Creating economic growth for Aboriginal groups and communities has traditionally revolved around investing in businesses focused on either goods producing or service providing functions.

As those industries rise and fall on demand, so too do the economic fortunes of the owners. For those seeking stable, safe returns, it has generally limited their investing options.

More and more Indigenous groups, however, are bucking that trend and instead putting their money behind the often boring, yet quite lucrative to own, infrastructure that fuels our economy as a whole.

Across the country the idea has caught fire in a big way and recently resulted in the largest such deal ever struck.

Suncor’s East Tank Farm Development

Late last year even the mainstream national media took notice as the Fort McKay First Nation (FMFN) and the Mikisew Cree First Nation (MCFN) partnered to acquire a 49 per cent interest in Suncor’s East Tank Farm Development at a jaw-dropping price of $503 million.

“The deal represents the largest business investment to date by a First Nation entity in Canada, and not only demonstrates the great potential for partnerships between First Nations and industry but serves as a model for how First Nations can achieve greater self-determination through financial independence,” said Jim Boucher, Chief of FMFN. 

The FMFN is composed of over 800 band members with approximately 400 members residing in the hamlet of Fort McKay – a community located approximately 65 km north of Fort McMurray. As a First Nation, FMFN is a leader in working collaboratively with industry, and holds a successful and long established record of strong relationship building with the various mining companies operating adjacent to its land. Fort McKay has aimed to maximize its participation in the economy to create sustainable, long-term growth and development.

“We are known for our good working relationships with the surrounding oil sands companies,” the group states, adding it strives to balance resource development with protecting the health of its community and the environment.

While the FMFN is very experienced and comfortable investing in oil sands-related ventures, the same could not be said about the other First Nation partner the Mikisew Cree, which signed Treaty 8 in 1899. This group has resided in northeastern Alberta and the southeastern NWT since time immemorial. The Athabasca Delta, which is in the centre of its traditional lands, is a unique international ecosystem which the MCFN members cherish. It is the source of much that sustains them.

When the fur trade came west and established a trading fort in this area, the Mikisew Cree were among those who traded furs. The traditional lands of the MCFN range over much of the area where the Athabasca oil sands deposits have been found. At the present time most members reside in Fort McMurray, Edmonton, Fort Smith, NWT, and Fort Chipewyan, Alta.

“It’s with great pride that we are part of this monumental deal,” said Archie Waquan, Chief of MCFN. “The economic benefits generated from this deal will help our Nation build capacity within our businesses, develop infrastructure in our community, fund social economic programs, and provide us with the means to help pay for education and training for our youth. This will be felt in our community for generations to come.”

What makes the Suncor deal so compelling is that this was not a case of any level of government providing the funds to the First Nations for them to invest. Instead the two partnering groups independently financed their acquisition through the issuance of $545 million in 4.136 per cent senior secured notes that come due Dec. 31, 2041. The offering was structured and marketed by RBC Capital Markets. 

“RBC Capital Markets is proud to serve as sole agent for this groundbreaking financing transaction,” said Mark Saar, North American Head of Project Finance, RBC. “Suncor’s industry partnership with the Fort McKay First Nation and Mikisew Cree First Nation is a testament to the collaboration and success that is possible in Canada’s energy sector.”

It was a good business deal for all involved: Suncor, the Aboriginal groups, RBC Capital Markets and even the private investors who bought the notes.

“We like the East Tank Farm transaction because of its strong credit and economic fundamentals coupled with the fact that this is a groundbreaking economic transaction between the First Nations and the oil sands industry, in particular with Suncor,” said John Braive, Vice-Chairman, CIBC Asset Management and ETF Limited Partnership bond holder. “The credit fundamentals of the transaction are supported by contracted cash flows that are underpinned by take or pay contracts with strong counterparties. These take or pay contracts eliminate commodity price risk, volume risk and operations and maintenance cost risk.”

The East Tank Farm Development is a bitumen and diluent storage, blending and cooling facility located approximately 30 kilometres north of Fort McMurray, Alberta. It is primarily dedicated to servicing bitumen production from the Fort Hills oil sands mining project. Revenue from long-term terminal services agreements with Fort Hills underpins the financing. Suncor is the operator of the East Tank Farm Development.

“We’ve completed a historic deal for energy development in Canada. This unique partnership has been part of a journey that demonstrates how innovative thinking and collaborative spirit can result in a mutually-beneficial opportunity and it has changed the way Suncor thinks about how our Aboriginal neighbours may participate in energy development,” said Mark Little, President, Upstream, Suncor. 

Suncor Energy is one of Canada’s leading integrated energy companies. Its operations include oil sands development and upgrading, offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand.

Suncor has a long track record of working with Aboriginal communities to increase their participation in energy development. One of the ways is through business development opportunities. Suncor has worked with more than 150 Aboriginal communities, including in the Regional Municipality of Wood Buffalo, home to its oil sands operations, and other locations through Petro-Canada branded retail, wholesale products and services.

In 2016, Suncor spent $455 million in goods and services with Aboriginal-owned businesses, bringing the total to approximately $3.9 billion since 1999. There are 26 Petro-Canada branded gas stations owned by First Nations, one wind project where a First Nation is an equity partner and Suncor is an equity partner in PetroNor, a James Bay Cree wholesale distributer.

While this record setting investment in the heart of the oil sands certainly caught people’s attention, it is the exception. Most of these innovative projects never receive much of the national spotlight.

Wataynikaneyap Power

Percolating away for several years now in relative obscurity is Wataynikaneyap Power and its plan to electrify a vast chunk of northwestern Ontario. Wataynikaneyap Power is a licensed transmission partnership equally owned by 22 First Nation communities (51 per cent), and Fortis Inc. (49 per cent). Wataynikaneyap Power PM Inc., a wholly owned subsidiary of Fortis Ontario Inc., acts as project manager.

In March the federal and provincial governments jointly pledged $1.6 billion enabling Wataynikaneyap Power to move forward with its plan to connect the communities to the electrical grid with approximately 1,800 km of 230 kV, 115 kV, and 44 kV lines in northwestern Ontario. Wataynikaneyap will develop and operate the network. The Project is estimated to create 769 jobs during construction and nearly $900 million in socio-economic value. Once complete, the project is expected to save over $1 billion over the next 40 years compared to continued diesel generation. The project will also result in over 6.6 million tonnes of avoided greenhouse gas emissions, will increase economic development opportunities, and will improve the social and living conditions for remote community residents.

The project has been a ground up initiative since 2008, which built on the mandates and support of the partner communities.

“Connecting remote First Nation communities to Ontario’s safe, clean and reliable electricity grid is a priority for the province, and is a key part of our plan to create fairness and opportunity for all Ontarians,” says Minister Glenn Thibeault, Ontario Minister of Energy. “By eliminating dependency on costly diesel generation, the Wataynikaneyap Power Project will create new economic opportunities and greatly improve the quality of life in these remote First Nation communities. This project is an important step in Ontario’s journey of healing and reconciliation with Indigenous peoples.”

Wataynikaneyap Power’s plan will see it directly address First Nations infrastructure needs in two phases. First, the grid reinforcement to Pickle Lake; second, the extension north to connect 17 remote off-grid communities.

Phase 1 – New Transmission 

1. Line to Pickle Lake:
2. Preliminary Proposed corridor  Green Line on map (page 36)
3. Approximately 300 km
4. Proposed 230 kV design
5. Estimated cost of $200 million ($2015)
6. Environmental Assessment Terms of Reference Approved
7. Construction start expected in late 2018 with completion in mid-2020
8. Construction will not begin without a plan for connecting the Remote First Nations Communities (Phase 2)

Phase 2 – Grid Connection to 17 

1. Remote First Nations Communities:     
2. Requires completion of Phase 1
3. Connection of 17 remote First Nations communities north of Red Lake and Pickle Lake (Purple Lines on map, page 36)
4. The preliminary proposed corridor north of Pickle Lake is estimated to be 895 km of 115kV and 44kV transmission line 
5. The preliminary proposed corridor north of Red Lake is estimated to be 626 km of 115kV and 44kV transmission line 
6. Estimated construction cost for Phase 2 is $1.15 billion ($2015)
7. Separate Environmental Assessment (EA) for Phase 2 was initiated in January 2016
8. Construction is expected to start in 2019 with completion in 2023
9. If requested, will consider connections to other customers

Ontario has identified transmission reinforcement to Pickle Lake and the connection of remote communities as a priority project in its Long Term Energy Plan. Ontario’s Independent Electricity System Operator (IESO) study concluded:

The cost of diesel generation in remote communities is 3-10 times more than the average cost of power in Ontario. 

Power supply cost for Ontario’s 25 remote communities is about $90 million/year and growing; this cost is mostly subsidized through Ontario electricity rates (ratepayers) and the federal government. For the 17 communities to be connected by the Wataynikaneyap Project, the estimated cost is $53 million/year and growing.

Over 40 years, transmission connection to remote communities could result in over $1 billion in cost savings compared to continued diesel generation. 

The benefits of this project have even been confirmed by an independent study conducted by PricewaterhouseCoopers.

The two Phases of the project notwithstanding, the federal government previously fast-tracked what was actually supposed to be one of the first sections of Phase 2 and committed $60 million to connect the Pikangikum First Nation to Ontario’s power grid with work there now underway.

“I’m very excited, especially seeing the training that has started in Pikangikum, but I’m particularly happy with the work we did with the community elders and leadership to get to this point,” said Margaret Kenequanash, CEO for Wataynikaneyap Power.

Like so many remote First Nations communities across the country, Pikangikum has relied on diesel to power its community. Without access to reliable power, everything from education, health services, to safe drinking water and the ability to connect new homes and build other critical infrastructure has been hampered. More than 80 per cent of existing homes are without water and sewer service. The fuel-intensive diesel generating station has been operating at capacity since 2010, leaving the community to struggle with constant power outages and several catastrophic generator failures.

“This is the best news I’ve heard in a long time – the community really needs this,” explained Pikangikum’s Chief Dean Owen. “This means that Pikangikum can move forward with infrastructure, economic development and community growth.”

The Pikangikum Power Line Project, expected to provide an estimated 110 jobs, would run north 117 km from Red Lake and officially has a construction contractor in the form of PowerTel Utilities Contractors Ltd. Construction on this first section is now expected to be completed in late 2018.

Of course not all infrastructure deals are measured in the billions; and size has nothing to do with success.

Hornepayne Forest Sector Businesses

Hornepayne is a township of about 1,050 people located in the Algoma District of Ontario. It sits on Hwy. 631, an isolated stretch of north-south road connecting the two branches of the Trans Canada Highway. 

The primary industry there, forestry, collapsed when in 2015 the Olav Haavaldsrud Timber Company was shuttered. At about the same time, a cogeneration plant formerly known as Becker Cogen went into receivership. The plant had utilized wood waste from the mill to create steam power and supplied heat back to the kiln in a symbiotic relationship between the two businesses.

But that industry has since been revitalized thanks to a large investment in the underpinning infrastructure by three local Aboriginal groups.

The Missanabie Cree, the Chapleau Cree, and the Netamisakomik Anishinabek (Pic Mobert) First Nations are now significant owners in these two Hornepayne businesses, now known as Hornepayne Lumber LLP, a random length sawmill which restarted production in January of 2017 employing 90 people; and Hornepayne Power Inc., which currently has 17 employees.

“The scale of this investment by First Nations is a first in Ontario,” said Chief Keith Corston, Chapleau Cree First Nation. “One tree at a time… We’ve got to be part of the business to be able to manage the resources within our territories, and ensure the integrity of our forests. We’re investing here as an investment in our people, our community, our lands, and our future.”

Having partnered through the newly formed Northeast Superior First Nation Investment LP, the three First Nations hold a $4 million equity share in Hornepayne Lumber and Hornepayne Power Inc. A memorandum of understanding towards their stake of more than 30 per cent was signed in July 2017 and the deal was completed just prior to the start of this year. 

“This is about creating resources to invest back in the healing of our people and to create opportunities for our people to live a good life,” added Chief Johanna Desmoulin of the Netamisakomik Anishinabek. 

To mark the occasion, Chief Corston and Chief Desmoulin joined with Chief Jason Gauthier of the Missanabie Cree First Nation, and others onsite for a tour and celebration including the presentation of a Star Blanket to forestry veteran and former Tembec founder Frank Dottori, President and CEO of Hornepayne Lumber and Hornepayne Power Inc.

“This investment creates real opportunities both at the facilities and in the forest operations for members of the First Nations,” said Chief Gauthier. “Our populations are growing, and as the sector’s workforce ages, our people will be the logical choice for employment.”

The initiative actually follows the successful model demonstrated by the purchase of White River Forest Products. Located four hours north of Sault Ste. Marie, that sawmill was brought back to life in 2013 by Dottori and a group of investors that includes the Pic Mobert First Nation after the mill had been mothballed for six years.

“Working with the township and the Pic Mobert First Nation, we are delighted that the local First Nations are participating as equal partners in wealth creation and resource management for Hornepayne Lumber and Power,” Dottori said. “We welcome the $4 million investment in order to address capital needs of the cogen facility, such as improving the water treatment systems, and to complete our modernization program at the mill, making us more competitive, and thereby ensuring a more stable future.”