Minister sides with company over Diavik oversight funding dispute

Minister sides with company over Diavik oversight funding dispute
Environmental Monitoring Advisory Board employees conduct water monitoring for the Diavik Diamond Mine. An ongoing feud between the board and the company needed ministerial intervention again earlier this year for the third time in a row.Photo: EMAB.

The latest in an ongoing saga of funding disputes between the owner and independent environmental oversight board for the Diavik Diamond Mine has resulted in the government siding with the company’s proposed budget for the monitoring agency.

Environment and Natural Resources Minister Michael Miltenberger stepped in as arbitrator to settle the matter for Diavik Diamond Mines Inc. (DDMI) and the Environmental Monitoring Advisory Board (EMAB) in February, according to a letter posted to EMAB’s website late last month.

The dispute arose after the company, which is required to fund EMAB’s operations, put forward a budget of $467,663 for 2015-16 and $477,590 for 2016-17 for the board. EMAB’s own proposed budget was for $627,587 in 2015-16 and $640,139 in 2016-17.

Though the two parties are supposed to come to an agreed-upon budget on their own, they may confer with the minister in the case of irreconcilable differences. Under the legislation, the minister cannot draft a new budget for EMAB, but must choose either DDMI’s or EMAB’s proposed budgets.

Miltenberger opted for the budget put forward by DDMI, based on a line item issue involving a traditional knowledge (TK) panel previously run by EMAB but now funded directly by Diavik.

Though both EMAB and DDMI submitted proposed budgets based on an allowable consumer price index increase of 2.1 per cent, EMAB had not reduced this year’s budget to reflect the removal of the TK panel, instead reallocating that funding to other line items in their 2015-17 budget.

The environmental agreement for Diavik stipulates that EMAB must make efforts to ensure the budget has not exceeded DDMI’s contributions for the previous funding period plus an increase for CPI.

“The Minister finds that EMAB did not make an effort to ensure that their proposed budget did not exceed DDMI’s 2013-15 contribution to the budget,” states the GNWT’s letter to the parties. “There are a number of areas in EMAB’s budget where cost-savings could have been realized, resulting in a budget of less than $600,000, without compromising EMAB’s ability to meet its mandate.”

Legacy of budget disputes

The latest disagreement is just one in a series of disputes over funding between EMAB and the company since 2009, when an independent arbitrator was first brought in to settle the disagreement.

The minister resolved a similar dispute for the 2011-13 and 2013-15 budgets, in both instances selecting the DDMI budget.

In his letter, Miltenberger acknowledged the problematic relationship between the two parties and asked them to work on finding solutions.

“EMAB and DDMI are strongly encouraged to improve their working relationship, particularly when it comes to funding issues,” the letter states. “This is the third time in a row that the Minister has been required to select a budget; the Minister’s involvement in these budget disputes should be a last resort following good faith negotiations.”

Miltenberger said both the board and company need to direct more effort into agreeing on a budget and to develop ways to resolve funding disagreements before involving the minister.

EMAB was created in 2000 following the signing of the environmental agreement for Diavik by DDMI, the GNWT, the federal government, the Tlicho Government, Lutsel K’e Dene First Nation, Yellowknives Dene First Nation, North Slave Métis Alliance and Kitikmeot Inuit Association.

It is a non-profit, independent advisory board meant to serve as a public watchdog for the regulatory process and implementation of the environmental agreement.

Diavik, located approximately 300 km north of Yellowknife, is Canada’s largest diamond mine and is owned primarily by Rio Tinto and managed by DDMI. The mine commenced production in 2003 and has an annual production of 6-7 million carats.

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