K.I. vs. Platinex: a ‘worst case’ example of community relations – Canadian Business Ethics Research Network

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CASE STUDY

•This section presents the now-infamous case in light of the previous discussion of the Aboriginal context to mining in Ontario, and the importance of community consultation in advance of resource development.

On December 14th, 2009 the Ontario Ministry of Northern Development, Mines and Forestry (MNDMF) announced that an agreement had been finalized between the McGuinty Government and Platinex Inc. to settle the junior mineral exploration firm’s litigation against Ontario and the K.I. First Nation (see MNDMF, 2009). This agreement included a $5 million payment to Platinex upon the release of its mining claims in the K.I. traditional territory and the guarantee of a royalty of 2.5% of any future resource revenues from those lands.

The settlement officially ended a dispute that began nearly ten years earlier, exacerbated tensions between Aboriginal communities, the province, and the mining industry, cost millions in legal fees, billions in potential revenue, led to the jailing of six K.I. community members, and changed the lives of hundreds of others who call K.I. home. How did things go wrong in K.I.?
 
The following section presents the now-infamous case in light of the previous discussion of the Aboriginal context to mining in Ontario, and the importance of community consultation in advance of resource development.

Kitchenuhmaykoosib Inninuwug First Nation

•This section provides concise geographical and historical context of K.I. First Nation prior to the conflict with Platinex

K.I. First Nation is an Oji-Cree community of roughly 1500 people, living on-reserve near Big Trout Lake, approximately 700 kilometres north of Thunder Bay. There is no year-round road access to this community, contributing to a high cost of living and low standard of delivery of essential services, healthcare, education, and community infrastructure, as is common among isolated Aboriginal communities in northern Ontario (Strauss, 2006). Figure 2 illustrates the location of the community on the northern shore of Big Trout Lake. The community has an elected band council, led by Chief Donny Morris.

The First Nation signed the 1929 adhesion to Treaty 9 and is therefore entitled to treaty rights and reserve land (see INAC). Under the direction of the Chief and Council, K.I. First Nation prepared and filed a Treaty Land Entitlement (TLE) Claim with Ontario and Canada in May 2000. This claim asserted that the calculation of the reserve land originally given to the First Nation was incorrect and their reserve should include an additional 19 square kilometre area on the south shore of Big Trout Lake and surrounding tributary lands. This claim was primarily based on the presences of a number of culturally and spiritually significant sites and the traditional use of the area by community members (Ariss and Peerla, 2009). As K.I.’s TLE claim was being researched and prepared, Platinex Inc. was simultaneously seeking rights to the land on which K.I. First Nation had occupied from time immemorial.

Platinex Inc. and Unwanted Mineral Exploration on Traditional Lands

•This section provides an overview of the progression of key events in the K.I. vs Platinex case. What began as an untimely development that the community was willing to consider quickly became an outright conflict that exacerbated company-community tensions throughout Ontario’s northern Aboriginal communities, cost millions of public and private funds, but resulted in increased public attention to Aboriginal issues throughout Canada.

Platinex Inc. is a junior mineral exploration firm, which sought to begin exploratory drilling for platinum deposits on the traditional territory of the K.I. First Nation. In 1999, prior to the formal submission of K.I.’s TLE claim, Platinex obtained mining claims and leases to the ‘Crown Land’ adjacent to the K.I. reserve from the MNDMF (see Figure 2). This was the first proposed mineral exploration in this region, and when the community was informed of the mining claims in 1999, they began a dialogue with Platinex regarding the community’s traditional use of the area and in 2001, along with five other First Nations in the area, declared a moratorium on development until land use planning could be completed and the community was properly consulted (Kerwin, 2006).

Speaking for the First Nation, Chief Donny Morris told Platinex that they were concerned about the impacts that their proposed development would have on their traditional use of the land, and how it may affect their TLE claim. Despite these issues, the community clearly stated that,

“KI is not opposed to development on its traditional lands but wishes to be a full partner in any development and to be fully consulted at all times. Whether any proposal for development would be accepted depends on the merits of each proposal, and whether the development respects KI’s special connection to the land and its duty, under its own law, to protect the land …” – Justice G.P. Smith, 2006, emphasis added.

Based on this expressed interest in discussing the exploration project, Platinex continued meeting with the Chief and Council, but when the company failed to follow the K.I. development protocol, which stressed the need for broad community involvement, in August 2005 K.I. notified Platinex that all previous agreements were null and void and that any development on their traditional territory would be opposed until the community was properly consulted.

During the early discussions between Platinex and K.I. from 2000-2005, the company had been gathering investment funds to begin the exploration process. There was considerable investment interest, and Platinex falsely notified investors that verbal consent had been given to begin ‘low impact exploration’ (Kerwin, 2006). Based on this assurance from Platinex, private investors had committed over $1 million to the project by December 2005. Since the funds were available, and they had permission to explore under the Mining Act, Platinex decided to begin drilling without K.I.’s consent in February 2006.

In response to the ‘unlawful’ drilling, community members held a peaceful protest at the drilling site. At this time, Platinex received letters from the Chief and Council that they were committed to take any measures necessary to stop the exploration in their territory. Eventually, the Platinex drilling team withdrew. However, in April 2006 Platinex sought a court injunction against K.I. to prevent them from interfering with further exploration and filed a $10 billion suit for damages resulting from the project slow-down (Ariss and Peerla, 2006). At this, K.I. counter-sued Platinex for damages, and Ontario, declaring that the Mining Act is unconstitutional since it did not recognize Aboriginal and Treaty rights and did not provide for proper consultation with Aboriginal peoples.

The case was heard by Justice G.P. Smith of the Superior Court of Ontario on June 22-23rd, 2006 in Thunder Bay. On July 28, Justice Smith ruled in favour of the K.I. First Nation, on the finding that K.I. may suffer “irreparable harm due to its loss of culturally and spiritually significant land, and of its connection to the land, and limitation of which land might fulfill a possibly favourable ruling on its TLE claim” (Justice Smith, 2006). Furthermore, Justice Smith added,

Since 2001, Platinex has received several letters and notices that KI was not consenting to further exploration. It is inconceivable that Platinex did not know that KI was strongly opposing any further drilling on the property… Platinex decided to gamble that KI would not try to stop them and essentially decided to try to steamroll over the KI community by moving in a drilling crew without notice… While I accept the evidence of Platinex that it will face solvency if it cannot complete its drilling by the end of this year or shortly thereafter, Platinex is, to a large degree, the author of its own misfortune
– emphasis added.

A temporary injunction was granted on the condition that K.I. establish a consultation committee to meet with Platinex and representatives from the Ontario Crown to develop an agreement that would fulfil the Crown’s duty to consult with K.I. and eventually allow Platinex to drill nearby, but not necessarily within the TLE claim land (Ariss and Peerla, 2009). This compromise was intended by Justice Smith to facilitate meaningful consultation and dialogue between the parties over the following six months. However, when the court re-convened following the six months, nothing had changed, at least from the perspective of K.I. First Nation. Given the pressure from their investors, Platinex again pursued legal action to permit small-scale exploration.

In May 2007, however, the Supreme Court found that the consultation process between July 2006 and April 2007 had been appropriate and that Platinex’s last proposed Memorandum of Understanding (MOU) was “a reasonable and responsible beginning of accommodating K.I.’s interests…” (see para 160 Platinex Inc. v. Kitchenuhmaykoosib Inninuwug First Nation et al. & A.G. Ontario). This ruling, according to Justice Smith, allowed the community to prevent drilling in certain areas (e.g. hunting areas and grave sites), but gave Platinex permission to drill a maximum of 24 sample holes (Thom, 2007). Although K.I. had hoped to prevent any drilling, Chief Donny Morris said, “We are going to play ball… We are going to travel down the road (of negotiations). But our consultation process must be recognized and utilized” (see Thom, 2007).

Despite the willingness of K.I. to work within a court-supported consultation framework, no exploration agreement was reached between the First Nation and Platinex by the end of the August 2007. Therefore, Platinex once again sought a court order stating that drilling operations could begin unobstructed by the community. In October 2007, the Supreme Court allowed Platinex to begin small-scale exploration without interference. In spite of this Court ruling, community members established a protest camp at the exploration site and others, including Chief Morris, met Platinex workers at the local airstrip and turned them back (Thompson, 2009).

For their actions, K.I. was brought again to court by Platinex, where Chief Morris and five other community members (including four councillors) were charged with contempt of court. In an attempt to avoid jail time for the ‘K.I. Six’, Aboriginal Affairs Minister Michael Bryant attempted to mediate by offering a compromise that included partial payment of fines to the Court and no further obstruction to mining, but the K.I. Six were resolute and accepted the jail time.

While in prison, NationTalk was able to interview Chief Morris (listen to interview). The sentencing of the K.I. Six occurred on March 17, 2008. This sentence focused a tremendous amount of media coverage upon the K.I. vs. Platinex case (see CBC’s The National March 25, 2008), and drew widespread Aboriginal support from the public (see support rally in Toronto), while unleashing serious criticism upon Premier McGuinty, the MNDMF, and the MAA (see debate in Legislative Assembly of Ontario April 22, 2008).

After serving 68 days of their sentence, the K.I. Six were released based on a Court of Appeal ruling that demonstrated a conflict of laws between Section 35 of the Constitution Act and Ontario’s Mining Act (Ariss and Peerla, 2009). This ruling, therefore, focused additional attention on Ontario’s then-antiquated Mining Act, which has since been amended to specifically address the issue of Aboriginal consultation under Bill 173. While the K.I. Six were released, their struggle was still far from over. As part of the release of the K.I. Six, the Court ordered a new round of consultation and mediation between the First Nation, Platinex, and Ontario. However, after his release, Chief Morris stated, “I’m not sitting down with Platinex. I believe we paid our dues when we were jailed and that company does not exist here” (Cowan, 2009).

After waiting over a year for Ontario to find a resolution to the problem, in May 2009 a spokesperson for Platinex said, “A confrontation is likely unless the government starts taking this seriously… We’ve been forced into this situation by government inaction and incompetence” (see Cowan, 2009). Once again acting without the consent of the community, a Platinex floatplane, reportedly carrying Platinex President and CEO James Trusler, attempted to land on a lake in K.I. First Nation’s territory in August 2009. The plane was unable to land, however, because Chief Morris went to confront it in a small boat, allegedly dragging debris through the water (see video of Chief Morris; Murray, 2009). That was the final trip to K.I. for Trusler.

Being denied access to K.I. territory a final time and seeking to avoid further confrontation, Platinex resorted to the litigation process it initiated with Ontario in May 2008. After negotiating throughout September-November 2009, the December 14th settlement announcement closed the Platinex vs. K.I. case.

While eventual victory for K.I. was an ‘expensive lesson for Ontario,’ MiningWatch Canada summarized the decade-long conflict nicely, this case points to the importance of effective engagement with Indigenous communities to address the requirements of free, prior, and informed consent before exploration and development projects proceed. It also shows the high social and economic costs that will be paid if we fail to meet this commitment (MiningWatch Canada, 2009, emphasis added).

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