Nunavut Tunngavik Inc. Approves New Resource Revenue Policy

Nunavut Tunngavik Inc. (NTI), the birthright corporation to which all Nunavut Inuit belong as dictated by the Nunavut constitution, approved a new resource revenue policy that has been two years in the making. As is stated in the official document, “the objective of the policy is to establish a clear, efficient and consensus-based policy to govern the use of a portion of the economic benefits derived from mineral resource development in Nunavut.”

The policy applies to royalties from all mines on Inuit Owned Lands (IOLs), the domain of which were apportioned during the Nunavut land claims agreement. The primary feature of the policy is the requirement for a minimum 12 per cent Net Profit Interest Royalty. The policy has been deemed applicable for all resource revenue since April 1, 2011.

The revenue is to be paid into a Resource Revenue Trust that will be managed by seven trustees consisting of the president of NTI, the presidents of the three Regional Inuit Associations (RIA) in Nunavut, and three independent trustees. Fifty percent of revenue collected will go to an operating fund, while the other half of revenue will go to an endowment fund. Income from the operating fund, after deducting operating costs, will be distributed annually based on a distribution formula of 30% to NTI, 10% for each RIA, and 40% to the RIAs split on a per capita basis. Income from the endowment fund will be distributed annually on the same distribution formula after the value of the fund exceeds $100 million.

The NTI press release on the policy summarizes how the income of the trust fund is to be spent after it is distributed: “Expenditures shall be for the purpose of providing both near-term and long-term sustainable benefits, and may be for economic, social, cultural, environmental or other purposes. Unless approved by NTI membership in exceptional circumstances, expenditures will not be made by NTI or an RIA in areas where government has primary responsibility.” Each RIA will be the primary decision-maker on the expenditure of the portion of trust funds that it receives, although any form of direct monetary distribution will need approval from at least 75% of NTI members.

While this resource revenue policy was ostensibly created by NTI with the best interests of Nunavut Inuit in mind, and was approved by the representative members of NTI, there remains widespread disagreement within the wider Inuit community surrounding natural resource development on their lands. Natural resource development and the corresponding resource revenue agreements on Inuit owned lands are controversial precisely because there are a wide variety of positions when it comes to defining the “best interests” of Inuit and the most effective ways to pursue these interests.

On the one hand, NTI has a strong case that the economic benefits derived from mineral development on IOLs through this resource revenue policy will bolster Inuit economy in Nunavut as never before. The mining industry has already spent $2.44 billion in Nunavut since 1999. There are now 82 active mining properties in Nunavut that contain gold, iron, silver, uranium, and other minerals.

At least ten of these mines are very large properties expected to go into go into production within this decade. NTI President Cathy Towtongie has stated that NTI’s conservative predictions estimate that the policy will bring in around $2 billion in royalties over the next several decades. Towtongie has publicly asserted her confidence that resource revenue sharing is the right way forward for Inuit: “One of the last frontiers in the world is Nunavut and this is the way to plan for it — to create economic certainty for future generations.”

Nevertheless, even some Inuit who find natural resource development on IOLs acceptable still have reasons to criticize the structure of NTI’s revenue sharing policy. First, there is disappointment that the policy only applies to net profits, which are determined by the internal accounting of the mining companies. Net profits can differ greatly from gross profits depending on how much revenue is allotted to cover operating costs, salaries and wages, and various other expenses.

Furthermore, there is a certain level of mistrust among some Inuit not only regarding the transparency and fairness of royalties calculated by resource development corporations, but also surrounding how NTI itself will manage and distribute money in the trust fund. The trustees of the resource revenue fund reserve the right to remove funds to cover operating expenses as they deem fit – a dangerous loophole in the eyes of those who are worried about the abuse of power for personal monetary gain that they have perceived in the past by the leaders of other native-run institutions.

Moreover, resource development has historically contributed little to sustainable economic development in the North. A major concern is that even with a significant amount of revenue flowing into the trust and being distributed fairly, any investments made from this money will be worthless without the basis of a sustainable Northern economy and strong, healthy communities to build upon.

Even more critical of NTI’s policy are Inuit who outright oppose natural resource development, arguing that the extraction of non-renewable resources is unsustainable by definition. As precedent has suggested, “royalty regimes can promote development that can negatively affect the social, cultural, and environmental well being not only of their immediate areas, but in neighboring jurisdictions.”

Thus, while at face value the approval of this resource revenue policy by NTI may appear to represent consensus among Inuit about their position and expectations regarding mineral development on IOLs, this belies a much more nuanced truth. Both outsiders and Inuit themselves need to keep in mind the myriad perspectives on the most advantageous way to go about natural resource development on Inuit Owned Lands in Nunavut, if at all.

This is not to deny that there is potentially enormous economic profitability for Inuit in Nunavut as a result of this prudent policy that secures revenue just when mineral development on IOLs in Nunavut is on the cusp of substantial growth. However, it is important to acknowledge that while the passage of this resource revenue policy attempts to ensure benefits to Inuit, it does not unconditionally guarantee a beneficial outcome from mineral development.