Canada Mining Boom Leaves Natives in the Cold: Indigenous community with ‘third world conditions’ sits 90km from diamond mine, prompting fight for resource royalties.

As mining companies around the world reap profits from high commodity prices, people in Attawapiskat are demanding a bigger slice of the pie from the diamonds extracted from their traditional territory.

Despite living just 90km from a massive diamond mine, Jackie Hookimaw Witt has watched poverty tear at the fabric of Attawapiskat, an indigenous community in northern Canada.

The northern Ontario community made international headlines recently, when the chief declared a state of emergency, as many houses lacked heating during frozen winters, and families were left sleeping in storage sheds, shacks or run-down trailers, often with no running water.

"Why are our people living in such extreme poverty when we are so close to this rich mine?" asked Witt, a mining critic born and raised in Attawapiskat. "There is something wrong with this."

As mining companies around the world reap profits from high commodity prices, people in Attawapiskat are demanding a bigger slice of the pie from the diamonds extracted from their traditional territory.

"Our native politicians are pushing for revenue sharing," where resource royalties from the Victor diamond mine would go directly to indigenous administrations, known as band councils, rather than straight to the provincial government, Witt told Al Jazeera.

Valuable resources

While high prices for precious metals and other commodities have profited mining corporations, they have led to desperate behaviour in communities around the globe, including an increase in copper wire thefts in some western cities and gold scavenging in Guatemalan garbage dumps.

"Great riches are being taken from our land for the benefit of a few, including the government of Canada and Ontario, who receive large royalty payments, while we receive so little," Teresa Spence, the chief of Attawapiskat, said in a speech on January 26.

About 1,800 people live in Attawapiskat, where unemployment hovers near 90 per cent. Temperatures drop to -40 Celsius in the winter and in one case, 90 residents have moved into two portable housing units used by construction workers, with only two washrooms.

The Red Cross has been assisting community members and appealing for donations, in scenes that reminded many Canadians of third world poverty, rather than of life in a wealthy democracy.

A spokesperson for De Beers, the international firm which owns the Victor mine, told Al Jazeera that Canada’s government and indigenous groups need to work out some kind of revenue sharing agreement.

Presently, De Beers pays money to Attawapiskat via a trust fund the company has set up, although it says it is not mandated by law to do this.

"There are direct financial payments to the community on a regular basis," De Beers spokesman Tom Ormsby told Al Jazeera, although neither he nor representatives from Attawapiskat have disclosed the amount.

The company has spent about $325m on contracts with indigenous-run business for services such as catering and contracting, Ormsby said. "More than 100 community members work at the mine."

The mine extracts about 600,000 carats of diamonds per year. "In the short period of time we have been involved with the community, we have seen a lot of progress," said Ormsby, adding, "we don’t want to dismiss the long term challenges the community has."

Despite global economic uncertainty, De Beers, the world’s largest diamond company, saw operating profit rise by 64 per cent in 2011.

Royalty debates

Critics say the company profits at the expense of local communities and public revenue. "In 2010, the company reported that they didn't pay any taxes at either of their Canadian mines," said Ramsey Hart, an analyst with Mining Watch Canada, an environmental watchdog.

Diamond royalties are set at 12 per cent of profits, Hart said. "Despite taking millions of dollars worth of diamonds out of the ground, the company has tried to show that it isn’t making any profit so it hasn’t been paying taxes." His claims on royalties could not be independently verified.

Hart wants to see a new tax structure, where mining companies have to pay according to the value of what they take out of the ground.

"When prices [for commodities] are high, the tax rate should increase accordingly," he told Al Jazeera. Mandatory revenue sharing with indigenous communities should also be reflected in an updated tax structure, he said.

Other indigenous groups, including the James Bay Cree and Inuit of northern Quebec have secured access to royalties from massive hydro-electric projects on their traditional territories, after lengthy protests and court battles. These communities generally have better social development outcomes than places such as Attawapiskat which do not receive royalties from projects on their traditional land.

Who is to blame?

Conservatives tend to blame poverty in indigenous communities on bad governance, rather than royalty issues.

Canada's ruling Conservative Party says the federal government has spent $90m in Attawapiskat since it took office in 2006. The government put the band council’s finances under third party management, saying their books had been mismanaged. The third party manager, a private sector consultant, is earning about $1,300 per day to manage the community's finances.

"I think being under third party management is probably the best decision at the moment," said Joseph Quesnel, an analyst with the Frontier Centre for Public Policy, a market orientated think-tank.

Under the Indian Act, legislation first passed in 1876, the federal government is responsible for providing services on native reserves, including Attawapiskat. "If those services are not being delivered it is like a breach of contract and it is taxpayer money," which is being provided to the local band council, he said.

"The whole idea of corruption is a wide issue" facing aboriginal communities he said, while not alleging any particular misdeeds in Attawapiskat.

He supports the idea of provincial governments hammering out a deal with aboriginal communities, or what are called First Nations in Canada, to share more resource royalties.

"First Nations have particular challenges in terms of the lands they are on. They often weren’t the most productive or best lands," Quesnel, who has mixed native and non-native ancestry, told Al Jazeera. "They are often away from highways and markets, especially the more isolated ones. There is no easy solution."

The community can only be reached by frozen ice roads in the winter and by plane in the summer. The cost of building a house in Attawapiskat is about $250,000, with transporting materials eating up about half the cost – and government critics say not enough money or support is being provided.

"Everything where we live is very expensive," said Jackie Hookimaw Witt, the Attawapiskat resident. "To buy broccoli, when I want a nutritious meal, it will cost $8, one cantaloupe costs $14."

The town, originally founded in 1893 by Catholic missionaries who wanted to "civilise" the natives, only got some running water and sewage facilities in the 1990s.

Environmental concerns

Beyond royalties and questions over who should finance development and new homes in Attawapiskat, indigenous people worry that increased mineral extraction is ruining the local environment.

"When we have mining in the area, First Nations that have lived off the land won’t be able to hunt, trap or fish anymore," said Stan Beardy, Grand Chief of Nishnawbe Aski Nation, who represents 49 communities – including Attawapiskat.

"I have major concerns about the local environment," he told Al Jazeera. "If standards are not high enough, it will destroy me and my people; we have nowhere else to go."

Ormsby, from the mining company, said that diamond extraction does not hurt local ecosystems. They just dig and then "wash and crush" the stones, he said.

But others are not so sure.

"At the beginning [during the mine's construction] I had a brother who worked there," Witt said. "He was digging with big machinery. He was shocked to see how they were using explosives for open pit mining. It hurt him when he saw the land desecrated, it haunted him."

With natural resource extraction driving Canada’s economy, the federal government is keen to have more big projects such as the De Beers Victor mine.

But some native leaders have warned of increased strife between corporations and indigenous people if a broader agreement on resource royalties is not reached, as frustration boils over, with wealth and poverty sitting side-by-side.

"The settlers have not fulfilled their obligations [signed under treaties with natives]," Chief Beardy said. "They are taking all the benefits derived from the land. As a result, we are extremely poor."

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