Traditionally, mining companies have been reluctant to give indigenous Australians equity stakes in mining projects, preferring to issue royalties, lump-sum payments and employment and education benefits to native title holders in exchange for access to their land. However, in a landmark deal negotiated earlier this year, some of the country's most disadvantaged indigenous Australians will become shareholders in an Australian Securities Exchange listed mining company under an innovative native title agreement.
Under a native title agreement between the Western Desert Lands Aboriginal Corporation (WDLAC) and Perth based company Reward Minerals Ltd, the Martu people were able to secure 7 million unlisted options in Reward Minerals, exercisable at 50 Australian cents for the development of its Lake Disappointment potash project in Western Australia. Once exercised, the options would amount to 10.31% of Reward Mineral's issued capital.
The Martu people hold native title over a 136,000 square kilometre area in Western Australia, which covers highly prospective ground for miners and explorers – including deposits such as Rio Tinto's Kintyre deposit, the Mega Uranium Kintyre Rocks projects, and existing mines such as Newcrest's Telfer gold mine.
The deal was negotiated for the Martu people by Joe Proctor, an advisor to the WDLAC, and Clinton Wolf, the chief executive officer of the WDLAC. Mr Proctor believes that the equity component is the way of the future in mining negotiations stating:
"We believe that the presence of a generous indigenous equity component as part of the transaction is the way of the future in mining negotiations. Reward has offered equity in a bid to align the future interests of both parties - an innovative strategy which also acknowledges the strength of the Martu people's rights."
In addition to the equity stake, the Martu people will receive cash payments based on milestones in the development of the project and a production royalty on potassium sulphate and other mining products.
The impact of this deal will set a precedent for land access negotiations between mining companies and Indigenous Australians. Royalties and upfront payments, on their own may no longer be accepted by native title groups who are likely to push for material equity stakes in mining ventures.
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