Provincial governments across the country should ensure a portion of mining revenues are shared with First Nations, say Canadian miners and Aboriginal groups.

"It's a rational outcome of how the government manages its mining royalties and taxes in terms of who owns the land," says Gordon Peeling, president and CEO of the Ottawa-based Mining Association of Canada (MAC).

The B.C. government recently announced plans to share tax revenue from new mines with First Nations on a case-by-case basis. Under the plan, the first of its kind in Canada, First Nations will receive a share of revenue from new facilities when they begin operating.

"It certainly supports what we're advocating, which is looking at Aboriginal businesses and Aboriginal communities as potential partners in economic ventures," says Clint Davis, president and CEO of the Toronto-based Canadian Council for Aboriginal Business (CCAB), a national non-profit group that promotes Aboriginal people as partners, employees and customers.

The informal plan does not specify if the mine must be located on First Nations land or traditional Aboriginal lands, which could be difficult to determine with many ongoing land claims disputes across Canada.

Mining groups say the plan is still a step toward improving relations between companies and First Nations, providing cost and investment certainty and, possibly, helping to entrench First Nations treaty rights.

But Peeling, whose group represents mine operators who would have to share their revenue, says it's up to provincial and territorial governments to sort out the details.

Successful revenue sharing comes down to how provinces and territories manage their relationship with First Nations and flow-through of revenue, and what portion of royalties they're talking about, he adds.

In the Northwest Territories, some federal diamond-mining royalties are returned to First Nations through their federal land-claims settlement. "So (revenue sharing with First Nations) is a reality in parts of the country," says Peeling.

According to MAC, mining companies are active in 1,200 Aboriginal communities across Canada.

Most mines can take a decade or more to develop, and there's no guarantee a proposed project will gain all of the necessary environmental and other regulatory approvals. But Peeling says impact and benefit agreements (IBAs) - private deals between companies and First Nations - can ensure that Aboriginal communities gain from prospecting and mine-development efforts in the meantime.

IBAs can cover such aspects as education, training, business contracts and payments for First Nations.

There are more than 50 IBAs across the country, involving such major firms as Barrick, Voisey's Bay Nickel, De Beers and Cameco. IBAs are also used on oil and gas pipeline and oilsands projects as well as hydro power developments.

B.C. Minister of State for Mining Gordon Hogg announced the plan after First Nations across the province called for new legislation to ensure they will receive a share of mining revenue.

Canadian mines generated $8.15 million in taxes and royalties in 2006, the last year for which figures are available. Mineral-processing and manufacturing facilities contributed $32 billion to Canada's GDP, while extraction efforts provided another $10 billion.

Peter McBride, communications manager for the Ontario Mining Association (OMA), says Ontario's Mining Act is being reviewed and amended, and revenue sharing with First Nations is one of the changes on the table.

The first draft of the new legislation is due out before Christmas.

McBride, who deals with First Nations and taxation issues for his group, says OMA is not necessarily pushing for revenue sharing with Aboriginal communities, but has no objections as long as taxes do not increase.

"This (revenue sharing) is not, to me, something new," says McBride. "In Ontario there have been 29 impact and benefit agreements between mining companies and First Nations. Things like that are taking place."

Mining companies are getting closer and closer to First Nations as the industry grows, he adds.

"(This) is an equitable way of ensuring that (places) where employees live get some kind of money for infrastructure development."

Gavin Dirom, president and CEO of the Association for Mineral Exploration BC (AME BC), which represents prospectors and developers, says B.C. mining companies have been pushing for revenue sharing with First Nations for more than two years.

While provinces and territories would be responsible for revenue-sharing with First Nations, Ottawa could facilitate discussions on a nationwide agreement, he adds.

"It's a good step towards sharing more of the wealth," he says. "It's not a concern of the operators if the tax burden hasn't increased. It's just a redistribution of the tax revenue."

Government-to-government revenue-sharing programs have much more transparency than private IBAs, he says.

Aboriginal and mining groups say the Gordon Campbell government is being prudent in waiting for a couple of mines to be developed before establishing set revenue-sharing percentages, policies or legislation.

"By having First Nations participate formally in terms of the revenue sharing as part of the revenue taxation, I think it's going to be a bit of a catalyst for First Nations who are benefiting from this to view mining in a way that's positive and progressive," says Davis of the CCAB. "It could be a catalyst for First Nations to really develop an expertise in the skills and trades for mining."

"I think every single province should look at what B.C. did in terms of making its commitment to Aboriginal communities."

Mine revenue-sharing is also likely to gain more attention and discussion in Saskatchewan. Chiefs from northern Saskatchewan have told Premier Brad Wall they want their First Nations to share in the province's resource windfall.

In a recent meeting with Wall, chiefs asked that First Nations be consulted on development of the resources in their area and receive a share of revenue in the form of jobs, infrastructure, or other benefits.

Chief Ron Michel of the Prince Albert Grand Council says they can't allow more young people to leave what he calls the Third-World conditions of some communities to seek jobs elsewhere.

"When all those things are extracted in our own backyards and within our traditional lands, I believe as First Nations we do have that responsibility for our people to get something for our people," Michel said.

Wall says they're looking at creating a framework for consultation before the end of the year.

Pierre Gratton, president and CEO of the Mining Association of British Columbia, says the revenue-sharing plan will improve the investment climate and make First Nations lands more easy to access because it ensures Aboriginal communities benefit directly from mine projects.

The entire Canadian industry has always believed that local communities should benefit the most from projects, but the sector's global nature does not always ensure that they do, he says.

- With files from The Canadian Press (Monte Stewart can be reached at monte@businessedge.ca)