Executive Summary of the Social Impact Assessment .../media/Nanoq/Files/Hearings/2013/TNG … · of the Social Impact Assessment Aappaluttoq Ruby Project for True North Gems Inc

Executive Summary of the Social Impact Assessment

Aappaluttoq Ruby Project for True North Gems Inc.

v. 4.2

May 2013

Social Impact Assessment – Aappaluttoq Project

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EXECUTIVE SUMMARY

This report is the Draft Social Impact Assessment (SIA) for the Aappaluttoq ruby and pink sapphire mining project proposed by True North Gems Inc. (TNG), to be located 30 km southeast of Qeqertarsuatsiaat in Kommuneqarfik Sermersooq, West Greenland. This Draft SIA has been produced by Grontmij A/S on behalf of TNG, according to the Guidelines for Social Impact Assessment for mining projects in Greenland, Bureau of Minerals and Petroleum (BMP), November 2009 (the Guidelines).

Maps showing location of municipalities and main towns in Greenland, including Nuuk, Qeqertarsuatsiaat and Paamiut


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Map showing location of the project area and the mine pit (the red dot in the red circle)

The SIA process The SIA process started in July 2009 with the elaboration of a preliminary Scoping document. Scoping consultations with stakeholders and field work in Nuuk and Qeqertarsuatsiaat were performed in February 2011. As a result of the scoping phase, Terms of Reference (ToR) were elaborated and submitted to the authorities for review and comments and made publicly available in Greenlandic, English and Danish on TNG’s website on March 21, 2011. This Draft SIA covers the construction stage, the operational stage and closure of the proposed mine. The Draft SIA describes the socioeconomic baseline in Greenland and in the main affected areas, evaluates likely socioeconomic impacts related to the project and identifies measures to mitigate negative impacts requiring mitigation. The social impacts have been assessed at two different levels: potential local impacts in Qeqertarsuatsiaat and impacts at regional and national level (Nuuk, Kommuneqarfik Sermersooq and at national level). The study area of the SIA includes the primary area of influence, identified as Nuuk, Qeqertarsuatsiaat and the surrounding areas. Furthermore, the secondary area of influence are Kommuneqarfik Sermersooq in general, including Paamiut, other towns where workers for the project may come from and towns where there is small scale mining, jewellery production or tourism activities that can potentially benefit or be negatively affected by the project. This Draft SIA is sent to the BMP for review and will be available to the public on BMP and TNGs web sites for comments. Based on the feedback received during the review and hearing process, expected to take place in spring 2012, a revised final SIA will be prepared. The conclusions of the revised final SIA forms the basis for negotiations between the Naalakkersuisut, the municipality and TNG resulting in a signed Impact Benefit Agreement (IBA).

Project area


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Project Description TNG is proposing to build a small mine with a minimum of infrastructure starting in 2012 and to expand the infrastructure and production as the market for Greenland ruby and pink sapphire is developed. The mine plan provides for duration of mining activities to be 9 years, with the possibility of extension. The Aappaluttoq Project will consist of mining operations and processing of ruby ore to ruby concentrate in the mine site in Aappaluttoq. The project will include processing, sorting and cleaning of ruby concentrate to rough classified ruby and pink sapphire in Nuuk. The project is expected to cost approximately DKK 215 million ($38 million) to construct, and approximately DKK 62 million ($11 million) per year to operate. The closest community to the project area is Qeqertarsuatsiaat. Qeqertarsuatsiaat is located south of Nuuk and is only reachable by boat or helicopter. Depending on the boat, the average sailing time is 4-5 hours from Nuuk or Paamiut in good weather conditions. Project activities in Aappaluttoq The mining activities in Aappaluttoq will consist of: An open pit from which the ruby bearing rock will be extracted A processing plant at which the ruby and pink sapphire concentrate will be produced Infrastructure, such as a camp, maintenance shop, explosive storage, roads, barge

landings, and power plants Two barge landings will be built: an outer landing that will accommodate large ships and an inner landing close to the camp that will only be accessible by smaller ships and barges. Personnel will generally travel from Nuuk and Qeqertarsuatsiaat by boat. Some personnel and supplies will be transported to and from Nuuk by helicopter. The initial pit will grow to be approximately 200 meters long by 150 meters wide and 70 meters deep. Mining will be done mostly with low-intensity blasting techniques that are common in the diamond mining industry. The level of lake adjacent to the mine, named Ukkaata Qaava by the local community, will be lowered approximately 10 meters to allow access to the ore body. Waste rock will be placed in the lake Ukkaata Qaava, which has been determined not to have any fish or other larger aquatic life. When mining is finished the lake will be allowed to re-fill to its natural level and the pit will be allowed to fill with water as an extension of the lake. Furthermore, buildings and process facilities will be removed so that little evidence of mining will remain.


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Layout of planned infrastructure in the project area

A processing plant will be set up near the mine site to crush, wash, screen and concentrate the ruby and pink sapphire material. Water flowing from the mining and processing area will be monitored closely and treated if necessary. The concentrate produced by the processing plant at Aappaluttoq, called dirty rough, will consist of approximately 35% matrix (valueless material attached to the ruby and pink sapphire) and will be transported to TNG’s secure facility in Nuuk in locked containers. Project activities in Nuuk - Hydrofluoric Acid Cleaning and Sorting The dirty rough concentrate will be shipped from Aappaluttoq to the sorting facility in Nuuk. After preliminary sorting, the concentrate will be sent to a facility in Nuuk for cleaning with hydrofluoric acid where the remaining matrix will be removed. The location of the sorting facility and cleaning facility have not yet been finally determined, but will likely initially be a rented space at NunaMinerals. The NunaMinerals building has a basement on 162 m2, where the sorting facility can be located and a safety box can be installed. On the ground floor there are also 162 m2 that can be setup for office facilities. To enter both floors, security measures will be required, depending on the area entered. TNG currently has rented office space in the same building. An assay laboratory is located on the ground floor in the same building; this laboratory could be easily converted for use for HF-cleaning process. This arrangement would have practical benefits such as ease of transport and security. Regardless of whether the cleaning is done by TNG or by an independent company, the process is the same:


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1. The corundum to be cleaned is divided into appropriate sized batches and placed in acid-proof containers.

2. HF acid is introduced to the containers, the containers are closed (not sealed), and the containers are agitated for a period of time.

3. The HF acid, after having dissolved the silicate, is drained. The cleaned corundum concentrate is rinsed thoroughly with water, and is then safe to handle

4. Both the rinse water and the products of the dissolution (remaining HF liquid and dissolved solids) are neutralized with an inexpensive and benign alkaline material such as hydrated lime (Ca(OH)2).

The neutralizing of the HF acid cleaning liquids in step 4 creates a slurry consisting of two parts: (1) a solid precipitate (sludge) which is inert and can be filtered out, dried and disposed of in an ordinary municipal landfill; and (2) a liquid solution consisting of varying concentrations of benign salts. This solution can be diluted and generally disposed of in the municipal sewage treatment system. Until the environmental safety of disposing of the solids and the solution is demonstrated, it is intended that the resulting products of HF cleaning will be shipped out of Greenland for disposal. After HF cleaning the clean rough concentrate will then be delivered back to TNG’s sorting facility in Nuuk. The location of the sorting facility has not yet been determined, but will likely initially be a rented space, in an area approved by the environmental and infrastructure authority of Kommuneqarfik Sermersooq, with a purpose-built sorting house built by TNG in the future. The clean rough concentrate will be sorted at the sorting facility into categories by size (1.7-3.3mm, 3.4-6.3mm, 6.4-9.5mm and 9.6+mm sieve sizes), by colour (pink or red) and by clarity (fine, gem, near-gem and non-gem) plus a “specials” category in both red and pink, yielding 34 categories. Sorting criteria will be standardized using reference sets so that the sorting can be done consistently over time. The sorting will be done by TNG personnel both by hand and using automated equipment and subject to verification by a representative from the Greenlandic authorities. Over time, this sorting system (referred to as a sorting “matrix”) will be re-evaluated and sorting into additional categories is likely.

After sorting, the categorized rough concentrate will then be divided into appropriately sized parcels, given an identification number and entered into a computer tracking system. TNG will provide access to the tracking system for audit purposes to representatives from the Greenlandic authorities.

Sales and Marketing For this project, TNG has developed a Marketing Plan and it is up to the Naalakkersuisut to approve this plan and to set the conditions for this which may include sales methods, polishing strategies, classification. The mine plan has been designed to increase production of ruby and pink sapphire from a modest amount of material in the first year (which is mainly construction and plant commissioning), to full production by year 3. This increase will allow TNG to assess the market for the rubies and pink sapphires produced and to adjust its marketing plan accordingly. The TNG marketing team has over 200 years of gemstone experience, representing a broad range of buyers, producers, polishers, manufacturers and educators. The general marketing strategy proposed is to introduce the rubies and sapphires from Aappaluttoq to the market as follows:


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Introduction to the market: sale of polished rubies and pink sapphires, starting 2012-13. The purpose of these polished sales is as a form of advertising to show the gemstone market that Greenlandic rough rubies and pink sapphires can be polished and transformed into a high quality product. In order to monitor the relationship between rough and polished prices, a minimum of 25% of corundum in each gem and near-gem sorting matrix category will be polished during the first three years of production;

Increase of sales of rough rubies and pink sapphires, following the increasing demand and price of rough gemstones once the market becomes acquainted with the Greenlandic gemstones.

Majority of sales as rough rubies and pink sapphires once the price is high enough. It is intended that a percentage of sales will be from polished gemstones, depending partly upon the extent to which jewellery wholesalers and retailers will wish to purchase polished gemstones directly from TNG to be absolutely certain of the origin of the gemstones and certain that the gemstones have not undergone any undisclosed treatments.

The balance between rough and polished sales cannot be predicted in advance, as it depends in part upon the extent to which partnerships can be made with jewellery retailers who wish to purchase polished gemstones directly from TNG. Polishing and marketing entails high costs, without necessarily resulting in increased prices for polished gemstones that overcomes these costs (the cost of polishing ranges from $0.20 to several dollars per piece polished). In the diamond industry, rough diamond prices are very close to polished diamond prices. Similarly, once the price of rough gemstones is high enough, selling the majority of the production as rough will result in greater profitability (and subsequently result in the payment of more taxes in Greenland) than if TNG attempts to undertake polishing and marketing. Nevertheless, for a number of reasons, it is anticipated that the Company will maintain a portion of its polished sales throughout the mine life. Polished sales will probably be made on a polished-to-order system using negotiated prices. Rough sales are expected to be conducted via some form of auction or tender. This is common practice for coloured gemstone producers. If properly planned and carefully conducted, an auction or tender system should maximize value and transparency on rough sales. Anticipated Production At peak production, which should be achieved by the third year of operation, 20,000 tonnes of corundum-bearing ore will be processed annually. According to the mine plan, this 20,000 tonnes of ore will result in approximately 7 tonnes of raw corundum annually. Of this 7 tonnes of corundum, approximately 35% will be either gem or near-gem, with the balance being non-gem material for which no market has yet been located.


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Even considering only the gem and near-gem material, the vast majority of the corundum will not result in polished gemstones. Studies done on bulk samples estimate that the retention (the amount left after polishing) will be approximately 9% with the balance (over 90%) being waste material that is either clipped or ground off, is the result of breakage, or is unpolishable for various other reasons. As a result, 7 tonnes of raw corundum is therefore expected to result in approximately 220 kg of polished gemstones annually, with only a small fraction of this 220 kg expected to be top-grade gemstone. Independent valuations place an average of $115/g ($23/ct) on the ruby and pink sapphire polished from bulk samples. Branding as Greenlandic rubies During the consultations, BMP and other stakeholders have drawn attention to the potential benefits to be gained from internationally branding the rubies and sapphires from Aappaluttoq as Greenlandic. These benefits include; increasing the market value of gemstones and jewellery produced in Greenland, promotion of Greenland as a tourist destination and increased general focus on Greenland. Successfully branding the rubies from Aappaluttoq as Greenlandic Rubies should signal to the buyers that: • The rubies are not produced in Burma (both the EU and the USA have placed an

embargo on selling rubies imported from Burma); • Rubies are produced in a legally established mine, which complies with

environmental, social and working environment safeguards and internationally accepted standards;

• Greenland is a new, clean source of high quality rubies and sapphires; For jewellers in Denmark, Greenland is a good branding for gold and gemstones, as there are good associations and emotional connections. No formal agreements have yet been made with Greenland Authorities on a branding strategy for the Greenlandic rubies. TNG will provide a proven certification of origin and information and marketing support required for the successful branding of the Greenlandic ruby and pink sapphire. Expected work force and working conditions The construction period is expected to last approximately 6 months, starting in late 2012-13 depending on permitting. It is expected that approximately 40-50 people will be employed, where 75% of the workforce are expected to be Greenlandic. Workers from Qeqertarsuatsiaat will have first priority for employment as long as qualifications are met. After the initial construction period, the mine is expected to be in operation from 2013 for approximately 9 years, with a work season at full capacity of about 8 months on site in Aappaluttoq and 12 months in the sorting facilities in Nuuk. By the third year of operations, TNG estimates a workforce of approximately 80 people, of which14-20 will work on the facilities in Nuuk. After a period of training, TNG expects that all positions can be occupied by Greenlanders with few exceptions. The proposed workforce includes 5 apprentices. Workforce in Aappaluttoq is expected to work in rotation schemes of one week on site and one week off (1:1) at the process plant and two weeks on site and one week off (2:1) for the mining operations. Workforce in Nuuk will work on weekdays all year round. The optimal rotation scheme(s) will be discussed and agreed during the SIA process and further if needed in order to maximise the amount of Greenlandic workforce.


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The construction crew will live in the existing tent camp at Aappaluttoq, which will be upgraded to a semi-permanent to house the workforce during the operations. A passenger boat will be chartered on a regular basis, probably twice a week, in order to transport personnel back and forth to Nuuk or Qeqertarsuatsiaat. Camp facilities At any time there will be a minimum of 42 employees at the mine site. The camp will be designed to approximately 50 people, in case additional people have to be accommodated. The camp will include (all dimensions are approximate):

50 pcs. 1 person rooms at 8.5m2.

Bathrooms and toilets are shared and placed in the corridors.

Household washing machines and dryers for civilian clothes.

Recreational room at 152 m2. The room can be used for activities like table tennis, pool, videogames etc. or it can be divided as needed.

6 pcs. Offices at 8.5 m2.

A conference room at 25.5 m2.

Exercise room at 17 m2 with various equipment.

TV room at 25.5 m2 with Wide Screen TV, video- and DVD-player will be there.

Lounge at 25.5 m2 with sofas, tables etc.

Canteen at 86 m2 with seats for 50 persons, serving area etc.

Kitchen with cold kitchen, hot kitchen, bakery, dishwashers, scullery. Total of 64 m2.

Warehouse / refrigerator / freezer

Men’s locker, dressing rooms, wash basins, shower, toilet, to a total of 61 m2.

Women’s locker, dressing rooms, wash basins, shower, toilet, to a total of 61 m2.

Laundry at 24 m2 with washing machines, dryer and storage for clean and dirty clothes.

First aid station “hospital”. To the hospital there will be attached a fulltime site-nurse.

Fire Station:

A 20’ container will be installed into which equipment for fire-men. Fire Station is to be located in proximity to waterworks for quick connection of water.

Wastewater treatment plant:

Treatment plant use- and drinking water.

Energy Supply:

There will be installed 2 generator plants of approx. 500 KVA with associated tank placed in the PE liner.

General: The entire camp will be covered by wireless networks, mobile telephony, fax, telephony, GPRS coverage, TV signal which include KNR, FM radio. VHF radio will be installed in the hospital and on site-managers office for use in emergency. Furthermore a satellite dish to take down the Canal Digital signal will be installed. Sirens in case of fire, activated by pressure will be placed in corridors and around central located sites. All rooms equipped with smoke alarms. The camp is equipped with 1 x 230 and 3 x 400 V, 50Hz. The total camp area is 1,577 m2. Heating of the camp is with electric radiators. The roof will be a construction with rafters, 15 degree slope and trapezium steel plates.


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Social and Economic baseline The Draft SIA describes the social and economic baseline, addressing the relevant context in Greenland in general and for the Qeqertarsuatsiaat area in particular. The baseline study provides information on demographic, economic conditions and trends, political structures, local organisations, cultural traits, and other factors that can influence the way in which affected communities will respond to anticipated changes brought about by the proposed project. The baseline study also helps to predict in which way the Project will be affected by these factors. Greenland Greenland is part of The Kingdom of Denmark, and has had status of home-rule since 1979. From June, 2009 Greenland has had the status of having “self-government” since June, 2009, although still part of Kingdom of Denmark. Greenlandic is the only official language in Greenland. Danish is also well known and used in Greenland as a second language and used in administration and Parliament. Greenland comprises Greenlanders (Kalaallit in Greenlandic); the majority of the population being Inuit and about 12% of Danish and other European descent. Greenlanders have settled into 18 towns and about 60 settlements stretched over 2000 km, primarily along the western coastal areas. Since 2009, the country has been divided into four municipalities. The project is located in the municipality Kommuneqarfik Sermersooq, in which the main town is Nuuk.

The means of transportation in Greenland is by boat, helicopter and/or airplane. There are no roads or railways connecting towns and settlements, with very few exceptions. Greenlanders live in close proximity to the sea and the sea is an essential part of a Greenlander’s life. Greenland’s climate is very rough and quick to change, which Greenlanders have learned to live with and endure.

Qeqertarsuatsiaat The settlement Qeqertarsuatsiaat, formerly also known as Fiskenæsset, is located in the municipality Kommuneqarfik Sermersooq (former Nuup Kommunea), and the settlement located closest to the proposed mining area - about 30 away. There are 21,559 inhabitants in Kommuneqarfik Sermersooq, among which 15,862 live in the capital Nuuk and 218 in Qeqertarsuatsiaat. In Qeqertarsuatsiaat the potential work force is made up of 145 persons between the ages of 15 and 63. Main employment opportunities include a local fish processing plant, fishing vessels, a housing company, public services and various other small businesses, such as a sealskin sewing workshop and precious rock cutting workshop. In the settlement businesses are mainly a KNI main store, smaller supermarket, laundromat, kiosk, and “Brættet” where local hunters and fishermen sell their daily catch. Among institutions in Qeqertarsuatsiaat are a postal office, a municipality office, a nursery, kindergarten, school (up to 9th grade) and a senior shared house. In addition there is a nursing station employing a station nurse and a health assistant. The station has videoconference equipment for telemedicine. A doctor and a midwife visit the settlement once a month. The settlement also houses a church, Greenlandic Evangelical Lutheran.


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Community relations during previous exploration activities TNG has been actively exploring the area since 2004 after signing an agreement with a Canadian company called Brereton Engineering and Development, Ltd. To date TNG has invested DKK 87.5 million ($16.5 million) in exploration activities in the area. TNG discovered the Aappaluttoq prospect in 2005. Exploration work by TNG peaked in 2007 and 2008, when as many as 13 Greenland residents and 13 foreign workers were employed on the project. All exploration activities took place in the summer months, as the camp, plant and office were all closed between the months of October and May. During this period, several large bulk samples were taken and almost 7000 metres of drilling was completed. A small processing plant and sorting facility were installed in Qeqertarsuatsiaat for processing the samples, which were transported from the site with helicopter. During the weeks of activities in Qeqertarsuatsiaat, some services and goods were supplied locally, such as housing, some diesel fuel, some food, and some equipment rental. Most of boat charters services and helicopter services were provided from Nuuk. TNG also provided some temporary jobs to local people, including translation, security, operation of the processing plant and field assistance during exploration, as well as three courses in jewellery manufacturing and faceting for the local villagers held in Qeqertarsuatsiaat. Relations between the community and the company have channelled through the highest ranking company employee on site in an ad-hoc manner based primarily on open and informal communication. Formal meetings were held irregularly but generally at least once per year. Community information was distributed by posting on the community bulletin board. No formal communication channels such as grievance mechanisms have been established. The SIA have identified some social conflicts that have occurred during the exploration activities, involving people from the community and the project. Sources of conflicts include disagreements related to collection of ruby bearing material in the concession area, nuisance due to noise from helicopter transport, creation of unrealistic expectations in the community about the value of the ruby and sapphire material involving a former TNG employee, among others. The experience related to the conflict situations that have occurred underlines the need to establish a formal community grievance mechanism that is implemented during all phases of the project, i.e. construction, exploitation phase and future exploration activities. The grievance mechanism should also include the documentation of the complaints received and the resolutions proposed and implemented. Impact Analysis: Expected positive impacts and opportunities The main positive impacts expected from the project are listed below: Generation of local employment All but a small number of the 60-80 job positions can be filled by local workforce after a period of training. The most likely scenario is that the project will attract mainly workers already employed in other sectors. Indirectly this will create new opportunities for the unemployed workers in Qeqertarsuatsiaat, Paamiut and Nuuk and other regions. Whether some of the people who left Qeqertarsuatsiaat due to the lack of jobs will move back if new job opportunities are created is uncertain. Barriers for achieving the expected high percentage of local workforce at Aappaluttoq may include:


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Lack of minimum qualifications/experience for the required positions

Low interest in work for 8 month seasons, particularly in the summer when other productive and recreational activities also take place

Low levels of retention of local workers due to difficulties to adapt to the working conditions

Mitigation In order to attract personnel from Qeqertarsuatsiaat a program will be implemented. This program will involve the local municipality office in Qeqertarsuatsiaat, Piareersarfik in Kommuneqarfik Sermersooq, True North Gems and the local population in Qeqertarsuatsiaat. The purpose of the program will be to identify the need for up-grading, training, qualifications and personal development among locals that potentially can occupy a job on site. Though the mine is only operating 8 month per year, the company will implement programs for all employees on site. This program will include a plan for work, holiday, courses, qualification, education etc. to ensure that the employee works a whole man year throughout a season. Because it is the policy of the company to use local workers, TNG believes that the period on site can be in relatively short intervals. No final rotation plan has been made, and it is TNG’s intention to be flexible when finding the best solution for the workers and the company. Local business opportunities The main direct positive impact on business life is expected to be related to the following areas:

Transport of goods and staff

Services to the camp

Provision of fuel

Provision of goods and food

Provision of technical services Purchasing of goods and services from Qeqertarsuatsiaat will have a significant impact on the local economy and community life. Possibilities identified include: provision of meat and fish from local hunters, groceries from the local Pilersuisoq, accommodation services, and rental of some equipment such as local boats. Paamiut could also benefit from some of the outsourced services although local technical services and goods will be purchased mainly from Nuuk. Synergy with other sectors at national level Jewellers, owners of souvenir shops and lapidary workshops consulted in Nuuk and Qeqertarsuatsiaat have identified the following positive impacts of the project:

International marketing and branding of Greenlandic rubies, and indirectly, of Greenland as tourist destination

Increased knowledge and capacity in the field of gemmology

Expected capacity building on sorting, polishing and faceting

Clear framework for the valuation of local rubies


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Rubies and pink sapphire from Aappaluttoq will be available for sale to Greenlandic jewellers and artisans. Sale procedures and documents to be provided by TNG to the jewellers and artisans in order to facilitate permitting process for sales, export, etc. is yet to be agreed with the Greenland Government. Taxes and revenues The project is expected to contribute to the Greenlandic economy through the payment of corporate tax by TNG’s Greenlandic Company, True North Gems Greenland A/S and through income taxation of personnel. Corporate tax is expected to be approximately 16 million dollars (approx. 90 million DKK) over the life of the mine. Income taxation of personnel is estimated in between 6 and 12 million DKK/year. The company has been able to complete further research since the original 2008 valuations and from new data and figures available, it is shown that a sales model where the majority of the economics are derived from selling rough shows a higher corporate tax return as the turnover of material is faster and more efficient. This produces a lower cost of operations, improved security, as there are less links in the chain, and maximises cash flow. Depending on limited, moderate to aggressive marketing and depending on the ability to change the sale from polished to rough new estimations shows that corporate tax has a potential up to not only 16 million dollars but 79,5 million dollars (approx. 453 million DKK) TNG has offered to pay an advance tax royalty to Greenland in an amount equal to 5% of the sales of ruby and pink sapphire. This tax is not required by the taxation rules of Greenland, but has been offered by TNG to demonstrate TNG’s commitment to sustainable mining in Greenland, with the understanding that the money paid by TNG will be used by Greenland in part to train and educate Greenlanders so they may participate in the mining industry. The advance tax will be paid quarterly based on sales during the three month period, If ruby or pink sapphire is polished before sale, the cost of polishing will be deducted before the tax is calculated. The advance tax will be credited against corporate income tax payable in the future so that the total tax paid by TNG remains the same, as required by Greenland tax law. This advance tax royalty is estimated to be between $1m and $1.2m per year at full production. Education and training One of the most significant benefits expected from the project is related to training and skills development opportunities. People employed on the project, as well as local companies providing services that will be outsourced will benefit from training on health and safety procedures, working standards for international companies, and from improved language skills. Specific on the job training will be provided for all the operators at mine front, processing plant and sorting house. Some of the training is specific for the gem industry and this project, but most of training can be applied to the mining industry in general, improving significantly the employability of all workers involved in the operations. The possibility of providing a significant number of trainee positions for students from the Greenland School for Minerals and Petroleum may have a significant positive impact on the vocational training sector. Given the existing and upcoming activities in the mining and oil sector, it is expected that the local administration will increase efforts on relevant training courses and employment opportunities targeting the sector.


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Impact Analysis: Expected negative impacts and social risks The main negative impacts and social risks expected from the project are listed below: Conflict with other economic sectors There are concerns that the Aappaluttoq Project will compete with the fishing factory in Qeqertarsuatsiaat for the workers, particularly during the summer. No further study has been carried out that can confirm or reject this concern. There are 25-30 professional fisherman and hunters in the Qeqertarsuatsiaat area. While the mining area is not directly impacting their activities, it can have effects on their access to valued areas. While the fishermen and hunters believe that the project and their activities can coexist with open communication and cooperation, they have expressed concerns regarding the impact that further exploration activities beyond the project area could have on their livelihood. Greenlandic stones and collection of the semi-precious stones are very popular in Greenland. Collection of corundum by the local community is locally recognised as a strong free time activity. The present information seems to indicate that the interest in the collection of rubies as a form of livelihood became relevant mainly during the exploration activities performed by TNG. In January 2010, a new regulation on small scale mining was implemented, regulating small scale mining and “collection of stones”. To date, in the Qeqertarsuatsiaat area, there is one small scale mining concession held by a person from Nuuk. Issues and questions identified in relation to small scale mining include: regulation perceived as constraint to scale of small scale mining, right to access to areas rich in corundum, lack of independent valuation of gems, bureaucracy and constraints associated with the export of Greenlandic stones for small miners and handcrafters.

A majority of the people interviewed find that small, local mining and stone collection and the Aappaluttoq Project can coexist. Nevertheless, basic conditions such as mutual good will, clear and timely communication on project activities, outspoken presence of the mining authorities, transparency in the valuation and taxation of the rubies need to be fulfilled. Social conflicts The following existing or potential social problems that could potentially be exacerbated by the project have been identified during the consultation process:

Existing social problems related to alcohol and drug abuse, particularly among unemployed and young, unskilled men

New exploration and mining concessions in the area, provided without informing or consulting with the community.

Risk of security issues and social conflict if people with criminal intentions regarding the rubies are attracted to Qeqertarsuatsiaat and its surroundings


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Vulnerable groups in Qeqertarsuatsiaat Young men (and young women) that have not completed their education and therefore are unskilled and unemployed have been identified by stakeholders as the vulnerable group in Qeqertarsuatsiaat, in particular those who are also suffering from other health and social problems like alcohol or intoxicant abuse. If the vulnerable persons cannot overcome their challenges and contribute to the positive development of the community, the gap between the weak and strong in the local society will become bigger, worsening their relative social position and increase their vulnerability. The scope of this assessment does not provide enough basis for predicting the significance of the risk on the vulnerable group of young, unskilled and unemployed men affected by social health problems. Access to natural areas of importance The Tasiusarsuaq and Tasiusaa areas are widely used by the fishermen and hunters in Qeqertarsuatsiaat as they are rich in most animals and fish found in west Greenland - except for redfish. The organisation Qeqertarsuatsiaat APP (the local fishermen and hunter’s association) has 25-30 hunters/fishermen members. The whole area in Tasiusaa and Tasiusarsuaq is used for picking berries, fishing and for recreational use by the local people. The fishermen/hunters use the Tasiusaa area as an escape area when the wind from southeast gets too fierce in Tasiusarsuaq, but they have been reluctant to enter the gate as they do not want to disturb the mining activities. Traditional production systems are important in Qeqertarsuatsiaat not only as for livelihood, but also for the cultural and social values associated to them. Sites of cultural importance The Greenland National Museum and Archives prepared an archaeological report in the fall 2010 indicating that the impact on sites of cultural importance is considered negative low, as none of the archaeological findings in the area is considered unique or outstanding, and it is relatively easy to avoid their destruction during the construction and operational phases. Occupational health and safety The health and safety risks related to mine operation and the processing plant are mainly related to operation of heavy machinery and use of explosives together with risk of human error and harsh weather conditions. Because of the relatively large amount of workers involved, and type of accidents involving explosives and heavy machinery the risks are significant and considered negative medium. There is also risk of accidents associated with shipping of goods and concentrate, and transport of staff, mainly due to the harsh weather conditions in Greenland. Implementation of the proposed Health and Safety Plans and their corresponding training, procedures and monitoring for all workers, contractors and visitors will certainly reduce the likelihood and severity of accidents associated with transport, mining and processing operations. Health and quality of life The operation of a mine project may have an impact on the health and quality of life of the employees and the public in general. Given the organization of the project, the local origin of the vast majority of the expected workforce, the expected low contact of local population with workforce, etc. it is considered unlikely that the project will result in significant increase of Sexually Transmitted Diseases (STDs), HIV/AIDS and unwanted pregnancies in Qeqertarsuatsiaat, and even less in Nuuk, where the number of workforce, particularly expatriates, is so limited. However, it is necessary to monitor the incidence of both STDs and unwanted pregnancies, and assess the impact further, in particular if more international staff and workers outside the community will be engaged in the project.


- XV -

Potential positive impacts on public health from mining projects may include improving nutrition, general life standards and access to medical services. Public services and infrastructure Regarding public services and development plans, the project is expected to have a low negative impact on the use of ports in Nuuk and Qeqertarsuatsiaat, use of airport and air transport services and municipal solid waste treatment facility in Nuuk. Impact and mitigation tables Anticipated social impacts are summarised in the following tables with colours indicating their magnitude and significance both before and after applying mitigation measures. Furthermore a draft impact and benefit plan is presented below. The SIA also contains a corresponding monitoring and evaluation plan with the aim to ensure evaluation of the impacts and benefits of the projects and effectiveness of the mitigations proposed. For each combination of project activity and social/socio-economic aspect, for both the construction and the operation phases, potential impacts of the project have been predicted and their magnitude quantified as far as possible. The impacts identified have been evaluated according to the following factors:

What is the certainty of impacts? - Is it certain, likely, known or unknown to happen?

Where are the impacts? Will the impact be Local (Qeqertarsuatsiaat), Regional (Kommuneqarfik Sermersooq), Greenland in general or International? Are there regional “winners” and “losers”?

What is the duration and frequency of impacts? – What will be the occurrence of the impact - Temporary, short lasting or permanent?

When will the impact be noticed? – Will it be noticed immediately or over time by the community?

The public concerns identified during the consultations with stakeholders in Nuuk and Qeqertarsuatsiaat have also been considered when assessing the significance of the impacts.

Mitigation measures have been identified for all impacts likely to occur that are adverse in nature and significant enough to require mitigation (i.e. medium and high-level negative impacts) The result of the assessment of the impacts before the implementation of mitigation measures is presented using the following colour codes indicating whether the impact is positive, neutral or negative and whether the significance of the impact is low, medium or high.

low Medium High

Positive +L +M +H

Neutral 0

Negative -L -M -H

A similar matrix is also presented for the residual impacts; these are the impacts as they are expected to be after the implementation of proposed mitigation measures.


- XVI -

Potential Impact of Aappaluttoq Project before the implementation of mitigation measures

Impact categories General Impacts Local Specific

(Municipal/National) (Qeqertarsuatsiaat)

Economic environment

Employment +M +L

Local business life +M +L

Conflict/synergies with other sectors +L -M

Changes on traditional production systems -L

Salary boost Non relevant

Taxes and revenues +M Not significant

Education and training +M +M

Public service and development plans

Existing infrastructure and services -L Not significant

Pressure on development plans Not significant +L

Social and health services Not significant

Social aspects

Demography and population Not significant

Social conflicts Not significant -H

Vulnerable groups Not significant -L

Health

Occupational health and risk of accidents -M

Public health and quality of life Not significant Not significant

Environmental impact Not significant -L

Cultural and natural values

Sites of monumental or cultural importance Not significant -L

Access to natural areas Not significant -M


- XVII -

Potential Impact of Aappaluttoq Project after the implementation of mitigation measures

Impact categories General Impacts Local Specific

(Municipal/National) (Qeqertarsuatsiaat)


Employment +M +M

Local business life +M +M

Conflict/synergies with other sectors +M -M

Changes on traditional production systems -L

Salary boost Not significant +L

Taxes and revenues +M Not significant

Education and training +H +M


Existing infrastructure and services -L +L

Pressure on development plans Not significant +L

Social and health services Not significant

Social aspects

Demography and population Not significant

Social conflicts -L -M

Vulnerable groups Not significant -L

Health

Occupational health and risk of accidents -L

Public health and quality of life +L +L

Environmental impact Not significant -L

Cultural an natural values

Sites of monumental or cultural importance Not significant Not significant

Access to natural areas Not significant -L

Social Impact Assessment – Aappaluttoq Project - XVIII -

DRAFT IMPACT AND BENEFIT PLAN

Overview of Impacts, proposed mitigations and impacts after mitigation (draft Benefit and Impact Plan)

Description of the Impact Existing mitigation Proposed mitigation Impact after mitigation


Employment (direct during construction phase)

Engagement of Greenlandic workforce from the beginning of the construction phase.

Training course at the School of Minerals and Petroleum SIK has prepared proposals for training initiatives for the mining and oil sector.

During construction phase there will be training of the engaged Greenlandic workforce in order to continue the engagement in the operation phase and to ensure a high degree of Greenlandic employment when entering the operation phase;

Undertake an assessment of training needs;

Develop a pre-employment and on-the-job training program for the required job categories;

Develop local sensitive rotation schemes, human resources development program and benefit packages to make Aappaluttoq an attractive work place for Greenlandic workers.1

The workforce will include 75% of Greenlandic personnel

Employment during operation phase (direct)

During operation phase TNG estimates a seasonal workforce of approximately 80 people at Aappaluttoq including 14 in Nuuk.

Training course at the School of Minerals and Petroleum

Prepare a description of the requirement for the different job categories for the operation phase;

Undertake an assessment of training needs;

Develop a job training program for the required job categories;

Job advertisement in Greenlandic newspapers and national television (KNR);

Design and implementation of an intense recruitment campaign in Qeqertarsuatsiaat, Paamiut and Nuuk, including advertising, community meetings, open day events, etc.

Contact and coordination with labour organization SIK and employment office for advertising the available job positions and identifying potential workers;

Evaluate the possibility of making agreements with the School of Minerals and Petroleum for allocating a number of seasonal job positions as internship for advanced students;

Discuss with the Municipality and the School of Minerals and Petroleum the possibility of involving TNG Greenlandic employees in training courses during the non-working season.

The goal is for the workforce to engage 95% of Greenlandic personnel in the project after 4-5 years

1 Ensuring that local workers are able to continue their traditional way of living including fishing and hunting, and providing job opportunities for unskilled

workers.

Social Impact Assessment – Aappaluttoq Project - XIX -

Business opportunities

During operation TNG will outsource activities of transport of goods and staff will mainly be by boat between the mine site and Qeqertarsuatsiaat and Nuuk, probably also from Paamiut. The service of the camp may be tendered and is expected to involve approximately 6 workers involving:

Camp manager Chef Cleaners

The catering service of the camp requires local provision of food and consumables.

GA’s (Grønlands Arbejdsgiverforening) initiatives to promote local business for mining companies (network workshops).

All measures are based on the condition that they are economically viable, or cost competitive, or non-detrimental to the overall cost of the contract

Preferential contracting practices for Greenlandic contractors (locally based in first place and secondly in Greenland) for logistics, transport of staff and goods, fuel etc. including sensitive elaboration of tender documents, specifications, etc.

Unbundling of contracts for services and supplies to camp where no cost hindrance to the project;

Preferential purchase of local goods and services to the mine camp and Nuuk operations: Security, laundry, catering, office supplies, IT maintenance, etc.

TNG´s Greenlandic company, True North Gems Greenland A/S, to become member of Greenlandic Employers Association (GA) and participate in the initiatives of local business actors;

Organise and participate in open days to inform, identify and attract potential services and goods suppliers and possible workforce;

Requirement in contract with the providers of catering services to supply local/traditional food;

Agreements with local fishermen and hunters for the provision of fish and meat to the canteen;

Engaging the local grocery store in Qeqertarsuatsiaat in providing some of the regular food and consumables for the canteen and camp in general.

Transport will be outsourced to local businesses Service of the camp will be outsourced to local businesses

Conflict/synergies with other economic sectors

The project will have potential impact on other economic sectors in the local community e.g. fishing and hunting, small-scale mining, and jewellers and handcrafters

Participatory design and implementation of information and communication procedures with the community in Qeqertarsuatsiaat and small-scale miners close to concession areas;

Public and accessible information on concession limits, exploration activities and restrictions on the access and use of the area;

Design and implementation of a grievance mechanism agreed with the community representatives in order to register, identify and solve potential nuisances and problems with the community in Qeqertarsuatsiaat;

Participation of TNG experts in general support on divulgation and training activities related to gemmology, etc. organised by private (i.e. Mineralogical Society of Greenland) and official initiatives (municipality, university etc.);

Formal collaboration/coordination with the School of Minerals and Petroleum on vocational and professional education planning and implementation;

Consider the support of a training of trainers program targeting local people with skills and experience both on polishing/faceting and training, preferable Greenlandic speaking, interested and committed to train others;

Quantitative and qualitative monitoring of impacts on jewellery and handicraft.

Social Impact Assessment – Aappaluttoq Project - XX -

Education

The project will Improve the level of education in Greenland, both with regard to development of general skills and specific training.

Develop a recruitment program for both the unskilled and skilled workforce, in collaboration with strategic allied;

Involve the School of Minerals and Petroleum in the training and recruitment program;

On-the-job training of staff on specific duties, safety etc.

Dedicated, local based Human Resource Manager to develop and follow up on recruitment, training and career development of staff;

Active participation of TNG experts on capacity building initiatives in the field of gemmology and mining;

Early development of a reinsertion program for workers after mine closure.

The proposed mitigations measures will even further stimulate the improvement of education in Greenland, both with regard to general development of general skills and specific training.


Exiting infrastructure and plans

The project will have potential impact on infrastructure through e.g. waste and housing

Local and national plans and programmes

Assess the type and quantity of waste potentially produced and consider alternative waste disposals methods;

Avoid in all cases municipal housing and use private rental;

For short term accommodation in Qeqertarsuatsiaat consider a frame contract with the local providers of existing private accommodation facilities where expected services and approximated time plan will be specified;

Discuss with the community and authorities a framework for the use of charter boats directly related to the project.

Social aspects

Social conflicts

The project will have potential impact and risk for exacerbations of existing social problems in the local community

Assign a Greenlandic speaking Human Resources and Community Relations person based part-time in Qeqertarsuatsiaat to handle recruitment, opportunities for local business and ensure timely information and open dialogue with the community;

Develop and implement an agreed Grievance Mechanisms to receive, register and handle complaints from the community;

Extend alcohol and intoxicant prohibition policies and contractual conditions to all service providers while on duty for the company, particularly freight and passenger boats to Qeqertarsuatsiaat and the mine site;

Develop a program and allocate resources to facilitate and support alcohol and drug counselling to staff and their families;

Support local initiatives and campaigns related to prevention and treatment of abuse and social health problems (Paarisa and others);

Support local initiatives aiming to improve the integral development and living conditions of children, teenagers and young people;

Include indicators of social health in the social monitoring program;

Keep an open constructive dialogue with local and municipal authorities in order to find coordinated and timely solutions if social problems may arise or increase.

Social Impact Assessment – Aappaluttoq Project - XXI -

Health

Occupational health and risk of accidents

The risks of accidents are mainly associated with shipping of goods and concentrate and transportation of staff.

Regulations which promote instruction and supervisions in order to reduce the accidents and to focus on a health and safety working environment.

Strict implementation of Health & Safety (HS) plans as developed for construction and operation;

Contractual requirements to providers of shipping and transport services (Air Greenland, charter boats for staff, etc.) regarding safety measures, response time, etc. in order to minimise risk of accidents, appropriate and timely response in case of accidents, emergency evacuation from mine site, etc.

Pre-notification of operations, exploration activities or similar and traffic of vessels to local authorities and community in Qeqertarsuatsiaat, hunting and fishing groups and users of area;

Community development action: evaluate the possibility of organizing basic first aid, fire fighting courses to the community in Qeqertarsuatsiaat, in coordination with their fire fighting services.

Cultural and natural resources

Overall the mining activities will have little impact on local use of natural resources.

As recommended by the National Museum, if possible avoid sites with cultural remains, keeping a minimum of 20 m around the archaeological structures for preservation;

During construction and operation, clear vegetation around the archaeological sites potentially affected and mark them clearly to raise awareness and avoid to destroying them by accident.

Documents

Executive Summary of the Social Impact Assessment .../media/Nanoq/Files/Hearings/2013/TNG … · of the Social Impact Assessment Aappaluttoq Ruby Project for True North Gems Inc