Case Studies

Guerro Mexico, Nahua People

CONNECTING INDIGENOUS PEOPLE TO THE GLOBAL ECONOMY

Northern Territory, Mangarrayi People

POWERING A NEW GENERATION OF ABORIGINAL ENERGY

Western Australia, Aboriginal Construction Firm

CREATING GROWTH THROUGH “YELLOW IRON”

Uniontown Alabama

TURNING ENVIRONMENTAL DISASTER INTO JOBS AND A FUTURE

Guerro Mexico, Nahua People

CONNECTING INDIGENOUS PEOPLE
TO THE GLOBAL ECONOMY

The Challenge:

The State of Guerrero Mexico faced a hurdle – how to connect a historically dispossessed people to meaningful local economic opportunity. Descendants of the Aztecs, the Nahua (pronounced Naw – wah) are one of the Indigenous peoples of Western Mexico. While recognized in the Mexican constitution, the Nahua have had little access to the growing resource economy in their state. They rank significantly lower in health, infant mortality, literacy and other indicators of socio-economic status. Mining is one of the largest industries in Mexico and many mine sites are located on traditional Nahua land. However, with no mining experience, limited resources and virtually no experience in the resources market, how could the Nahua enter the economy successfully?

The Solution:

Big Blue Sky was asked to propose a solution to this challenge. Working in partnership with Grupo Minero, a local mine operator, the state government and ore buyers around the world, Big Blue Sky designed a program whereby the iron ore from the Nahua located concessions could be brought to market in a “stair step” approach. Recognizing that capacity and credibility were the major hurdles to the creation of sustainable mining performance, Big Blue Sky focused on creating a pilot mining and export program whereby the Nahua could slowly raise their ore capacity as their operational experience grew. This included enabling access to each step in the resource value chain including the successful sale of the ore on the international market. Once the operation could prove its ability to meet small delivery targets on time, safely and with consistent product quality, the operation could be ramped up creating more local employment and use of more local suppliers.

The Outcome:

The export of Nahua-based ore is the first example of an Indigenously mined, processed and exported mineral product in Mexico. While the program is still in its infancy, Nahua ore can now be sold to more reputable buyers who are willing to pay a fair market rate for the product. Furthermore, the Nahua are aggregating other small Indigenous concession holders to pool their resources together to create better cost efficiencies, higher ore capacity and a stronger pricing position. A small mining ecosystem is beginning to be built, including the development of a local ore quality lab to help insure consistent product quality from smaller local suppliers.

The Point:

If Indigenous people have greater access to the local economy, communities improve, business grows and the risk of political instability drops. What it takes is the vision to see what’s possible, the experience to organize the necessary components to make it happen and the willingness of all the stakeholders to solve the challenge.

Northern Territory, Mangarrayi People

POWERING A NEW GENERATION
OF ABORIGINAL ENERGY

The Challenge:

Access to affordable energy is a critical issue for many Indigenous people. The long distances from generation sources and the lack of transmission and storage infrastructure necessary to serve small populations living in remote areas make the cost of delivering power much more expensive for those who can least afford it. Add to this the fact that diesel is the primary source of power generation, and not only is the cost to deliver energy to a remote community high, but it can also have a negative impact on the environment as well. Australia’s Mangarrayi people of the Northern Territory face this exact challenge – how to access power at an affordable cost and respect the environment in the process.

The Solution:

The Mangarrayi people, together with their business advisor, Savanna Solutions, chose to work with Big Blue Sky to address this challenge. The Northern Territory’s energy needs are growing rapidly. However, power generation that produces high carbon emissions is expensive and can have a negative impact on the environment. The Mangarrayi’s land is blessed with continual and abundant sunshine. Big Blue Sky proposed that the Mangarrayi consider working with the Northern Territory government to locate a commercial solar energy facility on their land. The Mangarrayi Council agreed that a solar farm would be in keeping with their concern for traditional culture preservation, land management and would enable the community to participate in the 21st Century economy as an owner of a renewable energy facility. Big Blue Sky initiated the discussions with the NT Government, Power and Water Corporation and the various constituencies who would play a part in the project, including the Australian Renewable Energy Agency (ARENA).

The Outcome:

The Mangarrayi solar array project is in the early stages of development. However, there have already been several positive outcomes. First, the Mangarrayi have come together as a community and made a collective decision to pursue an idea that has multiple benefits for their community – renewable energy. Second, there has been an honest, productive and continuing dialog between the community, the government, the utility and the developers for the project. By working hard to align stakeholder interests first, meaningful progress has been easier to achieve. Finally, the proposed project addresses the needs of multiple constituencies in a manner that goes beyond pure cost/benefit analyses and considers the need to create a new model for how Aboriginal people can contribute to the economic needs of the state in a manner that is self-determined and fits within the context of how they choose to live.

The Point:

Solving the challenges associated with remote energy delivery is not fast, simple or straightforward. Progress happens when everyone’s needs are considered early enough in the process and every stakeholder has a voice in shaping the outcome. Listening and seeing the bigger picture can often lead to positive outcomes as long as everyone has the opportunity to be engaged as an equal in the process.

Western Australia, Aboriginal Construction Firm

CREATING GROWTH THROUGH “YELLOW IRON”

The Challenge:

Any small business faces the hurdle of how to finance growth. For a small Indigenous construction company, sourcing and financing heavy equipment purchases can be costly, constraining to the operation and occupying an inordinate percentage of management’s time. This challenge is made more complex in Western Australia where the growth of the resources industry has put access to heavy equipment (also known as “Yellow Iron”) at a premium. Not only are heavy construction vehicles hard to come by, the market demand has put upward pressure on equipment prices making the gear tough to find and expensive to buy. For smaller Aboriginal construction firms, the situation is made more strenuous as access to debt financing is often constrained by the limits of a small business credit line. Even if the business can secure the financing, it can come with a high interest rate tying up capital and restricting the company’s flexibility to operate.

The Solution:

How to source good quality equipment and make financing that equipment affordable to small Aboriginal construction companies was the challenge offered to Big Blue Sky. Working with a network of heavy equipment and global financing partners, Big Blue Sky put together a unique equipment leasing operation where multiple leases could be packaged together and offered at an interest rate 2 to 3 points lower than a standard small business credit line. By assembling a global equipment sourcing network and then aggregating the equipment buyers under one umbrella, Big Blue Sky was able to generate more favorable business terms for financing the equipment as well as offer earlier access to better gear for the Aboriginal firms.

The Outcome:

By creating access to Yellow Iron on better terms, Big Blue Sky enabled the Aboriginal companies to lease better gear on more favorable terms than those available through traditional small business banking channels. This took pressure off company balance sheets while adding asset capacity that enabled the businesses to take on more work. For Yellow Iron sellers, aggregating a pool of pre-qualified buyers, supported by strong financial guarantees, made leasing their equipment faster, simpler and more profitable.

The Point:

Like any business, access to greater capacity at less cost translates into an opportunity to grow more sustainably. It’s how that access is created that separates the status quo from a breakthrough idea.

Uniontown Alabama

TURNING ENVIRONMENTAL DISASTER
INTO JOBS AND A FUTURE

The Challenge:

Uniontown Alabama was one of the poorest communities of many poor areas in the state of Alabama. A third of the residents lived below the poverty line. Unemployment sat at 17%. Up and down Main Street of this nearly 100% African-American community, businesses were closed. The town was dying.

Neighboring Tennessee faced an entirely different challenge. Fly ash from one of the largest utility plants in the country had broken through a holding dam creating an environmental disaster of epic proportions. The Environmental Protection Agency (EPA) needed to clean up the mess and insure that this type of disaster never happened again.

The Solution:

Partners from Big Blue Sky worked with the EPA, Tennessee, Alabama, Uniontown and a coalition of engineering, environmental management and minority-owned contractors to define the best possible answer. The result was the creation of Arrowhead, the largest and most environmentally sound landfill in the Eastern United States. Aligning the interests of federal, state and local government as well as the community of Uniontown, the Arrowhead project eventually spanned 1400 acres (570 hectares) and accepted over 600 railcars of fly ash a week. Located in an impermeable dry chalk cavern that isolated the ash from the water table, Arrowhead was built with an innovative leachate collection system – the first of its kind. The partners at Big Blue Sky also worked with the government to mandate that qualified local minority-owned suppliers be used in every aspect of the project.

The Outcome:

Arrowhead has been rated by the EPA as exceeding the most stringent environmental standards of any facility of its kind in the country. Aside from protecting the environment, the economic benefits that have accrued to Uniontown have changed the community’s future. A town that was dying now has new revenue that generates over $3M annually for a county whose total budget was less than $500K. To quote Fairest Cureton, Uniontown school principal and Perry County Commissioner, “This gives us an opportunity to fund our schools, to help build our roads, to create some things in Perry County that will enhance the lives of individuals. People have hope again.” Arrowhead also spawned the creation of multiple minority-owned businesses. The jobs generated by the facility stayed in Perry and benefited Perry’s citizens first – particularly its minority population who now has access to good paying jobs. Even environmentalists applauded the project, its location, its management and its outcomes. “It was the best answer to a problem with no easy answers,” said the EPA’s Arrowhead project coordinator.

The Point:

Aligning the interests of government, the community and the environment and then tackling a challenge together is what consistently generates positive results. Having an advisor that understands how to shepherd stakeholders towards a common objective without losing the interests of the minority in the process enabled Uniontown to turn an environmental disaster into a sustainable economic future for the community.