The federal government is under increasing pressure from First Nations to open avenues to enable Indigenous equity investment in resource projects.
A national campaign is under way, sparked by the Indigenous Resource Network (IRN) and Executive Director Robert Merasty, who says: “Probably 99 per cent of the time, bands don’t have the necessary capital to get into those projects.”
He and the IRN are not alone: The Conference Board of Canada now has weighed in with a new report noting that “Most Indigenous communities lack access to affordable capital needed to acquire meaningful ownership levels in major projects.”
One of the roadblocks: Indian Act restrictions that mean First Nations cannot use property and assets as collateral for loans.
The IRN adds: “With no collateral, commercial interest rates offered to Indigenous communities and companies are too high. As a result, Indigenous communities often cannot participate in resource projects” — even if they want to.
Merasty begins with this: “Indigenous peoples are faced with a choice of development or poverty.
“If First Nations are to have a chance at seeing real self-determination, equity deals in natural-resource development must be part of the conversation.
“Having ownership of the projects taking place on our land not only gives us own-source revenue but also gives us the ability to have a seat at the table and be part of the conversation with industry.”
Stephen Buffalo of the Indian Resource Council of Canada led discussions in the summer with the five big banks, major institutional investors and pension funds.
“First and foremost,’ says Buffalo, “interest rates can be discounted based on a project’s Indigenous participation: from equity level to Board and executive representation, and from workforce proportion to procurement. This would make resource projects with Indigenous participation more competitive, more profitable, and thus more likely to move ahead.”
Merasty, though, calls for a broad National Indigenous Guaranteed Loan Program to help Nations raise the capital necessary to invest in projects taking place on their land.
“A guaranteed loan program can be a very helpful tool for Nations as they raise the capital necessary to invest in projects.
“Our people are faced with a choice between development and poverty. We are looking for solutions for our people, and this one is staring us in the face.
“We hope other Canadians and Indigenous can come together to support Indigenous ownership in these projects. We believe it is a real win-win for industry and our Indigenous communities.”
The Conference Board report says:
“Indigenous ownership is rising across Canada’s $540-billion major-project landscape, with the potential to unlock new investment and advance economic reconciliation.
“Driving this trend are Indigenous communities seeking stable, long-term revenues and greater decision-making power over projects impacting their territories. Industry is also awakening to the strengths and increased certainty Indigenous co-owners can bring to their operations.
“The opportunities these new partnerships are creating have sparked a growing urgency for Canada to break down long-standing barriers in the way of Indigenous major project ownership.
“Promising efforts are under way, but many Indigenous communities still lack access to the resources they need to make informed decisions, manage risks, and finance large-scale investments in their future.”
The report adds: “Increased Indigenous ownership levels are generating a range of benefits for major projects, including reduced regulatory risk, accelerated permit approvals, improved communications channels, and better long-term alignment of interests between industry and Indigenous communities.
“Greater Indigenous involvement at the strategic level, with community-appointed board members in a position to impact all aspects of operations, is ultimately leading to better projects and more equitable benefit-sharing—building trust within communities while creating predictability for investors.”
And the report goes on to explore what Indigenous groups need in capital and capacity to be strong partners in major resource projects.
While Merasty and the IRN push for new avenues to investment-funding, there have been some impressive recent moves.
For one, 23 First Nations and Métis communities in northern Alberta are investing $1.1 billion to become part owners of seven Enbridge oilsands pipelines. It’s described as the largest energy-related Indigenous partnership transaction in North America.
The Alberta Indigenous Opportunities Corporation (AIOC) provided a $250-million loan guarantee to back the deal. Said Merasty: “We need a national program, like the AIOC, so that agreements like this can take place all over Canada.”)
As well:
- Ontario’s Hydro One will offer First Nations a 50-per-cent equity stake in all future large-scale capital transmission-line projects: http://ow.ly/CEr450KZZGV
- And 16 Indigenous communities along the Coastal GasLink pipeline route have signed option agreements with TC Energy for an equity stake in the project: http://ow.ly/V7AF50KZZqa
Here’s hoping that Ottawa has its ears open.
True, Budget 2022 committed $100 million over five years to expand the Indigenous Partnership Office and the Indigenous Natural Resource Partnerships program. That included $13.5 million in funding for the First Nations Major Projects Coalition.
But we need that National Indigenous Guaranteed Loan Program proposed by Merasty, to help Indigenous communities enter into equity agreements.
And perhaps it could also help Indigenous communities found their own companies, such as the multi-million-dollar Bouchier Group in the oilsands and the Fort McKay Group of Companies run by the Fort McKay First Nation in Alberta.
- Bob Merasty on TroyMedia: http://ow.ly/O8iY50KYVis
- IRN’s Ownership Changes Everything campaign: http://ow.ly/RpBR50KZX0K
- IRN video: http://ow.ly/SGhb50L02Nu
- Conference Board report: http://ow.ly/BfYT50KXrkg
- The Enbridge pipeline deal: http://ow.ly/U8Ie50KZYp4 and http://ly/NSKN50KZ6WN
- Coastal GasLink equity option: http://ow.ly/V7AF50KZZqa
(Posted here 06 October 2022)
