First Nations sought as equity partners
Initiative seeks to encourage equity partnerships between industry and First Nations in resource projects in British Columbia
1 of 3Harold Calla is the executive chair of the First Nations Financial Management Board. A proposed initiative to encourage First Nations to become equity partners in major resource projects in British Columbia involves the board and the federal First Nations Fiscal Management Act. — Photo courtesy of the First Nations Financial Management Board
2 of 3The Hon. Gerry St. Germain, a retired Conservative senator from British Columbia, is leading an initiative to encourage First Nations to become equity partners in major resource projects in the province. — Photo courtesy of Western Economic Diversification Canada
3 of 3Steve Berna is the chief operating officer of the First Nations Finance Authority. With the help of capital markets, the FNFA hopes to provide its member First Nations with the opportunity to apply for long-term, low-rate loans that can possibly be used to invest in natural resource projects. — Photo courtesy of the First Nations Finance Authority
The federal government and the First Nations Financial Management Board are seeking First Nations as equity partners in major resource projects in British Columbia.
The Hon. Gerry St. Germain, a retired Conservative senator for British Columbia and a former chair of the Senate’s standing committee on aboriginal peoples, spoke about the initiative at the Premier’s BC Natural Resource Forum in Prince George, British Columbia January 22.
Harold Calla, executive chair of the First Nations Financial Management Board, said some of the initiative involves allowing First Nations easier access to capital markets in order to gain money to invest in projects.
And Steve Berna, chief operating officer of the First Nations Finance Authority, outlined a way First Nations can access low-rate loans to help them to potentially invest in natural resource projects with the help of capital markets.
St. Germain and Calla stressed in their forum presentations that both the federal and provincial governments—along with industry—need to be involved in negotiations regarding investment in natural resource projects. And both stressed the need for industry and governments to treat First Nations with respect and support during negotiations.
“This opportunity of which I speak is simply a business deal that First Nations could, and I believe should, consider participating in,” St. Germain, a Métis, said during a mining presentation entitled Digging into the Future.
“The tools exist right now for First Nations to become equity owners in large projects.”
Investment in natural resource projects
St. Germain said since retiring from the Senate nearly two years ago, he has been volunteering his time with the First Nations Financial Management Board, engaging First Nations in discussions about equity partnership in major resource projects.
“A novel approach exists through the Financial Management Board, where First Nations would access the capital needed for equity ownership using existing tools within the (First Nations) Fiscal Management Act,” St. Germain said. “The strength of this access would be backstopped by a federal government guarantee.”
Calla said the oversight framework for the initiative under the Fiscal Management Act was still being worked on. But he said because of the massive capital costs of developing some natural resource projects that industry, capital markets and/or governments would have to loan First Nations significant amounts of money in order to allow them to purchase equity in projects.
“It will be a couple of months before we get the real procedures (dealing) with First Nations, Canada, the province, and the capital markets to provide that kind of money,” he said.
Putting First Nations on "a level playing field"
But Calla also said First Nations need money and expertise to conduct proper due diligence on specific projects before agreeing to invest. He also said First Nations need access to capital markets not just to invest in natural resource projects, but also to gain financing for projects in their communities.
Berna said in March the First Nations Finance Authority (FNFA) would be raising money from capital markets for the 34-member FNFA First Nations to access long-term low-rate loans to possibly invest in natural resource projects. The loans could be up to 30 years with a rate of 4.1 per cent.
“When you look at economic projects, if you’ve got an opportunity to pursue in either mining, or forestry, or your own business or be part of an equity (place) in natural gas, and you can earn 11 per cent and 11 per cent comes in—and you’ve taken a loan at four per cent—you’ve got seven per cent left over for your community,” Berna said.
St. Germain said First Nations need to enter into natural resource negotiations with industry and governments prepared with their terms and ideally able to speak with one voice. Governments and industry needed to act on such terms, including providing First Nations with access to capital for equity participation, and need to treat First Nations as landowners.
“The concept of equity partnership of First Nations in resource projects has the serious attention of decision-makers in Ottawa,” he said.
Berna said Canada is currently the only place in the world where First Nations have such access to capital markets for investment purposes as that offered by the FNFA. The organization is owned and managed by its 34 members, but 93 other First Nations are already in the process of becoming members.
“It’s put First Nations on a level playing field,” Berna said. “But it will apply to businesses that say, ‘We have a duty to consult and accommodate.’ The First Nations now have access to the monies to support their share of the equity side, should that be required.”
