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What does Traditional Ownership in the resources sector mean?

There is a lot of history, law and context in looking at this question. But let’s first address the word ‘Indigenous’. For any industry, and particularly the resources sector, this has two meanings.

Firstly there is the broader context of Indigenous Australia, which relates to approximately three per cent of Australia’s population. At a corporate level, many industries (and not just the resources sector) are gradually addressing the inequality that this demographic experiences professionally, economically and socially. The focus in recent times has been predominantly around having policies and procedures driven by human resource functions to achieve certain Indigenous employment targets. Applicants and employees from anywhere in the country that identify as Indigenous form the outcome of such policies. However, employment alone is a limited view and needs to expand.

The second meaning or level of Indigenous – the focus of this article – includes Traditional Owners groups, which consist of family clusters that have or are travelling through a Native Title process, to gain recognition of their traditional custodianship of particular lands. Legally recognised traditional ownership in Australia does not give these stakeholders title, exclusive use or ownership of the land in question or any resources it contains. In a nutshell what it does give them is the right to undertake traditional activities, and to engage with industry proponents undertaking activity on the land.

This Traditional Owner level of Indigenous is particularly relevant to the resources sector which holds tenement on Traditional Owner land. By law, resource sector companies are required to engage with Traditional Owners in four key areas, including the protection of cultural heritage, compensation, royalties and economic participation.

In this article, the focus is on the fourth topic (economic participation), and as it relates to Traditional Owners.

What is the status quo of economic engagement between Traditional Owners and the resources sector?

There is no doubt significant room for improvement, and this is the responsibility of the resources sector and their contractors, Traditional Owner groups, and support mechanisms within government. When potentially very large sums of money are on the table in terms of compensation and royalties, these priorities (which have a limited timeframe of benefit) can result in a disproportion level of focus, with inadequate attention paid to the topic of long term and sustainable economic development within Traditional Owner groups.

The other factor impacting on solid engagement is Traditional Owners’ readiness to engage commercially with a mining company, and its contractors.

Putting things in perspective – for Native Title to be recognised by Australian courts, the determination must be awarded to an organisation, normally a Prescribed Body Corporate (PBC). This entity comes into existence with a Constitution and a Board of directors, and often not much else.

Without an economic development plan, the focus of the PBC often remains indefinitely on everything other than economic development. By the time a resource company has decided to go ahead with a project, all good intentions to engage with Traditional Owner groups on a commercial basis can be all too little and too late.

Some window dressing is often applied (resulting in a degree of jobs and/or a small degree of business participation), often at vast expense to the resources company which has to be able to demonstrate some outcomes, and an investment in achieving those outcomes.

So how could best practice in Traditional Owner group economic development look?

There are three main players which all have to put their shoulder to the wheel, and in a collaborative fashion.

1. Traditional Owner groups

Whether or not there is a resource sector company in the mix, Traditional Owner groups need to transition in a planned fashion from an initial PBC to a well-structured and managed organisation that might have one or several commercial arms. Some of these commercial arms may relate to a mining company on their land, and other arms might not.

Commercial operations need to be entities in their own right, with adequate demarcation from the PBC. The task of these commercial entities is to obtain start-up capital from the PBC (or in their own right), to employ group members, to begin servicing the project (and very importantly – other regional industries), and to return a portion of profit to the PBC.

In conjunction with this process, it is important for Traditional Owner groups to employ two key tools. The first tool is a group People, Skills, Aspirations, Asset Register. The second tool is a Communication and Stakeholder Management Plan. These two tools combined ensure the identification of and communication with the group’s most important resource – its people, and a thorough engagement process with external stakeholders such as present resource companies. Resource sector company dynamics are complex, as are the dynamics within Traditional Owner groups. Ambiguous, crossed, narrow and reactive communication can cause any good intent or planning to falter.

All the processes to this point start to draw the group’s attention away from the PBC being seen as a welfare organisation with endless resources (which is not the case).

Longer term one entity under the PBC could be an investment arm, which makes investments on behalf of the group in property, existing businesses, managed funds, etc. These investment create capital and sustainable passive income outside of immediate group activity, diversifying the overall economic picture and creating wealth which can be applied to multi-generational social, cultural, educational and commercial endeavours of the group.

This all equates to self-determination.

2. Resource companies

In concert with the activity above, any resources company that has an agreement with a Traditional Owner group needs to start considering early on as to how Traditional Owner commercial entities could fit into its supply chain directly, and via major contractors that will be working on a project. As this starts off as a hypothetical exercise (i.e. if the group has no commercial arms), it must be done in a pragmatic fashion with full disclosure and management of expectations. It needs to be clear to all stakeholders that if the Traditional Owner group does not take the necessary steps to prepare for commercial engagement with a project or operation (which may include capacity building assistance from the resources company), then they may not be offered significant commercial opportunities. Cost, schedule and quality are paramount and will never be discounted by a resources company in favour of an under-prepared Traditional Owner group.

Within the resources company good outcomes in this space involves early and ongoing collaboration and planning with a variety of internal functions, as well as with the Traditional Owner group and its commercial entities as they emerge. Significant capacity building and technical assistance will likely be required for both the PBC and its commercial entities, which resources companies should have a budget allocated for, and which third party stakeholders (e.g. government) can support.

By the time a resource company has decided to go ahead with a project, all good intentions to engage with Traditional Owner groups on a commercial basis can be all too little and too late.

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