries
• We also work with representatives of industry and labour through advisory committees,
and are actively engaged with civil society organisations.
• A strength of the OECD is the capacity for governments to learn from each other through
peer review (whereby each country’s policy in a particular area is examined by fellow
members on an equal basis). Our work is supported by data and engagement with
stakeholders.
• The OECD is overseen by various Committees and working parties, which are made up
of delegates from member countries, and non-member countries which are also invited to
participate
• The Regional Development Policy Committee (RDPC) was established in 1999 and
oversees work by the OECD Secretariat in regards to policies related to regions, rural
areas and cities (see - http://www.oecd.org/cfe/regional-policy/regionaldevelopment.htm)
4
Organisation for Economic Cooperation and
Development (OECD)

5. • Issue that affects virtually all OECD member countries – mining of
minerals and metals, extraction of coal, oil and gas, and downstream
production (investment, production, and decline/ transition)
• Challenges associated with mining and extractive activities are amplified
at the local and regional scale for example conflicts with other land users,
population changes and impacts on housing markets and public services, and
structural adjustment and transition costs
• Policies related to mining tend to be shaped at the national level with a
sectoral focus - trade and fiscal settings, concession and permitting
processes, local content – integration with local and regional development
strategies can be weak
• This centralised approach makes it difficult to manage the territorial
impacts of mining, exacerbates challenges and tensions, and leads to
missed opportunities and benefits – resulting in problems such as
difficulties in securing and sustaining social license to operate
5
Motivation for this work from the OECD Regional
Development Policy Committee (RDPC)

6. Summary of findings:
• Mining is spatially concentrated, often in
low density/remote economies – linkages with
local economies vary considerably
• Strong productivity performance coupled
with volatility in growth, inequalities, and local
dutch disease effects
• Place-based approaches are needed to
address these issues – land use and
housing, supply of local skills and
competencies, and linking local SMEs to
mining value chains
• Importance of multi-level governance -
decentralisation and alignment with revenues
and institutional capacities at a sub-national
level to support integration of mining with
regional development
6
Previous work by the OECD RDPC on this topic

7. 1. Provide a framework for the OECD, the mining
industry, national and sub-national governments,
and non-government organisations to cooperate on
addressing shared challenges related to mining,
extractive industries and regional development.
2. Produce a series of publications that deliver
regional specific recommendations and
implementation support, and a tool-kit
(benchmarking and guidance, indicators and data,
and best practices) to support the implementation of
better regional development policies in a mining and
extractives context across countries
3. Develop a global platform for mining regions
and cities through events and peer-review that
enable knowledge sharing, advocacy and dialogue
between public/private sectors and local
communities on better policies to enhance regional
productivity and wellbeing.
7
OECD Mining Regions
Information about the project can be found here:
http://www.oecd.org/cfe/regional-policy/mining-regions.htm

8. 1. Productivity and diversification - Policies that enable the development of the
mining industry, that support productivity and also strengthen the supply chain
linkages around mining activities and support economic diversification efforts.
2. Quality of life and wellbeing - Policies that enhance quality of life and address
inclusive growth and well-being challenges that affect regions and cities with a high
degree of dependency on mining and extractive industries.
3. New models of partnership between the private sector and local communities
- Good practices that help build and maintain social license to operate for mining
and extractive operations at a regional and local level.
4. Sub-national governance and fiscal arrangements - Sub-national governance
and fiscal arrangements that address the complex relationships between national
and sub-national governments, the mining industry and community stakeholders in
relation to issues of economic development and wellbeing.
8
Priority themes that will be addressed by this
project

9. 9
(2) Evidence about regions with a mining
specialisation

10. 10
Mining and extractive activities are spatially
concentrated
0
1
2
3
4
5
6
7
8
9
Locational quotient
Regional specialisation in industry* (employment), select OECD countries
Source: OECD Regional Database. *Industry category in this chart includes mining and extractive activities, energy and water. The
locational quotient (LQ) for is the ratio between the sector weight in employment for the region, and the weight of the same sector in
national employment. A value above 1 implies that the region is more specialised in that sector than the rest of the economy. LQ
scores for Sweden and Finland are 2012, and for other countries 2014.

11. 11
Coping with changes in external markets and
volatility in regional growth performance
GDP growth index, select OECD countries and regions, 2001-2014 (2001 = 100)
Source: OECD Regional Database. *25 regions across Australia, Canada, Hungary, Finland,
Sweden, the United States. Regions with a locational quotient higher than 2 were included in the
sample.
Standard deviation of
difference in GDP
growth (2001-2011) for
a larger sample of
OECD regions
specialised in mining
was 28.08 compared
to 13.08 for the
national level*.
0
20
40
60
80
100
120
140
160
180
200
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Canada Newfoundland and Labrador Sweden
Norrbottens County United States Alaska

12. 12
High productivity with uneven distribution of
benefits
Percentage of GVA and Employment, Industry*, select OECD regions (2013)
Source: OECD Regional Database. *Includes mining and extractive activities, and utilities.
0
10
20
30
40
50
60
70
80
Antofagasta Atacama Western Australia Newfoundland and
Labrador
Alaska Saskatchewan Alberta Northern Territory
Percentage
GVA - industry Employment - industry

13. State Indigenous population
(%)
Specialisation in mining and
extractive industries
Alaska 14.3 4.2
New Mexico 9.1 3.9
South Dakota 8.5 0.7
Oklahoma 7.5 3.6
Montana 6.8 3.0
North Dakota 5.6 4.0
Arizona 4.4 1.2
Wyoming 2.3 5.4
13
Indigenous peoples and regional specialisation in
mining and extractive activities (United States)
Source: US Census Bureau (2013) American Fact Finder and OECD Regional Database.
Note: Level of specialisation is a locational quotient a score of 1 indicates the same level of specialisation as the
national economy. This categorisation includes mining and extractive activities, and utilities.

14. Key issues Examples
Localised environmental
externalities
Impacts on water quality and availability, run-off and
emissions, dust and noise
Conflicts with other land
users
Residents, food producers, tourism operators, and Indigenous
peoples
Innovation and value-
chains
Adapting production techniques to local environment
conditions, local procurement and supply chain opportunities
Local workforce Skills mismatches, access to air services, temporary
accommodation and housing, amenities and public services
Regional infrastructure
networks
Bottlenecks in existing transport, energy and communications
networks, opportunities for investment and shared use
Mining closure and
transition
Environmental remediation, localised transition and structural
adjustment costs
14
Mining is a global business and matter of national
interest – but regional and local issues matter

15. 15
(3) Policy implications

16. Dimension Policy objective Action areas (examples)
Competitiveness
and
diversification
Producing more value in
extractive industries
Long-term planning and investment strategies for
regional infrastructure networks
Diversifying into other
economic activities
Availability of small scale grants and credit to
local SMEs and start-ups
Quality of life Enhancing local quality of life Integrated land use and infrastructure planning
Making growth more inclusive Entrepreneurship support for vulnerable groups
Regional
governance
Making the most out of fiscal
transfers
Better link planning and budgeting and allow for
multi-year planning and spending of the royalty
transfers
Developing collaborative
institutions to facilitate cluster
development
Develop a common vision and priorities for
regional innovation
Integrated planning and
community engagement to
improve local quality of life
Foster urban and rural linkages (e.g. shared
governance, service delivery planning)
16
Initial OECD framework for integrating mining
with regional development
Source: OECD (2016) Mining regions and their cities: scoping paper, http://www.oecd.org/regional/regional-policy/Scoping-
paper.pdf

17. Category Examples
Environmental /
Spatial
• Conflict with non-Indigenous parcels located inside reservations or protected
areas
• Competing land uses
• Small areas are given to Indigenous groups in the context of a wider ecosystem
(forests, ground water, aquifers)
• The problem of third polluters (industrial activity in proximity to Indigenous
lands)
Organisational
/Institutional
• Enough, regular financial resources
• Technical capacity and competencies of Indigenous institutions
• Transparency and accountability in the use of revenues
• Legitimacy of the institution that represents the Indigenous people
• Negotiations with multiple Indigenous groups
• Effectively combining Indigenous and non-Indigenous systems of knowledge
17
Land governance challenges related to
Indigenous communities (self-governance)
Source: OECD (forthcoming) Linking Indigenous Communities with Regional Development Pillar Paper 2 – Making land
governance work for Indigenous economic development (http://www.oecd.org/cfe/regional-policy/indigenous-
communities.htm)

18. • Mechanism by which Indigenous peoples negotiate monetary and non-monetary
benefits with corporations, in the context of project development
• Inclusive process governed by a pre-negotiation agreement (who will be engaged,
procedures for engagement, the timely provision of information, how Indigenous
people will be supported, and cultural sensitivity)
• Provision of monetary and non-monetary benefits that invest in the long-term quality
of life and capabilities of Indigenous peoples (community trust, employment and
training, procurement, local services and infrastructure), including provision for
project closure and legacy costs
• Transparent process that allows for Indigenous communities to receive third-party
advice and support
18
Benefit sharing agreements – leading practices

19. (4) Next steps
19

20. 2018 2019 2020 2021
OECD Mining
Regions and
Cities Event
Darwin, Northern
Territory, Australia
(October)
Skellefteå,
Västerbotten,
Sweden (April)
Seville, Andalusia,
Spain (October)
Pilbara, Western
Australia, Australia
(May/June)
Greater Sudbury,
Ontario, Canada
(September/ October)
TBC – final event
in Latin America
OECD Mining
Regions Policy
Workshop
-- FEM, Levi, Lapland,
Finland (November)
PDAC, Toronto,
Canada (March)
IMARC, Melbourne,
Australia (October)
--
OECD Mining
Regions Case
Studies
• Colombian region
(TBC)
• Antofagasta, Chile
• Västerbotten &
Norrbotten,
Sweden
• North Karelia,
Finland
• Coahuila, Mexico
• Andalusia, Spain
• Pilbara, Australia
• Northern Territory,
Australia
• Ontario &/or
Quebec, Canada
(TBC)
-- Production of
final tool-kit/
thematic report
20
Project schedule – OECD Mining Regions
Anchorage has
a sister-city relationship
with Darwin
Shared focus on
mining in the Arctic
Working with the
OECD to develop
recommendations for
better policies

21. Event Proposed thematic focus Target audience
2018 - Darwin, Northern
Territory
• Innovative partnerships: Indigenous people
and mining
• Economic diversification in urban and remote
contexts
Australia, SE Asia
2019 - Skellefteå,
Västerbotten, Sweden
• Skills supply, and equality and diversity in local
mining workforces
• Regions and cities supporting environmental
sustainability and technological change in
mining
Arctic countries,
central Asia
2019 - Seville,
Andalusia, Spain
• Industrial modernisation and smart
specialisation in a mining context
• Improving regional level policy, administrative
and regulatory support for mining and
extractive industries
Spain, Central and
South America
2020 - Pilbara, Western
Australia
• Quality of life, attractiveness and mining cities
• Fiscal arrangements and public investment
Australia, South
America, and China
2020 - Greater Sudbury,
Ontario, Canada
(September/ October)
• Developing local mining clusters, and the
inclusion of Indigenous entrepreneurs
• Role of higher education and vocational
institutions in regional development
Canada, USA, and
Francophone Africa
21
Events will have different thematic focus areas
and audiences

22. THANK YOU FOR YOUR
ATTENTION
CHRIS.MCDONALD@OECD.ORG
WWW.OECD.ORG/CFE/REGIONAL-POLICY/MINING-
REGIONS.HTM
22