Aboriginal Economic Cooperation At the Diavik Diamond Mine

NWT Aboriginal Development Conference October 17, 2007 By: Tom Hoefer, Diavik Diamond Mines Inc.

Through investment in training, employment & business

Diavik Diamond MineRio Tinto / Aber

Who is Diavik?

• A medium sized mine, with 3 high grade deposits • Small footprint – approximately 9 sq.km. of land• 2006 diamond production of ~ 10 million carats • No chemicals to separate diamonds

Diavik – Canada’s Top Diamond Producer

March 28, 2007

Diavik Plant Site

A154 Dike & Pit

Airstrip

NEW A418 Dike & Pit

Till placed for future fish habitat

Diavik – Our Island Home

Country Rock Piles

Processed Kimberlite

Containment

Water Treatment Facilities

The Plant Site

Diesel power plant Boiler plant

Permanent Accommodations

Administration / Maintenance Complex

Process Plant

Fuel Tanks

Sewage Treatment

Explosives Emulsion Plant

Our Mine Community

Aber Diamond Limited

Partnership 40%

Diavik Diamond

Mines Inc. 60%

Aber Diamond Corporation

(Toronto)

Rio Tinto plc (London)

Diavik – Our Ownership

MANAGER

Diamonds

TiO2 / Iron

GoldBorates

Copper /Gold /

Silver /Molybdenum

Coal

TalcCoal

Talc

Iron ore

Borates

Copper

Aluminium

Talc

Uranium

TiO2

Copper

Copper / Gold

DiamondsSalt

Iron ore

Aluminium

Aluminium

Coal

BauxiteCoalAluminaAluminium

Coal

Iron Ore

Uranium

Copper/gold

Zinc, silverand gold

Talc

Diamonds

TiO2

HIsmelt

Iron ore

Potash

NickelCopper

Rio Tinto – 35,000 workers around the world

Feasibility & developmentExisting operation

Copper

Talc

TiO2

Copper

Global Company, Global Policies

• Rio Tinto’s Statement of Business Practice: The Way We Work• 9 Core Corporate policies

Communities Employment Environment Human rightsLand access Occupational health Political involvement Safety Sustainable development

Diavik’s Region of Focus

Lupin Mine

YELLOWKNIFE

Ekati

Lac de Gras

ARCTIC CIRCLE

NUNAVUTTERRITORY

Diavik Diamond Mine

GREAT SLAVE LAKE

Kilometres

00 200200100100FortFort

RiverRiver

ResolutionResolutionHay

Fort Fort SmithSmith

EnterpriseEnterprise

Fort ProvidenceFort ProvidenceJean Marie RiverJean Marie River

BathurstBathurst InletInlet

UmingmaktokUmingmaktok

NORTHWEST TERRITORIES

GREAT BEAR LAKE

FortFortLiardLiard

FortFortSimpsonSimpson

Norman Norman WellsWells

TulitaTulita

DelineDeline

WrigleyWrigley

NahanniNahanni ButteButte

Trout LakeTrout LakeYUKON

MA

CK

ENZIE R

IVER

Wha Ti

WekwetiGameti

RaeEdzo

Kugluktuk

Lutselk’eDettahN’dilo

600-km Area of Interest • ~ 31,000 people Aboriginal Communities• Tlicho (Dogrib) Dene • Yellowknives Dene • Lutsel K’e Dene • North Slave Metis Nation • Kitikmeot Inuit Association Non-Aboriginal Communities too

Our Approach to Economic Cooperation• Economic cooperation revolves around:

• Training, employment and business • We set high goals

• Construction Jobs: hire 40% local Business: spend at least 38% in North

• Operations Training: maintain from 8-18 apprentices annuallyJobs: hire at least 66% locally, 40% AboriginalBusiness: spend at least 70% locally

• Committed to the goals – “a handshake wouldn’t do”• Socio-Economic Monitoring Agreement • 5 Aboriginal Participation Agreements

• Fulfilled through innovative approaches

Community-Based Training • Innovative Approach

• Diavik “invented” to create trades helpers for construction

• Elements • Local administration & student selection • Partnership driven & funded • Training on-the-job & classroom • Left product in community • Academic upgrading • Team & confidence building • Offered Trades Entrance Opportunity

• Construction Total - 234 Graduates

A Few Community Based Training Projects

Kugluktuk arena

Rae-Edzo Airstrip

Kugluktuk House Rehabilitation

Book available at www.diavik.caRae-Edzo Welding

College Partnerships Enhanced Success

• NWT’s Aurora College • Key Partner in Community Based Training • Used for technical training, eg, process plant operator

training, instrumentation, apprenticeship • Broadened their capacity with further partnerships with

Northern Alberta Institute of Technology • Diavik was first real active college partner since

Pine Point Mines in ’70s & ’80s

Workplace Learning Centre

• Diavik Learning Centre • Established during construction • 2 Qualified Adult Educators • Academic upgrading • Computer-based training modules• Web-based distance education• Career counselling • Customized training & career planning• Builds confidence • Apprenticeship support• Aligned with College Community

Learning Centres

Innovative Aboriginal Leadership

• Aboriginal Leadership Development Program• SAIT Partnership with Aurora College • Builds leadership capacity within DDMI & outsource

contractors • 183 hour program – Diavik Business Literacy with SAIT

Applied Management Certificate course work • Delivered by a qualified Northern instructor • Mentorship of participants by Diavik managers, sup’ts• Certification recognized towards further education• 18 graduates to date – 3rd session now underway

Enhancing Aboriginal Employment

• Career fairs in the schools • Scholarships • Summer student program • Support pre-vocational programs

in high schools • Community awareness program • Cultural awareness training • Attraction & retention systems • Contracting mining work to Aboriginal firms

Local Business Approach

• Developed “Northern Business Participation Policy”

• Drove from the top – President / Rio Tinto support• Began early – started before construction • Hired northern business development manager

• Facilitated & monitored joint-venture partnerships • Assisted contractors in obtaining business financing • Developed Northern vendors & contractors capacity

database • Provide locals advance notice of business opportunities

• Wrote community goals into contracts

Aboriginal Business Drivers

• Identify opportunities for existing businesses • Tailor contracts to local capabilities

• Identify opportunities for new businesses• Facilitate joint-venture partnerships• Develop strategic alliances with economic development

agencies to help capitalize aboriginal business• “Welded” business opportunities into

Participation Agreements• Provided long-term security for business investment• Allowed direct negotiation with aboriginal businesses• Shares rewards & collective accountability

• Outsource significant part of work

Unique Aboriginal Contracting Plan

Explosives

Catering, Camp

DDMI Employees

Site Services

HEO Manpower

Other

Security

• Almost half the workforce is contracted

• Majority with aboriginal firms

• Helps build capacity • Contractors share

responsibility to meet Diavik commitments

Aboriginal Mine Contractors • Site Services – Tli Cho Logistics

• Tli Cho First Nation • Mining Operators – I&D Mgmt Services

• 3 Dene / 1 Inuit Partners • Catering / Accommodations – Ekati Services

• Yellowknives Dene First Nation • Security – SecureCheck

• Kitikmeot Corporation (Inuit) • Explosives – Western Denesoline Explosives

• Lutsel K’e Dene First Nation

Not Just Aboriginal Outsourcing

• Other Aboriginal Businesses too, eg: • Operations

Scheduled Air – Tli Cho Air, Canadian North Trucking – Tli Cho LandtranIce road construction – Nuna Logistics Medical services – Exploration Medical

• Second phase Construction / Capital Underground mining – Kitikmeot Cementation Mining Dike construction – Lac de Gras Constructors Engineering – Nishi-Khon/SNC Lavalin

So, How Have We Done?

Created Significant Employment

44%Northern

ConstructionWorkforce

800 Workers

20% Aboriginal

*Mid-year 2007**Year-end 2006, includes capital

66%Northern

OperationsWorkforce

794 Workers*

32% Aboriginal

(258)

Employment is Exceeding Projections• Commitment based on operations workforce of 400 ± 50. • Have surpassed worker commitment with larger workforce

Actual Number of Workers

0

100

200

300

400

500

600

700

800

Total Northern Aboriginal

Estimated

Actual

Source: Diavik 2006 SEMA Report

Trades Training Success

• Commitment: 8-18 apprentices annually • 21 Apprentices as of December 2006

• 16 Aboriginal & 5 northern Non-Aboriginal • 10 Journeymen created since 2003

• 8 certified in 2006 • All northern & half Aboriginal

Unprecedented Local Business

Construction

74%Northern

ConstructionContracts

C$1.2 billion

50% Aboriginal

Operations

*Mid-year 2007**Year-end 2006, includes capital

77%Northern

OperationsSpending

C$479million**

45% Aboriginal

Aboriginal Business Exceeds $1 Billion

Chart 1: Diavik Cumulative Expenditures by Priority Group 2000 to 2006

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

2000-2002 2003 2004 2005 2006

$ bi

llion

s

Other Canadian

Other Northern

Northern Aboriginal

74%75%

74%

74%

75%

51% 47% 45% 46% 46%

100%

100%

100%

100%

100%

Total Diavik Aboriginal Business Spend ~ $1.2 Billion

Diavik - www.diavik.ca

For centuries, people of the North have used the resources wisely.

… Diavik is continuing this tradition

Masi Cho