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Aboriginal Law Bulletin (ALB)
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Nettheim, Garth --- "Indigenous Resource Rights: Interview with Stuart McGill" [1986] AboriginalLawB 37; (1986) 1(20) Aboriginal Law Bulletin 8

Indigenous Resource Rights

Stuart McGill interviewed by Garth Nettheim

The Department of Aboriginal Affairs has published a report entitled 'Indigenous Resource Rights and Mining Companies in North America and Australia'. One of the two authors of the report (with Greg Crough) is Stuart McGill, an Australian lawyer who has had experience in the negotiation of resource development agreements while working for the Northern Land Council and the Papua New Guinea Department of Justice. McGill is currently completing doctoral studies in economics and political economy at the New School for Social Research in New York. He gave the following interview with Garth Nettheim, about the report:

Nettheim: Stuart, what was the genisis of the consultancy that led to the writing of this report for the Department of Aboriginal Affairs?

McGill: I met the Minister and his advisers when they visited New York in early 1985. The Minister had already seen that, with respect to resource rights, American Indians appeared to be a little better off - relatively speaking - than Australian Aborigines. He had also noticed that the attitude of mining companies appeared to be somewhat better and that at least one Australian mining comany (BHP) had been dealing with Indians. Consequently, he engaged me to research the details of such matters. The idea was to show mining companies not only that they don't know how well off they are, but in fact that many companies do know how well off they are. In other words, the Department of Aboriginal Affairs wanted to look at the veto rights of North American indigenous people and also the terms and conditions of the agreements they enter into when they decide they wish to have developments on their land. In addition, there was this desire to look at the companieswhich were involved in developments on indigenous land in North America and assess the extent to which those companies were also involved in developments on Aboriginal land in Australia. So the report really falls into three parts - the first part deals with veto rights, the second part deals with the terms and conditions of agreements in North America, and the third part deals with a breakdown of transnational ownership and other company ownership in the mining sector in Australia.

Was the report meant as a counter to the AMIC (Australian Mining Industry Council) campaign designed to black any Aboriginal control over mining on Aboriginal land?

Certainly it was felt that it was necessary to present the other side of the picture, and this report should provide factual information for both the government and the Land Councils to pursue their dealings with mining companies more effectively than they have been able to do in the past.

Having indicated that the report falls into those three parts that you mentioned, maybe you could left me how you went about doing; thee report. What was the methodology?

For the first part, the examination of veto rights, I looked at the legislation on this issue in both the USA and Canada. It turns out that in the USA the Indians have had veto rights to prevent development on their land since the late 1930s. And,in the case of Canada they have had those rights since late last century effectively through-out the whole history of Indian affairs, at least since the time that it became regularised under their equivalent of the DAAwhich in that case is the DIAND-The Department of Indian Affairs and Northern Development. The veto rights that these two groups of indigenous people have in North America are unqualified in the sense that they are not subject to any provisions of national interest or so forth. Therefore with respect to that first part, it can be seen that mining companies have in fact been dealing with indigenous people in a situation which is roughly similar to Australia, and those indigenous people have had veto rights. Notwithstanding that the mining companies have been able to live with it, and in fact a considerable amount of development has occurred on the land of indigenous peoples in that area.

The second part of the report then goes on to look at the terms and conditions of the mining agreements in North America. I collected something like 30 of the major representative agreements that have been entered into by indigenous people and mining companies in the last twenty years. If you just use the royalty rates as a rough bench mark - notwithstanding the fact that, of course social and environmental conditions are also very important - but just using that bench mark, the royalty rates in Australia have only very recently gotten over 5% and I think, only in the case of one agreement, the new Amoco-Pitjantiatjara agreement (see last Issue AboriginalLB -Texas Tea in Pitiantjatjara – [1986] AboriginalLB 12; 1(19)pg3 ). In North America, in contrast, the royalty rates vary anywhere between 15% and above - and in some cases profit rates in addition to the royalty rates - up to 50%. There is a whole variety of agreements being used in North America. Some of them are flat profit sharing agreements, some of them are service contracts, in fact they have used most of the forms of agreements that have now been used very effectively in the third world by developing countries.

Does all of this suggest then that the mining industry lobby, the AMIC has been either dishonest or disingenuous when it suggests to government that it cannot live with effective Aboriginal vetos, or rights to negotiate the terms on which mining should proceed?

Well I think they have been effectively, very effectively, presenting their side of the story and this nowassists with seeing the otherwde of the story to be seen. For instance, the number of mining companies that are actually presenting their side of the story in Australia is much smaller than we would have otherwise thought. There are something like 135 companies in AMIC – they can be reduced to approximately 50 corporate groups when you look at the patterns of horizontal and vertical integration, and of those 50 groups only about 25 are significant groups in the sense that they have major resource interests in Australia. Of those 25 groups only about half, or slightly less than half, are Australian groups. When you look at the pattern of dealings that those 25 or so companies have had, it seems that the Australian companies are driven by a broader ideological consideration in their dealings with Aboriginals whereas the American companies are driven purely by commercial considerations. The Australian companies tend to argue on macro terms. They present their case in terms of what is good for Australia and they maintain that they know what's best for Australia and they tell the Australian people that it is in everybody's interest that mining should proceed on Aboriginal land, that veto rights shouldn't get in the way of development, and that the terms and conditions should be such that the Aborigines don't get very much of a share of the cake. In contrast the American companies, simply look at a deal that's being offered by Indigenous people. If they can get a rate or return in the bottom line that is acceptable to them, they will go ahead and develop. If they can't they will quietly go elsewhere. Meanwhile the Australian companies tend to make a great deal of fuss and it appears that underlying this fuss is a broad ideological objection to land rights.

As a result, there is some evidence that, within AMIC, there is a difference of opinion between 2 groups of companies over the policy and tactics that the organisation should pursue. Aborigines maybe able to effectively exploit this division.

Does the report itself spell out any conclusions or propose any specific recommendations?

It wasn't really the task of this report to make specific recommendations, although I think that it will have an effect on the policy that is pursued by governments and Land Councils in Australia.

What would be the appropriate responses to the information in the report y the Commonwealth government, State governments, the mining industry and Aboriginal organisations?

I think Aboriginal organisations will be able to negotiate more effectively with mining companies to get a bigger share of the cake. And they will also be able to stand up more effectively and present their case against mining particular areas or all areas or whatever, both to the Australian public and to governments. I think governments in Australia are already, from what I have seen, impressed by having another aspect of the picture available to them and not having to rely on the information that is presented to them by AMIC and so forth. Certainly the indications that some of us have had- so far, is that politicians are impressed by the fact that the mining companies really have been able to do business in North America under considerably more stringent arrangements than have even been contemplated in Australia.

The situation you are talking about is one where there is a power of veto but the power of veto is not used tosay 'No' to mining, it is rather used as a basis for getting what the indigenous peoples regard as fair terms for that mining. Is that a fair statement of the North American experience in recent years?

The North American experience has changed over the last 15 years. Whereas the veto right certainly wasn't used until about 15 years ago. in the last 15 years we now have seen the emergence of groups of Indians and other Indigenous people in North America who have said no to development, in some cases, in some areas, for some periods of time or altogether. Its a case of indigenous people, feeling that they have a sufficient degree of legal security and support within the government and want to be able to effectively use the veto rights they have always had. In the case of North America up until about 15 years ago there were various administrative processes which effectlvely prevented the people from using their veto rights. I think that out here in Australia the veto right is important for two reasons. First. because there are cases obviously when Aboriginals quite rightly, do not want to develop their land. But equally the veto right is also critical in being able to negotiate a deal with some particular developer. In other words the power to say tno is the most important bargaining chip that an Aboriginal group has. If you don't have that fundamental power then the terms and conditions of any agreement you get are likely to be considerably less.

What is there in the report that is likely to be of most immediate use to Aboriginal Land Councils and their advisers?

I think that the first part will be used for policy discussions over the shape of future legislation, that's the part dealing with the veto. The second part dealing with agreements will be used in negotiations which nearly all land Councils are currently carrying out with various mining companies. And the third part will be of assistance to Land Councils in determining who they are dealing with, which corporate groups, which country in fact. For instance, the French Government has about six companies operating in Australia on Aboriginal land, as does the Anglo-American group headed by the South African, Harry Oppenheimer. Land Councils will be able towork out who they are dealing with and pursue their negotiations with those companies somewhat more effectively as a result. Land Councils and others will also be aware when such corporations have had dealings with other indigenous people.

What, if anything, did your investigation reveal about the links between the companies operating in mining in Australia and companies operating in other spheres of commercial activity?

The interesting thing, that we didn't have a time to pursue but which I've looked at briefly, is the extent of connections between the mining industry and the banking industry, or what some people would call, finance capital. In the Australian situation it appears that finance companies have significant holdings in mining companies,according to a study that was done by the Transnational Research Corporation several years ago. So if you then look at the Australian families and individuals who own the finance houses you can actually trace through a pattern of ownership from individuals to mining companies that are actually operating on Aboriginal land in the Kimberley's and so forth. So I think what comes out of that, as an effective piece of research for the future which Aboriginal groups may like to pursue, is to track that right through so that next time we have a situation such as the Noonkanbah dispute, Aboriginals can have the whole pattern of ownership in front of them. I should mention that there are some small changes to company legislation that would be necessary before such studies could be completed.

Are there any other fertile future areas for research following up the study?

The other thing that needs to be done is to analyse the agreements that I have collected and which have now been made available to the Aboriginal Law Centre and to some of the Land Councils. Those agreements need to be looked at in both legal and financial terms. In other words, the terms and conditions need to be gone through with a view to working out what is appropriate for the Australian situation. And the financial terms contained in those agreements need to be developed into financial models so that the Australian projects which are proceeding can then be analysed under various and different financial regimes as a part of the ongoing negotiation process.

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