Chapter 21 - Employment and Business

21.2 Environmental Effects Assessment

This section analyses the environmental effects of the Project on employment income and business in terms of their type and quantity and geographic distributions. The section provides:

a description of the factors that may influence the distribution of these environmental effects;

a summary of the environmental effects of employment and business to date;

estimates of the environmental effects of construction, open pit and underground operations and decommissioning phases; and

estimates of the social and demographic environmental effects of employment and business activities.

21.2.1 Factors Affecting the Distribution of Employment and Business Effects

There are a number of factors that will determine the distribution of the employment, income and business benefits within Labrador and on the Island. This section discusses these factors and how they could influence the geographical distribution of project-related environmental effects. The major factors determining the distribution of employment and business benefits are:

the use of a commute operation;

labour market qualifications;

local business capabilities and the nature of the contracting process; and

benefits commitments.

21.2.1.1 The Project as a Commute Operation

The Commute System

As described in Chapter 3, the Project will be a fly-in/fly-out operation, also known as a commute mine. All site workers will alternate between periods at the worksite, living at the accommodations complex, and periods in their home communities. VBNC will provide air transportation between the site and the airports or airstrips at a number of designated "pick-up" points.

Currently, exploration workers are picked up from the communities on the North Coast (Nain, Utshimassits, Hopedale, Postville, Makkovik, Rigolet), Happy Valley-Goose Bay, Deer Lake and St. John's. This system has proved to be successful and may be used for future exploration activity.
The mine/mill contractor will establish transportation arrangements for Project workers in consultation with VBNC. The construction work schedules will depend upon the construction activity and the season in which it is being performed.

Prote Poker, chief of Utshimassits: "Voisey's Bay Nickel Company may be able to help us to maintain and promote our culture by providing Innu workers at the mine with 1-month leaves so that they can go to nutshimit (the country) to practice our way of life. . . . But the development may destroy our culture if Innu workers . . . begin to neglect their own way of life." (The Voisey's Bay News, March, 1997.)

Labour market analyses indicate that Labrador can meet a substantial portion of the workforce requirements for the open pit operations. It is proposed that most operations workers wil be on a 14/14 rotation. The introduction of underground operations will require a larger project workforce and the commute arrangements for that phase will likely be influenced by experience during the first several years of mine activity.

Spatial Distribution of Employment

It is desirable to forecast the spatial pattern of workers' place of residence and hence the distribution of employment and income-related environmental effects. Certain provisions within the IBAs may be a factor in the spatial distribution of the workforce. Forecasting is complicated by the characteristics of the commute system itself, which permits a wide geographic dispersion of employment benefits and has the advantage of allowing workers and their families considerable flexibility in deciding where to live.

Most employees at commute mines in Canada live in the province or territory in which the mine is located. That jurisdiction benefits from their taxes and the indirect benefits of their expenditures. For example, more than 85 percent of employees at the uranium mines in Saskatchewan lived in that province in 1996. This is not the case for mines in the Northwest Territories, however, where the population base is smaller and mining operation more remote. While there was an increase between 1987 and 1996 in the percentage of commute mine employees in the Northwest Territories who lived within the territory, the overall percentage is still low. For example, while the proportion of employees at Echo Bay's Lupin mine living in the Territories had doubled between the mid 1980s and 1996, it still only represented 18 percent of the total labour force (Community Resource Services 1996).

The places of residence of workers and their families are, broadly speaking, determined by hiring and retention patterns, and by any subsequent decisions by those workers to relocate. The following discusses the factors affecting hiring and retention patterns, and relocation decisions. This leads to a discussion of possible patterns of employment distribution and related, social and demographic change.

The commute schedule not only means that workers may be initially hired from a range of widely dispersed communities, but may seek to optimize their personal and family situations by subsequently relocating. This may result in the worker and his or her family moving to be closer to or at a greater distance from a particular pick-up point, or switch to commute from a different pick-up point. The economic and social factors prompting such relocation are reviewed here using hypothetical examples set in the context of the Project; examples of their more general occurrence in the mining and oil industries are provided in Shrimpton (1994).

Seeking rotational employment: People seeking work on the Project may move to North Coast communities, Happy Valley-Goose Bay or Western Labrador in order to be closer to the pick-up points.

Employment opportunities for family members: Workers and their families may relocate from smaller to larger communities (e.g., from smaller North Coast communities to Nain, from all Labrador Coast communities or rural Newfoundland into Happy Valley-Goose Bay) so as to have access to a wider range of employment opportunities for spouses and older children. Larger communities are, in particular, more likely to be able to provide part-time employment opportunities for spouses, opportunities which many couples find compatible with the commute rotation pattern of mine workers.

Reducing commute time and costs: Workers and their families may relocate, or move closer to a pick-up point to reduce the time and money costs of the commute; this might, for example, result in a move from Cartwright or the Island to Happy Valley-Goose Bay.

Reducing living costs: There will be cost of living differences between and among the various pick-up points and more distant communities, and these will influence relocation decisions. Substantial net savings might be realized, for example, by moving to a community where reduced living costs more than compensate for the additional commute cost to the employee. This will serve as a control mechanism, in that any growth-related increases in housing and other living costs in, for example, Upper Lake Melville, will likely reduce the in-migration and increase the out-migration of commuting workers and their families.

Social milieu: Workers and their families may use rotational employment to move to a preferred social milieu, be it to a more urban community like Happy Valley-Goose Bay, or to a smaller rural community. The former could include a move away from a small community in which there is pressure as a result of income differentials between the mine worker and other residents, perhaps including pressure to share that income. However, there could also be return migration to the coast, given widely expressed Inuit and Innu desires to return to these communities.

Community services and leisure opportunities: Workers and their families may choose to relocate to a community which has a wider range of services and leisure opportunities, including better educational and health services as well as more recreation opportunities. This may result in, for example, a move from smaller North Coast communities into Nain or Happy Valley-Goose Bay.

Personal social relationships: Workers and their families may chose to relocate to communities where other family members and friends are available to assist and support the family while the mine worker is away at site. Thus, for example, a worker who lives with his/her family in Happy Valley-Goose Bay may relocate to another community in Labrador or the Island so that the family can be near his/her relatives.

Increasing family exclusivity: It has been argued that commute work causes some families to progressively withdraw from the community (which often has difficulty in dealing with "part-time single-parents" and a worker who is absent for many community events) into family life, leading to an increased preference for the standardized and impersonal social settings that are more characteristic of larger urban communities.

Based on the above, the following events may occur.

There will be concentrations of workers in North Coast communities, Upper Lake Melville and Western Labrador. There will also be workers living in other Labrador communities, and some workers will choose to live on the Island and perhaps outside the province; however, the numbers of workers in any one community in this second group will be relatively small. The numbers living outside Labrador may increase when production moves underground, depending on the degree to which Labrador is able to provide the necessary workforce, and any future decisions on the work schedule and the use of other pick-up points.

Some workers and families will choose to relocate to Upper Lake Melville or Western Labrador from elsewhere in Labrador. This will include relocation from the other pick-up points on the North Coast, but this may be moderated by Innu and Inuit concerns about social problems and pressures in Happy Valley-Goose Bay. There may also be some in-migration to Upper Lake Melville from the Island. However, in all cases migration will be influenced by the cost of living, and especially costs of housing, in the region. As was noted above, if project-related employment and business activity results in high relative living costs, this will reduce the in-migration and, in some cases, increase the out-migration of site workers and their families.

There may be some relocation to Nain from other Inuit communities on the North Coast, but the use of a fly-in system will limit this effect, particularly if living costs in Nain were to increase substantially.

The above patterns of relocation could result in modest net population losses from North Coast communities other than Nain, although Aboriginal preference for living on the coast may reduce such loss and result in some return migration from larger centres.

Distribution of Business Activity

The potential "fly-over" of business opportunities is an important issue with respect to the spatial distribution of the business benefits in commute operations. This refers to the situation where communities near the mine site (or even within the province or territory where the mine is located) lose business benefits opportunities to a distant, larger town or city which is used as the service centre for the Project.

Currently, the value of goods and services acquired from within the Canadian province or territory where the commute mine is located varies, depending primarily on the mine's location relative to major sources of supplies and company purchasing policies. Most business generated by the commute mines operating in the Northwest Territories goes to Alberta, with 70 percent of the goods and services purchased by the Lupin mine and 36 percent by the Colomac mine (both in the western Northwest Territories) coming from that province. Newfoundland's only commute mine, Hope Brook, purchased 60 percent of its goods and services outside of the province (Community Resource Services 1996).

The distribution of goods and service purchases made within the province or territory also varies. Two commute mines in northern Ontario (Golden Patricia and Detour Lake) make 80 percent and 60 percent, respectively, of their purchases in northern communities. In the Northwest Territories, of those purchases made within the territory, the majority were made in Yellowknife (Community Resource Services 1996).

A key factor affecting the local purchase of goods and services is the availability of appropriate suppliers. For example, northern Ontario communities such as Timmins, Sudbury, and Thunder Bay have a long history of serving the mining industry. In contrast, the mining services sector in the Newfoundland and Labrador is well-developed only in Western Labrador. In the Northwest Territories, Yellowknife has a strong mining service sector. However, it provides very little to Polaris, the mine in the eastern NWT, since the mine obtains supplies by air and sea from other locations outside the Northwest Territories (Shrimpton and Storey 1991).

For the Voisey's Bay Project there will be some loss of business opportunities from Labrador as a consequence of concentrate ships providing a backhaul service from other locations. With regards to the rest of the Province, the Project will provide a much needed boost to business activity.

21.2.1.2 Labour Market Qualifications

The second factor important to the distribution of employment and business benefits is the availability of suitable labour. High school graduation is now the minimum requirement for a large number of industrial positions, while post secondary education is normally required for managerial and technical positions. Education levels in Labrador are lower than elsewhere in Canada, and lower still in the Aboriginal populations (see Section 21.1).

The language of the workplace will be English, which for many Aboriginal people, most notably the Innu, is a second language. Language competence requirements will vary by position but may affect the hiring of some area residents who are not proficient in English. For those working at the site, language proficiency would be expected to improve over time.

Many positions in construction and operations require evidence of either formal qualification in the relevant trade or demonstrated competency acquired through previous experience. Indications of a high level of Aboriginal interest in the Project have been demonstrated by the fact that over 1,100 individuals of Aboriginal status have expressed interest in Project employment (Innu Nation and LIA 1997). However, residents in remote northern communities face considerable barriers in securing access to relevant apprenticeships. The limited range of employment opportunities similarly restricts the number of Aboriginals who have acquired relevant workplace experience in order to establish competence in the performance of specific tasks.

The Province has experienced major construction projects associated with hydroelectric and oil and gas development. The most recent major project in the province was the construction and assembly of the Hibernia production platform. The employment and business associated with this development were considerable, not just for local communities but for the Province as a whole. At peak, 6,100 of the 6,800 people employed constructing and assembling the Hibernia production platform were living in the Province of Newfoundland (Community Resource Services Ltd. 1996).

Residents of the Upper Lake Melville area are somewhat familiar with the construction and operation of major industrial projects, and they are also aware of the uncertainty associated with such projects. While the area has no large-scale non-renewable resource developments, residents of the area are very familiar with providing supplies and services to industrial developments.

Residents of Happy Valley-Goose Bay have been providing supplies and services to CFB Goose Bay for approximately 50 years. CFB Goose Bay still remains the area's largest employer and generator of business activity. Residents of the area understand the uncertainty associated with industrial developments, given their experience with the downsizing of the Base over recent years. As a result, they are keenly aware of the influence of external forces on the level of local employment and business.

Residents of Western Labrador have a substantial degree of experience supplying goods and services to the mining industry, mainly as a result of the region's involvement in the IOCC mine in Labrador City and the Wabush mine in Wabush. As a result, individuals and businesses in this area should be in a good position to capitalize on employment and business opportunities resulting from the Project.

Analysis of baseline characteristics with respect to general labour market qualifications indicates that, in general, Aboriginal groups tend to have lower levels of education and training skills than other residents of the Province.

21.2.1.3 Business Supply Capabilities and the Nature of the Contracting Process

The distribution of business effects will be determined by the local supply capabilities of various businesses in each community and region. A Business Supply Capability study is currently being conducted by VBNC. The Utshimassits relocation project will provide further impetus to Innu-based business development in particular. Various joint-venture arrangements are currently being arranged between the Innu and established businesses both provincially and nationally. Through LIDC, joint ventures have been established, and a number of business enterprises launched which employ predominantly LIA members.
Existing businesses in other parts of Labrador, especially Western Labrador, have considerable experience in providing goods and services to the mining industry and business supply capability is strong in this area. Finally, some businesses in the St. John's CMA also have expertise in the provision of goods and services to the mining industry, which will also enhance the likelihood of business benefits accruing to this area.

21.2.1.4 Benefits Commitments

Benefits Commitments and Aboriginal Participation

"The shortage of wage employment in most northern native communities is such that wives are generally enthusiastic about rotation employment, with typically 80% or 90% reporting that they want their husbands to have such work the next employment season. The same proportion say they would like their husbands to work �as long as possible'." (Hobart, 1982)

The commute work pattern appears to be compatible with Aboriginal lifestyles (Hobart 1989). The 729 Aboriginal people employed at the 14 commute operations in Canada in 1996 represented 21 percent of the total workforce. The proportion of Aboriginal employment ranged from none at Detour Lake in Ontario and Hope Brook in Newfoundland to 56 percent at Cluff Lake, Saskatchewan. Five commute mines had greater than 35 percent Aboriginal employment; four of these are in Saskatchewan and one in Quebec (Community Resource Services 1996). This has been attributed to the presence of relatively large local Aboriginal populations and the development of effective Aboriginal employment policies.

The following reviews the experience of Aboriginal involvement in commute mining operations and the role that benefits commitments can play in that involvement.

Aboriginal Involvement in Commute Mining

A survey of the experience of aboriginal people in mining in Nunavut, Nunavik and Northern Labrador, undertaken for the Royal Commission on Aboriginal Peoples, reviewed Schefferville versus a number of other mines, where the experience has been more positive and significant long term well-paid employment has been generated for Aboriginal Canadians.

The opening of the Nanisivik Mine on Baffin Island has been seen as beneficial to Arctic Bay and the wider Baffin Region. The Polaris Mine, has not been as successful as hoped in increasing Aboriginal employment but some success was achieved with the establishment of a training program which attracted a number of native northerners.

The Lupin Gold Mine, 400 km northeast of Yellowknife has had some success in steadily increasing the proportion of Aboriginal workers. The introduction of a revised rotation schedule in 1986, which brought in a 14/14 rotation, increased Inuit opportunities for hunting and reduced the turnover rate (Pierce and Hornal 1994). The mine has a clear policy of northern hiring and has actively recruited from the Inuit communities of Coppermine and Cambridge Bay. In 1992 13 percent of employees were Aboriginal and the community of Coppermine received an estimated injection of $1.0 million into the wage economy. By 1996 Aboriginal employment had increased to 18 percent (Community Resource Services 1996). The company reports that its two-week rotational cycle has enabled the Inuit "to minimize their time away from families while allowing them to continue the pursuit of their traditional way of life". At the time of the 1992 report, the Lupin employee with the greatest length of seniority was from Coppermine (IWGMI 1992:85-90).

Aboriginal organizations have been increasingly active in pursuing the economic potential of mineral developments. In 1995 the Makivik Corporation signed an Impact and Benefits Agreement with Falconbridge Limited to secure employment and other economic benefits from nickel mining. The Raglan Agreement was welcomed by Makivik as bringing employment benefits: "it is going to open more avenues for people in the north to create business" (IWGMI 1995:69).

The Mistissini Band signed an employment benefits agreement, in 1995, with the INMET Mining Corporation which established a target of 25% Cree recruitment for work at the Troilus Project in northern Quebec.

The agreement between the Northwest Alaska Native Association and Cominco to exploit the large Red Dog zinc deposit in the area has provided significant employment and other economic benefits to the Inupiat, since its signing in 1982. Major training and educational initiatives are underway, particularly to encourage young people to seek relevant post-secondary qualifications.

The Red Dog mine has provided a number of local contracts and entered into a joint venture to provided accommodation and food services on the site. The fly-in rotational work pattern is reported to have created little interference with subsistence activities; joint management and monitoring mechanisms have reduced adverse environmental effects. Cominco has sought to assist local communities in taking advantage of the opportunities afforded by the development, for example, Noatak, a village 26 miles from Red Dog, ordered fuel delivery in conjunction with the mine and had it shipped up and stored at Cominco's facilities for subsequent delivery to the village (McLean and Hensley 1994).

Since 1991, the Tahltan Nation Development Corporation (TNDC) has completed construction work for the Homestake Golden Bear Mine and Eskay Creek Mine. In 1991, the TNDC was a subcontractor to build a mine site road for Eskay Creek. By 1993 the TNDC was the prime contractor for the completion of the mine site road. During construction, over 40 percent of the construction workforce was from Tahltan communities. During the first year of operations, 23 (32 percent) of the workers employed by Eskay Creek were Tahltans and another 10 (47 percent) were employed by contractors. In addition, TNDC were awarded the road maintenance and snow removal contract for the operation (Murphy, M. pers. comm.).

The RCAP study authors identified a number of barriers to Aboriginal recruitment into the mining industry, including low educational attainment and lack of interest in careers in mining. Companies that had entered into socio-economic agreements were found to be more likely to have a higher Aboriginal participation rate, as were mines with fly-in/fly-out rotational schemes of employment (Pierce and Hornal 1994:38). In addition, it appears that higher turnover may be related to the length of the rotation (Storey and Shrimpton 1989).

Canadian Aboriginal People and Uranium Mining

Aboriginal residents of the Athabasca region of northern Saskatchewan have had two decades of experience with uranium mining. The Rabbit Lake Mine began production in 1974/75, providing jobs to residents of Black Lake and Wollaston Lake. Gulf Minerals decided to utilize commuting for its work force, rather than construct a new town, a pattern to be followed by other uranium mine operators.

The Key Lake Mine opened in 1982. Cameco, which operates the mines, has an explicit commitment to maximizing employment opportunities for northerners, who constitute an increasing proportion of the workforce. In 1992 43.3 percent of employees were northerners, an increase from 32.2 percent; two years earlier, 86 percent of this group were Aboriginal. Cameco's employment policies also cover contractors; 50 percent of contract workers, as of May 1992, were Aboriginal (IWGMI 1992:59).

The Key Lake Board of Inquiry into the proposed uranium mine considered the social effects associated with employment and concluded:

We do not believe that the proposed mine and mill will have a measurable negative social impact�. The proposed Key Lake mine is located in an unpopulated part of the province and there will not be a transitory workforce resident in any of the communities or in close contact with the people of the communities�. The Board does not accept that the creation of at least 250 long-term jobs for northern people will have a negative social impact. Quite the contrary. We believe that employment for a large number of people will contribute to a more stable social environment in which it is more likely that persistent social problems will be solved rather than caused�. Considering the entire situation, we are satisfied that the social impact of the project on northern people and communities will be positive. (Ecologistics 1992:5-18).

The Cluff Lake mine, operated by Amok, has been in operation since 1980. Northerners receive first consideration on all job openings, a seven day rotation cycle allows employees to continue to live in their own communities and pursue a traditional lifestyle. Amok has also developed a Northern Business Program which affords explicit preference to northern business in contracting. Amok assists in identifying business opportunities and removing barriers to effective northern participation (Amok/Cluff undated). Cluff Lake Mine reported that in early 1997 over 60 percent of its workforce were residents of northern Saskatchewan of whom the vast majority were Aboriginal. There is considerable mobility between job levels: "In the majority of job categories at the mine site, workers can move from entry level position to the top level in a period of less than five years" (IWGMLI 1997:74).

Low levels of skill and limited educational qualifications have, to date, resulted in relatively few northerners accessing skilled, professional and managerial positions (ESAS 1992:57), although, as noted earlier, some companies have developed programs to address this problem.

McBain reports that, in 1991, of 959 uranium mine employees in Saskatchewan, 32 percent were northerners, although only 64 percent actually lived in the north, a number having moved south after recruitment (1995:67). These figures do not include those employed by subcontractors in the uranium mining industry (security guards, catering, trucking etc.). McBain's figures are apparently drawn from the Canadian Human Rights Commission executive summaries, based on reports submitted. Another study, undertaken for the Saskatchewan Uranium Mine Development Review Panel, offers a figure of 40.8 percent based on a total employment of 839 (ESAS 1992:50). Community Resource Services Ltd. (1996) offer a more recent figure of 55.9 percent native employees at Cluff Lake, 41.7 percent at Rabbit Lake and 36.9 percent at Key Lake in August 1996.

Access to well-paid mining jobs might reduce the pool of qualified labour available to a community, as some of the more energetic and talented individuals are attracted to new opportunities. However, this must be set in the context of the dramatic under-use of human capital in many communities. In Sheshatshiu, for example, a recent survey found that of 476 individuals between 18 and 65, only 155 held full-time or part-time jobs. Of these, 68 worked for the band council, Innu Nation, the school and the group home, and another 54 worked for Human Resources and Development (Sheshatshiu 1977:8). In Saskatchewan, the employment of more qualified or experienced members at uranium mines gave others the opportunity to move into the jobs they left. Replacements were found and trained for positions which became vacant (Gagnon 1992:299).

Currently the uranium mining industry in Saskatchewan supports a number of initiatives to encourage aboriginal students to stay in school and pursue mining industry careers. These include:

achievement awards for Grades 7-12, scholarships for post-secondary education, summer employment to assist the return to a study program;

career information service regarding employment opportunities in mining;

succession planning for senior Aboriginal employees;

placement of employees in technical, trades and management training positions;

mine site tours to familiarize high school students with the work site; and

sponsorship of northern institutional training initiatives (IWGMI 1997: 49).

Gagnon reports that in northern Saskatchewan the community effects of increased cash income are largely confined to the workers themselves. There is some increased spending at local stores but no new jobs have been created (1992: 308). Not surprisingly, the study found that the benefits of local spending varied considerably, depending on such factors as the range of local commercial establishments and the degree of community isolation: "from zero percent where there was no store, to 71 percent, where the store was small but the community isolated, and the only way out was an expensive plane trip" (ibid: 305).

Pierce and Hornal report limited stimulation of business ventures connected with mining, in their survey of Nunavut, Nuavik and Northern Labrador (1994:40). O'Faircheallaigh, on the other hand, suggests that wage income from mining employment can represent a significant resource to indigenous people who want to develop their own business (1991: 237).
McBain suggests that relocation of some of those employed in the mines to southern communities reduces local economic benefits. Employment benefits occurred but much of the anticipated spin-off benefit failed to materialize with some of the increased income generated by northern residents being spent in southern communities where prices were lower (McBain 1995: 27).

Recent figures for the Saskatchewan mining sector, including non-uranium mines, indicate that mining companies are the largest employers in northern Saskatchewan. Northerners (84 percent of whom are of Indian or Metis ancestry) make-up more than 50 percent of company employees. In 1996 mines in operation or construction spent more than $145 million on contracts for goods and services in northern Saskatchewan and $18 million on wages to northern Saskatchewan employees (Post-Secondary Education and Skills Training 1997: 31-36). Weekly earnings in mining in Saskatchewan, for example, in December 1996, averaged $927, compared to weekly teachers' wages of $646. Wages were over four times higher than those of employees in the tourism services sector and 83% higher than those paid to workers in seasonal forestry jobs, and 45 percent higher than those paid to workers in seasonal construction jobs (Post-Secondary Education and Skills Training 1997: 33).

There is also a growing number of successful joint venture business partnerships. The La Ronge Band, for example, has seen its enterprises grow from nothing in 1980 to seven enterprises, with annual revenues of $25-million, in 1994/95 (IWGMI 1997:36). Mine operators pursue a variety of strategies to increase local business opportunities. Cameco, for example, tenders many contracts solely in the north, employing a system of preferential bidding and packaging contracts in a way which allows northern companies an opportunity to bid. Cameco encourages joint ventures for large contracts and offers advice through its office in La Ronge (Joint Federal-Provincial Panel 1997:18).

Benefits Commitments and Women

While most commute workers consider a work place with a mix of male and female employees to be beneficial, males accounted for 89 percent of the total labour force, and 90 percent of the on-site workers, at the 14 operating commute mines in Canada in 1996 (Shrimpton and Storey 1989, 1991). These proportions have remained unchanged from 1987 to 1996 (Community Resource Services 1996). The Key Lake, Polaris, and Seabee mines had greater than average levels of female employment at 16.3 percent, 19.1 percent, and 13.2 percent, respectively.

The majority of on-site female employees at the 14 commute mines in Canada were employed in administrative, catering, and other support positions, while the majority of on-site male employees were employed in mining and mill operations. Of the 14 commute mines in Canada, only five had 5 percent or more females employed in mining and mill operations (Community Resource Services 1996).

VBNC has and will continue to encourage the participation of women in the Project workforce. During construction and operations, women seeking employment with VBNC will be given equal opportunity.

The indirect and induced employment created as a result of the Project will also produce opportunities for the employment of women in communities on the North Coast, Upper Lake Melville, Western Labrador and elsewhere.

21.2.2 Employment and Business to Date

Expenditures by VBNC since the its involvement with the Project have resulted in a very substantial contribution to the local, regional and provincial economies. These contributions have been primarily associated with exploration activities which are currently ongoing.

In early November 1997 there were 196 persons employed on the Project in Labrador. Of these 112 (57 percent) were Labrador residents, and 73 (37 percent) were Aboriginal. Of the latter, 66 were LIA members and 7 were Innu Nation members. Break down by gender shows that 172 (88 percent ) were males and 24 (12 percent) were females. In recent months total employment has remained relatively stable. Since July 1997 monthly totals have ranged between 226 (September) and 194 (October).

As of December 31 1996, over $106 million had been spent on exploration activity. Of this, $72 million (68 percent) had been spent in the Province as a whole, with $33 million (31 percent of the total) being spent in Labrador. A further $32 million (30 percent) was spent elsewhere in Canada. Newfoundland and Labrador content for the Project has ranged between 54 and 78 percent during 1995 and 1996, while overall Canadian content remained close to 100 percent.

Of total contract expenditures, 29 percent was on labour, 33 percent on materials and equipment, 17 percent on subcontract charges, and 21 percent on overheads and profit. Throughout 1995 and 1996, expenditures on helicopter travel and drilling represented the two largest components of project expenditure.

21.2.3 Estimates of Economic and Social Environmental Effects

21.2.3.1 Employment and Income: Methodology and Assumptions

The following section provides estimates of income and employment levels from the Project for the Province, Labrador, selected regions within Labrador, and communities. Direct, indirect and induced income and employment levels were estimated for construction, open pit operations, underground operations and decommissioning. The direct labour component includes the number of employees and labour income. The capital and operating costs were derived from preliminary estimates and cross-indexing with other projects of similar size. (Note these estimates are considered preliminary).

Economic Analysis

The number of employees and labour income of VBNC workers is used to calculate the direct environmental effects of the Project.

The indirect environmental effects resulting from Project expenditures are calculated first by estimating the quantity of goods and services that would be supplied by provincial based firms, and then by estimating the value-added factor for each level of expenditure. The amount supplied by firms within Labrador and Newfoundland was estimated by reviewing the types of goods and services that would be purchased in each cost category to determine how much could reasonably be supplied from within the Province. These estimates were made based on the relative amount of goods and services required, and the existing supply capability of the provincial economy. The amounts vary between categories, but are generally in the 35 to 60 percent range. The model is designed to reflect a growing supply capability over time.

After estimating the amount of provincial supply, a value-added factor was applied to determine indirect income. The value-added factor refers to the amount of expenditure which contributes to incomes in the Province, including wages, profits and overheads. Based on experience with the provincial economy and experience with similar activity elsewhere, this amount was assumed to average 35 to 38 percent for expenditures made in the Province for materials and supplies, 20 percent for equipment, and 5 percent for energy. When provincial supply capability is multiplied by the corresponding value-added factors, the overall provincial content ranges from 5 to 25 percent by type of expenditure.

The next step involved calculating the induced effects. Induced effects flow from the re-spending of money in the economy by those employed directly and indirectly on the Project. To estimate these, the total direct income and indirect income was added together and an income multiplier was applied to this total. Based on experience with the provincial economy and discussions with provincial officials, the multipliers assumed for Newfoundland and Labrador were 1.26 and 1.15 respectively. The lower value used for Labrador was to account for the greater potential leakage from the Labrador economy. This assumption may change over the Project life as businesses establish in Labrador. The amount determined by this formula is referred to as induced income.

A summary of the factors used in this analysis for determining the location of direct effects is provided in Table 21.4. The first three columns were used to allocate the direct employment on the Project only. The indirect environmental effects were estimated by taking the total estimated Labrador indirect effects and allocating it to the various communities based on the proportions indicated in the last column.

Induced environmental effects for each community were also calculated by applying the 1.15 multiplier to the total direct and indirect income in each community.

Table 21.4 Assumptions Adopted in Allocating Direct Employment

Community/Region	Interest Factor	Success Rate	Improvement Factor	Indirect Allocation
Labrador North Coast
Nain	58.0%	28.0%	1.6	12.0%
Utshimassits	58.0%	23.0%	1.6	1.0%
Hopedale	72.0%	23.0%	1.6	1.0%
Makkovik	51.0%	23.0%	1.6	1.0%
Postville	57.0%	23.0%	1.6	1.0%
Rigolet	56.0%	23.0%	1.6	1.0%
Subtotal Labrador North Coast 17.0% Upper Lake Melville
HVGB	10.0%	25.0%	1.2	43.0%
Mudlake and Sheshastshui	27.5%	23.0%	1.3	0.0%
North-West River	35.0%	23.0%	1.3	0.0%
Subtotal Upper Lake Melville 43.0%
Labrador City-Wabush	10.0%	25.0%	1.2	35.0%
Other Labrador Regions	2.0%	23.0%	1.2	5.0%
Total Labrador	12%	24.0%	1.31	100%

Labour Effects

Project-related employment is assumed to affect the provincial and regional labour markets through an expansion of the labour force as participation rates increase and as unemployment rates decrease. Increases in participation and employment are assumed in order to calculate revised employment levels and unemployment rates in each of the regions analyzed.

Caveats

As with any predictive estimates, the results from the analysis should be treated with caution. They represent a maximum environmental effects scenario but results should be considered as illustrative rather than definitive. They are based on a set of assumptions which may well change before the Project commences or during its lifetime.

The following should be noted:

Changes to the Project will have implications for employment demands and expenditures.

Estimates of employment and income effects become less reliable the more they are disaggregated by region and community.

The method of estimating employment and income effects generates "precise" answers based on the assumptions made. Such precision should not, however, be equated with high levels of confidence in the results, as many of the assumptions made may not remain valid. For example, experience with the Project may well demonstrate that "interest", "success" and "improvement" rates become altered from those assumed here.

This chapter utilizes Statistics Canada labour force data. The data, for the most part, are for 1991. They are thus dated, and in some cases their accuracy is doubtful. They are, nevertheless, the best data available.

The IBAs may alter some of these estimates, particularly for direct and indirect employment and income for the North Coast.

Other exogenous factors and events such as other mineral discoveries or changes in the fortunes of other sectors, will affect labour availability, interest levels, and the like.

Monitoring employment patterns will allow confirmation of the estimates made and the assumptions adopted.

Community-Level Environmental Effects

To derive an estimate for the amount of employment and business occurring in each of Labrador's communities and regions, estimates were first made as to the number of persons in each community who were available and able to work on the Project. This approach involved the following steps:

Determine the size of the labour force (using 1991 Statistics Canada data).

Determine the level of interest ("Interest Factor") in obtaining work on the Project. This was based on the survey of Inuit communities (Community Resource Services 1997) and estimated for the rest of Labrador.

The Interest Factor was multiplied by the labour force to derive an estimate of those willing to work on the Project from each community. Using this base number of people, a "Success Factor" was applied to each community. This factor was based on a review of the skill levels in the community, the skill requirements for the Project, and from experience in similar operations elsewhere.

Multiplying the number of interested persons by the Success Factor provided a figure for the number of people in each community who would be successful in obtaining employment on the Project. This figure was then increased by the use of an "Improvement Factor" which reflects VBNC's commitments to hire on a local basis (Table 21.4).

21.2.3.2 Employment and Income: Newfoundland and Labrador

Total Employment and Income

In total, over the life of the Project, an estimated 80,061 person-years of employment and $4.2 billion in income to provincial labour and businesses are expected to be generated (see Table 21.5). Over all phases of the Project, project-related employment is split between the Island portion of the Province (51 percent) and Labrador (49 percent).

Table 21.5 Total Employment and Income - Newfoundland & Labrador

Employment and Income	Construction		Open Pit Operations		Underground Operations		Decomm.
Employment (person-years)	Average¹	Range²	Average¹	Range²	Average¹	Range²	Average¹	Total ³
Direct	609	96-1410	942	456-1421	1071	537-1188	14	28,493
Indirect	317	73-707	873	425-1351	1432	712-1539	13	31,948
Induced	303	54-695	80	280-885	785	392-857	9	19,620
Total Employment	1229		2418		3307		36	80,062
Income ($ M)
Direct	$32	$5-75	$50	$24-75	$56.4	$28-63	$1	$1,504
Indirect	$14	$3-32	$39	$19-61	$64.4	$32-69	$1	$1,438
Induced	$12	$2-28	$46	$11-35	$47	$16-34	$0	$1,174
Total Income	$59		$137		$169	$84-124	$2	$4,176
¹ Average annual employment and income by phase. ² Projected upper and lower annual values by phase. ³Totals represent the sum of annual employment and income for all phases, not the sum of the averages.

This geographic distribution consists of direct, indirect and induced employment that is expected to occur over all phases of the Project. Moreover, included in these totals are employment levels that result from both expenditures associated with on-going operations and capital investment in infrastructure and mine development. Capital and operating expenditures are separated in several of the figures which follow to better reflect the geographical incidence of employment benefits captured by each region within the Province.

Direct, Indirect and Induced Employment and Income

The Project is expected to create a maximum of about 28,000 direct person-years of employment within the Province (Figure 21.2 and Table 21.5). About forty percent of the employment comes indirectly, from those firms that supply goods and services to the Project. The induced employment, created by the increased demands for goods and services throughout the economy (as direct and indirect income get spent within the Province), is responsible for almost 25 percent of the project-related employment. While VBNC has some limited control over the regional allocation of direct activities, it has little influence where indirect and induced employment environmental effects are felt.

Direct employment income generated within the Province as a whole is estimated at $1.5 billion over the life of the Project. Ancillary activities are expected to generate a further $1.4 billion, while expenditure of those direct and indirect incomes will result in a further $765 million in induced income (Table 21.5).

Figure 21.2 Total Direct, Indirect and Induced Employment

Total Employment and Income - Labrador

While more than 39,000 person-years of Project-related employment and $1.9 billion in incomes to workers and businesses is expected to be generated in Labrador (Table 21.6), it is important to understand that not all of the Project-related employment will come from direct hires with the Project. A substantial portion will arise from those firms that supply goods and services to the Project, while additional employment will be created in the service industry as direct and indirect earned incomes flow through the economy in the form of increased demands for goods and services. It is expected that nearly 63 percent of the employment that will occur in Labrador will be as a result of direct hires with the company (Figure 21.3). Another 25 percent of the employment will result from the expanded activities of those firms that supply goods and services to the Project. The residual, 12 percent in induced employment, comes from the spending of direct and indirect earned incomes throughout the economy.

Table 21.6 Total Employment and Income - Labrador

Employment and Income	Construction		Open Pit Operations			Underground Operations		Decomm.
Employment (person-years)	Average¹	Range²	Average¹	Range²	Average¹		Range²	Average¹	Total ³
Direct	385	87-828	776	377-1,146	1,003		473-1,102	14	24,742
Indirect	103	24-228	238	100-385	445		214-479	4	9,690
Induced	83	21-155	135	75-181	190		130-197	4	4,655
Total Employment	571		1,148		1,638			23	39,087
Income ($ M)
Direct	$20	$5-44	$41	$20-61	$53		$25-58	$1	$1,305
Indirect	$5	$1-10	$11	$4-17	$20		$10-22	$0	$436
Induced	$3	$1-6	$5	$3-7	$8		$5-8	$0	$186
Total Income	$28		$57		$80			$1	$1,945
¹ Average annual employment and income by phase. ² Projected upper and lower annual values by phase. 3 Totals represent the sum of annual employment and income for all phases, not the sum of the averages.

Figure 21.3 Total Employment, Labrador Direct, Indirect and Induced Employment and Income - Labrador by Region

The communities along the Labrador North Coast (see Table 21.7) are expected to receive about 21 percent of the total employment estimated for Labrador (Figure 21.4). They are expected to receive a similar proportion of direct employment and income, but a smaller share (17 percent) of the indirect employment and income. Their share of induced employment (28 percent) is higher than either of the other two types of employment. A further breakdown by community can be found in Appendix C.

Table 21.7 Total Employment and Income - Labrador North Coast

Employment and Income	Construction		Open Pit Operations			Underground Operations		Decomm.
Employment (person-years)	Average¹	Range²	Average¹	Range²	Average¹		Range²	Average¹	Total ³
Direct	113	29-200	162	100-200	197		161-200	5	5,195
Indirect	17	4-39	40	17-65	76		36-81	1	1,647
Induced	25	7-46	39	23-50	52		38-53	1	1,303
Total Employment	156		242		325			7	8,145
Income ($ M)
Direct	$6	$2-10	$9	5-10	$10		$8-10	$0.3	$273
Indirect	$0.8	$.2-2	$2	$.8-3	$3		$2-4	0	$74
Induced	$1	$0-2	$2	$1-2	$2		$1-2	0	$52
Total Income	$8		$12		$16			$0.3	$400
¹ Average annual employment and income by phase. ² Projected upper and lower annual values by phase. ³Totals represent the sum of annual employment and income for all phases, not the sum of the averages.

Figure 21.4 Direct, Indirect and Induced Employment, Labrador

The largest share of total Labrador-based employment and income goes to the Upper Lake Melville area (see Table 21.8). The communities in this region can be expected to receive approximately 28 percent of the Labrador-based employment. Their share of direct employment is slightly below that experienced on the North Coast (20 percent versus 21 percent). However, their share of indirect employment (43 percent) is nearly triple that experienced in the North Coast communities. This is explained in large part by the existing services offered in the Upper Lake Melville region. With these amounts of direct and indirect employment, the share of induced employment and income going to the Upper Lake Melville region is the highest of all the regions of Labrador.

Table 21.8 Total Employment and Income - Upper Lake Melville

	Construction		Open Pit Operations		Underground Operations		Decomm.
Employment (person-years)	Average¹	Range²	Average¹	Range²	Average¹	Range²	Average¹	Total ³
Direct	110	29-194	158	97-194	192	156-194	57	5,048
Indirect	44	10-98	102	43-166	191	92-206	23	4,167
Induced	29	7-55	48	26-66	70	46-73	15	1,699
Total Employment	183		309		453		94	10,914
Income ($ M)
Direct	$6	$2-10	$8	$5-10	$10	$8-10	$3	$266
Indirect	$2	$0-4	$5	$2-7	$9	$4-9	$1	$188
Induced	$1	$0-2	$2	$1-3	$3	$2-3	$1	$72
Total Income	$9		$15		$22		$5	$521
¹ Average annual employment and income by phase. ² Projected upper and lower annual values by phase. ³Totals represent the sum of annual employment and income for all phases, not the sum of the averages.

Approximately 24 percent of the total Labrador-based employment and a similar percentage of income, is anticipated to occur in Western Labrador (Figure 21.4 and Table 21.9). This region also accounts for large shares of the indirect and induced employment (35 percent and 32 percent respectively) but only 20 percent of direct employment.

Table 21.9 Total Employment and Income - Western Labrador

Employment and Income	Construction		Open Pit Operations		Underground Operations			Decomm.
Employment (person-years)	Average¹	Range²	Average¹	Range²	Average¹	Range²	Average¹		Total ³
Direct	101	26-178	145	89-178	176	143-178	4		4,639
Indirect	36	8-80	83	35-135	156	75-168	2		3,392
Induced	26	7-49	43	23-58	61	41-63	1		1,488
Total Employment	163		271		393		7		9,518
Income ($ M)
Direct	$5	$1-9	$8	$5-9	$9	$8-9	$0.2		$244
Indirect	$2	$0-4	$4	$2-6	$7	$3-7	$0.1		$153
Induced	$1	$0-2	$2	$1-2	$2	$2-3	$0		$60
Total Income	$8		$13		$19		$0.3		$456
¹ Average annual employment and income by phase. ² Projected upper and lower annual values by phase. ³Totals represent the sum of annual employment and income for all phases, not the sum of the averages.

The other communities in Labrador are estimated to receive no more than three percent of the total Labrador-based employment (Figure 21.4 and Table 21.10). This breaks out as two percent of direct employment, five percent of indirect employment and four percent of induced employment.

Table 21.10 Total Employment and Income - Other Labrador Regions

Employment and Income	Construction		Open Pit Operations		Underground Operations		Decomm.
Employment (person-years)	Average¹	Range²	Average¹	Range²	Average¹	Range²	Average¹	Total ³
Direct	9	2-16	13	8-16	16	13-16	0	419
Indirect	5	1-11	12	5-19	22	11-24	0	485
Induced	3	1-5	5	2-6	7	4-7	0	164
Total Employment	17		30		45		1	1,068
Income ($ M)
Direct	$0.6	$0	$1	$0-1	$1	$0-1	$0	$22
Indirect	$0.3	$0	$.5	$0-1	$1	$0-1	$0	$22
Induced	$0.1	$0	$0	$0	$0	$0	$0	$7
Total Income	$1		$1		$2		$0	$50
N.B. Other Labrador Regions refers to Eastern Labrador and the Labrador Straits. ¹ Average annual employment and income by phase. ² Projected upper and lower annual values by phase. ³ Totals represent the sum of annual employment and income for all phases, not the sum of the averages.

Based on the estimates for the distribution of employment, approximately 38 percent of direct employment, or 24 percent of total employment, is not allocated to a specific region or community within Labrador. The balance of employment is allocated to the mine site, reflecting those people who will work at the site but will not establish residence within Labrador while employed on the Project (see Table 21.11 and Figure 21.5). Rather, they will return to their place of residence outside of Labrador upon completion of their shift at the site.

Table 21.11 Total Employment and Income - Mine Site

Employment and Income	Construction		Open Pit Operations		Underground Operations		Decomm.
Employment (person-years)	Average¹	Range²	Average¹	Range²	Average¹	Range²	Average¹	Total ³
Direct	52	0-239	297	83-557	422	513	0	9,441
Indirect	0	0	0	0	0	0	0	0
Induced	0	0	0	0	0	0	0	0
Total Employment	52		297		422		0	9,441
Income ($ M)
Direct	$3	$0-13	$16	$4-29	$22	0-27	$0	$497
Indirect	$0	$0	$0	$0	$0	0	$0	$0
Induced	$0	$0	$0	$0	$0	0	$0	$0
Total Income	$3		$16		$22		R0	$497
¹ Average annual employment and income by phase. ² Projected upper and lower annual values by phase. ³ Totals represent the sum of annual employment and income for all phases, not the sum of the averages.

Figure 21.5 Total Employment By Region, Labrador

Total Employment and Income by Region - Labrador

The largest share of Project-related employment, 28 percent of total employment and income, goes to the Upper Lake Melville region (Figure 21.5). This is followed by Western Labrador and the mine site, each accounting for slightly more than 24 percent of the total Labrador employment. This is followed closely by the communities on the Labrador North Coast which capture approximately 21 percent of the employment. Less that 3 percent of the total employment is anticipated to accrue to other Labrador communities. For a breakdown by community for each of these regions see Appendix C, Tables 1-9.

While these broad percentages tell part of the regional benefits story, it is not complete. A fuller understanding requires consideration of the employment effects by phase of operation and type of expenditure.

Regional Employment and Income by Type, Labrador - Construction Phase

The Labrador North Coast is expected to receive 29 percent of total direct employment and income which is anticipated to accrue in Labrador during the construction phase, 32 percent of the direct employment from operations, and 29 percent of the employment associated with capital expenditures (Figure 21.6 and Table 21.7).

Figure 21.6 Regional Employment (Construction), Labrador

During this phase of the Project, communities in the Upper Lake Melville region are expected to receive approximately 29 percent of total direct employment, 31 percent of the direct operations employment and 28 percent of the employment related to capital expenditures. The combined share of total direct employment going to the Upper Lake Melville region is 29 percent (Table 21.8). These employment estimates are similar to the shares estimated for Western Labrador. During the construction period, 26 percent of total direct employment, 28 percent of direct operations employment and 26 percent of direct capital employment is expected to accrue to the residents of this region (Table 21.9). Between 2 and 3 percent of employment, either total, operations or capital, is estimated for the other Labrador regions (Table 21.10). Further, it is anticipated that the mine site will account for 16 percent of capital-related employment but only 6 percent of direct operations employment for a 13 percent share of total direct employment (Table 21.11).

Regional Employment and Income by Type, Labrador - Open Pit Phase

During the open pit phase, approximately 41 percent of the direct operating employment and income in Labrador comes from the Labrador North Coast communities (accounting for 31 percent) and Upper Lake Melville (accounting for 20 percent) (Figure 21.7). During this phase, more than 19 percent of direct operating employment is anticipated to come from Western Labrador and less than 2 percent from other Labrador regions. As well, almost 38 percent of this employment comes from non-residents of Labrador, who, for the purposes of this assessment, have been allocated to the mine site. The non-residents of Labrador estimate is based on the current assumption of participation rates and the current unemployment rate (see Appendix 21C). Should more residents of Labrador take the opportunity to become employed at the mine, the number of non-Labradorians would decrease.

Figure 21.7 Regional Employment (Open Pit), Labrador

When the employment and income created by capital expenditures becomes the focus, the relative shares of this direct employment going to each community is substantially different. For example, Upper Lake Melville and the Labrador North Coast account for less than 22 percent of the capital-related employment. The share at the mine site more than doubles to 58 percent, with the shares in Labrador West and the other Labrador communities remaining essentially unaltered.

Combining the direct operating and capital employment results in 41 percent of the employment going to the communities on the Labrador North Coast (21 percent) and communities within Upper Lake Melville (20 percent). Western Labrador gets about 19 percent of the total direct employment and the other Labrador communities receive less than 2 percent of the employment. The mine site accounts for the residual 38 percent of total direct employment.

Regional Employment and Income by Type, Labrador - Underground Phase

The underground mining operation is the largest source of direct employment and income over the Project life. The estimated share of total direct underground employment going to the North Coast is 20 percent (Figure 21.8).

Figure 21.8 Regional Employment (Underground), Labrador

During this phase, the North Coast can anticipate receiving a similar share of direct operating employment (20 percent) and direct capital employment (19 percent). A similar pattern is observed for Upper Lake Melville which captures about 19 percent of total direct, direct operating and direct capital employment. This is repeated in Western Labrador where the share of employment ranges between 17 percent and 18 percent, and in the other Labrador communities which receive slightly less than 2 percent of the direct employment. The mine site is expected to account for between 42 and 44 percent of direct employment.