Over the past couple of decades, there has been an evolution in the legal rights of Indigenous communities to be consulted and provide consent in the development of natural resources on their territories.

More and more, Indigenous communities are exercising these rights and more often than not, becoming equity partners in the development of those natural resources ensuring more economic prosperity to their communities.

Perhaps as important, the inclusion of First Nations in the development of these natural resources is leading to faster regulatory approval, along with stronger social licences needed to develop these resources. It is also contributing to the reconciliation process underway.

According to a recent report (December 2023) by the MacDonald-Laurier Institute (MLI), since 2012, First Nation and Metis communities have “acquired or negotiated options for almost $10 billion in equity in energy and resource projects.”

Having skin in the game has the advantage of aligning the interests and incentives of all equity partners in the successful development of natural resources.

Some projects are not as suitable for equity partnerships due to the risks and upfront costs needed to develop the resource, such as mining and upstream oil and gas projects. In such cases, First Nations often opt for annual revenue streams and royalties or participation through supply chain support initiatives.

Financing Equity

Although Indigenous communities have access to traditional lenders and capital markets, the challenge for First Nation communities is that they are prevented from using their reserve lands and assets as collateral.

Indigenous communities have a number of sources to help finance their equity participation in natural resource development projects. The First Nations Finance Authority (FNFA) provides First Nations with loans at preferred long-term rates with repayment terms of up to 30 years. Since being established in 2005, FNFA has loaned more than $1.8 billion, mostly to finance housing and community infrastructure, as well as commercial projects. However, the FNFA provided $250 million to the Mi’kmaq Coalition to purchase a 50 percent interest in Clearwater Seafoods in 2021.

The Canada Infrastructure Bank (CIB) has a mandate to support revenue-generating infrastructure projects. In November 2023, CIB announced an Indigenous Equity Initiative (IEI) to help First Nations, Metis and Inuit communities buy equity stakes in infrastructure projects within their traditional territories.

The ICI will provide loans between $5 million and $100 million to cover up to 90 percent of Indigenous investments. This initiative was to assist in CIB’s previously announced commitment to invest at least $1 billion in Indigenous infrastructure. Some provinces, including Ontario, Alberta and Saskatchewan offer Indigenous loan guarantees. CIB recently loaned the 13 Mi’kmaq communities in Nova Scotia $18 million to partner with Nova Scotia Power on their battery storage project.

Types of Projects

In Atlantic Canada, there are already a number of resource projects with significant Indigenous equity participation.

In September 2023, the North Shore Mi’kmaq Tribal Council (NSMTC) representing seven First Nations in New Brunswick (which includes the Papineau First Nation) signed equity agreements with both Moltex Energy and ARC Clean Technology for their potential use of Small Modular Reactors (SMRs) at the Port of Belledune to develop a green hydrogen hub. These two companies are working with New Brunswick Power to develop Small Modular Reactors (SMRs) at Point Lepreau in Mi’kmaq territory.

In Nova Scotia, the Mi’kmaq Coalition of seven First Nations led by Membertou purchased 50 percent of Clearwater Seafoods with Premium Brands of British Columbia for $1 billion in 2021. The community continues to expand its inshore fishery by acquiring licenses in the regular fishery.

Recently, Membertou First Nation also became the major shareholder of two wind farms that will be developed to support EverWind’s plan to build a green energy production facility at the Strait of Canso, which will cost half a billion dollars to construct.

In Newfoundland & Labrador, the Qalipu First Nation is working closely with World Energy HO2 as this green energy project edges closer to the start of its $6 billion phase one project, as well as EverWind, and has established a joint venture with DOB Academy in the Netherlands to provide a training centre for onshore, offshore and hydrogen training targeting eventually a national market.

Interestingly, the Qalipu First Nation is one of the few non-reserve Indigenous communities in Canada and represents 25,000 members in 67 communities across the province.

Importance of Leadership

There are a growing number of highly successful First Nations across Atlantic Canada. Perhaps the one with the highest profile and most successful is Membertou First Nation where Chief Terry Paul is both the long-term chief of the community and CEO of Membertou Development Corporation.

He is also on the Board of Directors for Clearwater Seafoods. In fact, Chief Paul celebrates his 40th anniversary as chief this year.

Chief Paul has gone from being a residential school survivor to being named one of Canada’s most admired CEOs by Waterstone Human Capital last year.

In a recent Insights Podcast, Chief Paul talked about the “Membertou Model” of development, which has the goal of reinvesting surplus revenues into the community. Membertou has the reputation of being a progressive Mi’kmaq community and the advantage of being an urban indigenous community.

Membertou was the first Indigenous organization in the world to receive an ISO 9001 certification. The Membertou Development Corporation was named one of Canada’s Best Managed Companies in 2019, the first Mi’kmaq corporation to be so recognized.

It also has a corporate office in downtown Halifax to increase Membertou’s profile with major private-sector companies in the province.

The community has a strategic focus on education and career-related training to increase employment opportunities for its community members and fully funds post-secondary education for all those interested.

There was a time when Membertou was considered to be a dangerous and unsafe community by the non-indigenous community in industrial Cape Breton. That has now changed as a result of the employment opportunities created within the community and the services available to the wider community including the Membertou Trade and Convention Centre which has led to a high degree of integration between the indigenous and non-indigenous communities, helping to break the stereotypes and biases of the past.

Membertou has annual revenues of $80 million, supporting 600 jobs in the community and allowing it to reinvest in the community infrastructure where more than $90 million has been invested in the past 10 years.

Membertou has accumulated nearly $80 million in surpluses providing the community with the financial capacity to consider new investment opportunities, including its newest commercial and retail enterprise called Exchange Seven on Highway 125.

Most First Nations in the region are involved in the fishery. It is interesting to note that both the Membertou and Papineau First Nations are concentrating their efforts on the commercial fishery by buying licenses when they become available rather than being focussed on the moderate livelihood fishing rights provided for Indigenous communities.

Looking Ahead

The common element of the leading and most successful First Nation Communities in Atlantic Canada is their commitment to become economically self-sufficient and bring prosperity to their communities by developing their own source revenue streams. Importantly, these successful First Nation communities each have their own economic development corporations managed by an independent board of directors.

It is now a given that First Nations involvement in the development of natural resources is not only a benefit to those communities, but to the country overall as it continues on its journey of reconciliation.

Improvements in the governance model for First Nation communities and professional leadership are contributing to this movement.

Don Mills is the co-founder and former owner of Corporate Research Associates Inc. (now Narrative Research), an active advocate for change and involved as a partner with several private companies. He is also the co-host of the weekly Insights Podcast.