The Ripple Effect Newsletter
April 2011
In Canada, renewed activity on land claims and treaty settlements has increased opportunities for companies to work with Aboriginal groups. Resource companies have learned that it is sound business practice to develop Aboriginal policies and partnerships. For the past 28 years, Ripple Effects Ltd. has been helping corporations and other businesses learn how to be more effective and successful in relationship building with Aboriginal people, groups and organizations.
Hello everyone, my apologies for the length of time since our last newsletter. Last October, industry leaders shouted in unison: “Gentlemen Start Your Engines.” Our team has had the petal to the metal ever since. Ripple Effects is delighted in getting caught up in all the renewed optimism and positive responses from our many existing and new clients.
This past year has seen a proliferation of companies both large and small expressing an interest in building relationships with Aboriginal communities in regions where they operate. Currently, it is estimated that there are over 450 various agreements between Aboriginal communities and corporations in place and working well. Impact Benefit Agreements, Agreements In Principal, Memorandums of Understanding, Consultation Protocol Agreements, Limited Partnerships and many Joint Ventures Agreements all across Canada.
The terms, conditions, targets, objectives, priorities and programs are varied and complex but they are working. Aboriginal partners often ask their industry partner to have all their employees working on the project, including all the contractors and suppliers personnel, take Aboriginal Awareness Training.
In some cases the Aboriginal partner is asking industry to have Aboriginal Cultural Awareness as well. As a result, Ripple Effects Ltd. has been providing Aboriginal Cultural Awareness training and working with the chosen Elders form many diverse Aboriginal cultures to ensure inclusion, correction and accuracy in the sharing of Aboriginal cultural topics that are related to “ local culture”.
Learning as much as you can about those you wish to contract with seems to be reasonable and your new partner will be very appreciative. Providing Aboriginal Awareness Training is just one way of demonstrating the required respect and beginning the process of trust building that will lead to a successful relationship.
Do you want to bring added value to a client with an Aboriginal Partner? Do you want to gain a competitive advantage? Let's get started. We would like to hear from you wherever you may be. Please enjoy these news stories as they relate to Aboriginal people in Canada.
Most Sincerely,
Robert Laboucane
President, Ripple Effects Ltd.
Story 1
Northeastern Alberta Aboriginal Business Association
The Northeastern Alberta Aboriginal Business Association (NAABA) is a non-profit organization that consists of a growing interest group of Aboriginal Businesses, committed to enhancing and creating an environment, which promotes businesses, jobs, and training for the betterment of all native people in the region.
Story 2
Online resources for industry and First Nations in Ontario
With 127 Indian and Northern Affairs Canada (INAC) recognized First Nations in Ontario, it is almost certain that the need to consult and accommodate will be an important topic to most mining developments or acquisitions. The goal of this month’s column is twofold — I want to share some information and tools that could be useful when you are looking at your property, and I want to emphasize some of the resources that are available to First Nations communities to help them find out who’s digging in their back yard.
Keep in mind that there could also be some level of Metis interest in your territory, even though I have only seen strong Metis involvement in the Manitoba region. In most cases in Ontario, industry deals with First Nations, since it is these communities that have land treaties.
Companies with property in Ontario need to quickly identify whether or not there are any Aboriginal interests in the territory. Do not rely on the provincial government to determine these interests and initiate discussions, because history shows us that process happens very slowly. If you have property and are serious about its development, then you should be equally interested in communicating openly with the surrounding communities.
In some cases, the land in question might be shared by more than one community, and you might at times have to deal with two or three First Nations, all of whom hold portions as their own traditional territory. It is important not to take sides by choosing to deal with one community over another. There are indeed cases in which companies are still trying to mend fences years later because they neglected to engage one of the communities in their discussions. Often there is no easy way to identify which community you should be talking to. Nevertheless, it is still critical to at least attempt to bridge this gap.
A useful tool for companies to help identify First Nations communities in Ontario can be found at http://communities.knet.ca. This website allows you to determine which communities are near your property and to obtain relevant contact information. It might be a good idea after you have identified these communities to arrange a visit with the Chief. From my experience, most Chiefs appreciate this and see it as a welcoming opportunity.
For exploration or mining to take place, a company (or individual) must file a formal “claim” with the provincial government. To aid First Nations communities to keep track of the activity going on in their territory, the Ontario Ministry of Northern Development, Mines and Forestry has created a map that tracks claims (www.claimaps.mndm.gov.on.ca). Although not as user-friendly as Google maps, it does offer a tutorial for new users and has the capability to show any claim in your region. The ministry also tries to provide quarterly claim maps to all First Nation communities with mineral sector activity in their area.
The Cree region of Quebec has mapped out its territory using their traditional system of trap lines. If you want to carry out development in their territory, they have a website (www.cmeb.org/geoeco) that not only indicates which communities you need to talk to, but also the owner of the trap lines and their contact information. This site should probably serve as a model for how other grand councils should map out their territory.
In a perfect world, all the treaty land entitlement claims would be resolved, and carrying out exploration activities in partnership with First Nations communities throughout Canada would be as easy as it is to work in the Cree region of Quebec. In the meantime, using the above information and resources will get you started on the path to a successful partnership.
Story 3
Full consultation, mutual benefit key to gaining First Nations support on P3s
PETER KENTER
correspondent
First Nations business leaders say they’re open to P3 developments on traditional lands — provided that Aboriginal interests are considered an essential part of those developments.
“The ‘old way’ of developing projects on traditional lands is out,” says Phil Fontaine, a principle at Ishkonigan Incorporated, who addressed delegates at the 2010 Canadian Council for Public-Private Partnerships (CCPPP) in Toronto.
“There is now a duty for consultation and accommodation of Aboriginal interests.”
Fontaine stressed, however that businesses desiring a stake in such P3 infrastructure and resource projects will find a competitive advantage if they gear their efforts to the concerns and interests of those communities.
“Private-sector firms that best learn and understand how to consult with and accommodate Aboriginal communities will be the most successful,” says Fontaine.
“For example, $350 billion is expected to be invested in mining alone in the next decade, much of it on Indian land and territories. The challenge for us is, how do we connect with each other and how do we structure our relationships to create win/win scenarios for the private sector, government, and the Aboriginal people?”
Fontaine notes that infrastructure development is desperately needed in First Nations communities.
But he said that 80 cents of every dollar reaching those communities immediately disappears outside.
“We will either continue to fail as we have in the past or we will do things in ways that transforms not only First Nations Communities, but the entire country,” he says.
Chief Clarence Louie, of the Osoyoos Band of B.C., supports that message. “You can’t do business in this country anymore without including the Aboriginal people,” he says. “There is a handful of First Nations bands in every province that are becoming economic powerhouses in their traditional territories, so it makes good business sense for all of you who construct roads, and build water and sewage projects to engage with us. There will be a lot of business opportunities for your companies if you keep your ears to the ground regarding the major developments that are going to be happening among First Nations people.”
Louis points out, for example, that the First Nations Finance Authority soon plans to issue bonds to raise capital for infrastructure projects on behalf of its member First Nation governments.
John Beaucage, President of Wind Dancer Power in Markham, Ont. says that, while small business is the backbone of the Canadian economy, big businesses are needed to create a large influx of wealth.
“You’ve got to be a part of the transmission lines, of the power generation, and of the resource industry and we have to be equity players in all of that,” he says. “How do we become part of joint ventures of billion dollar companies, instead of worrying about when the next payment is coming in for a pick-up truck so that we can go out and carry two-by-fours?”
Beaucage notes, however, that First Nations players are often outflanked by high-powered lawyers and business advisors proposing billion-dollar projects. “We’re sitting across from multi-national corporations and we don’t have money to do due diligence, get tax advice or get corporate counsel. When you look at 200-page joint venture agreements you need money to get the project started. You can’t look properly at billion-dollar projects when you’re worried about nickels and dimes.”
Stephen Lindley, Vice President of Aboriginal and Northern Affairs for SNC-Lavalin notes that, although more public sector funds are reaching northern communities, more infrastructure investment is required to attract major players. “If we look at the old Diefenbaker paradigm of ‘build it and they will come’— well we’re really not building it and the guys who want to come and the aboriginal communities are struggling.”
Companies must also respect the values of First Nations communities to partner with them, says Beaucage.
On a recent transmission line project, he explains that First Nations communities identified their priorities as: respect for their treaty, respect for the Land and revenue generation — in that order.
“To any other business partner revenue would probably be the most important thing,” he says.
“The companies who understand that will have a better chance of becoming a joint venture partner with us.”
Story 4
Private property is a native right
A great deal of confusion and rancour arises over the question of whether aboriginal Canadians should have individual property rights on reserve lands. Is this a goal to aspire to, or an attempt, as claimed by some indigenous leaders, at further assimilation? On one hand, non-aboriginals tend to see aboriginals as one homogeneous cultural group; on the other, some aboriginals project a universal view of collective property ownership on all groups that’s simply not accurate.
When Europeans first came to B.C., for example, they found 32 diverse language groups. These groups operated independently as organized societies, possessing complex social institutions, arts and cultures, and well-developed barter economies. And most had strongly developed notions of property ownership.
The coastal people I’m from, the Tsimshian, had very defined ideas about private and collective property ownership. Tribes had well-delineated territorial boundaries for the lands they owned. Any non-tribal entity wishing to use the resources from such a territory were expected to seek permission and, if allowed, to pay what amounted to a tax on any wealth taken from the territory.
Individuals and families possessed further rights to harvest and hunt in certain areas. Individuals owned their personal chattels and what might be considered intellectual property rights to sing specific songs or dance particular dances. As a result, a rich and powerful culture of trade and entrepreneurship flourished. Early European traders recognized the commercial skills of the Tsimshian by referring to them as the Phoenicians of the northwest coast.
Without such a system of property ownership, coastal indigenous people might have found results similar to the early American colonists. The people in the original 13 colonies initially owned the lands collectively, and starved as a result. It wasn’t until a form of private property ownership was introduced that people began to work their lands harder and smarter. As Peruvian economist Hernando De Soto has pointed out, where there isn’t clear private property ownership, the productive potential of such lands are greatly underused, and those lands essentially amount to what he calls “dead capital.”
What people forget is that owning property individually rather than collectively changes your mindset toward it – the care you take of property is much greater when you own it. You didn’t have to go too far into a typical communist country (or reserve) to realize the woeful neglect that collective property ownership often results in. On the other hand, China, with its brand of “socialism with Chinese characteristics,” clearly recognized the value of creating forms of private property ownership. The role this has had on lifting its massive population to a higher standard of living can’t be denied.
In a similar manner, aboriginal Canadians need to embrace forms of private property ownership if they’re to escape the poverty of economic dependency – a system foisted on them by the archaic Indian Act, under which reserve property isn’t even collectively owned directly but by the federal Crown in trust for their use and benefit.
Many aboriginal groups see the Indian Act system of land ownership as an antiquated barrier to progress. As a result, they’re developing forms of private property ownership more akin to their traditional systems. New treaties in B.C. are resulting in the Nisga’a, Tsawwassen and Maa-nulth First Nations adopting forms of a Torrens system of property ownership. Their leaders clearly understand that private property ownership is a prerequisite to lifting their people from the economic morass created by the Indian Act.
Calvin Helin
Story 5
A new development model gains steam in aboriginal communities
Rejecting the advice of government bureaucrats, Ken Noble decided to think big.
A member of Henvey Inlet First Nation, he led direct talks with developers – bypassing Ottawa and other “economic development” officials – to find out what type of project might work for his reserve near Parry Sound, Ont.
“We just really listened to the industry and paid attention to what a developer required,” he said. “We didn’t apply to any government.”
The message to Mr. Noble, whose community sits on 20,000 windswept acres on the northeast shore of Georgian Bay, was to go big. It did – and in February, the Ontario government approved a proposal to build a $1-billion wind farm that will generate 300 megawatts of electricity – enough to supply 70,000 homes.
The project involves $700-million in debt financing from Canada’s five big banks, as well as foreign lenders. Mr. Noble estimates that, when the turbines are up and running in 2015, the band will receive $25-million in annual revenues, of which about $15-million will go toward paying off the debt.
“We’re getting into an industry and a project that’s making more money than we ever dreamed possible,” said Mr. Noble, president of Nigig Power Corporation, an energy company run by the band. “It means we’ll shut down our welfare department.”
The widespread problems of substance abuse, despair and suicide in Canada’s native communities are well documented. Less well known are the small pockets of economic success that show how some communities – even those far from urban centres – can thrive under the right circumstances.
Big success stories remain rare, but first nations are increasingly trying to work with the business community to change that. Their optimism is tempered with frustration that federal parties aren’t seized with efforts to spread this economic activity more broadly.
Many business leaders – more accustomed to conflict when it comes to projects that involve native Canadians – are going out of their way to smooth relations. Mining, forestry and energy still provoke battles, but experience is leading to more enlightened resource deals that go beyond the traditional model, which sees a company simply handing out royalty cheques.
The Churchill Falls development project has yet to receive final approval from the Labrador Innu, but is considered an example of this new approach: It promises the Innu an annual $2-million in royalties, but the government of Newfoundland and Labrador and Nalcor Energy also pledge to provide jobs, training and $400-million in business contracts.
Even if Churchill Falls doesn’t go ahead, the Innu have already seen increased employment and training in recent years because of a 2002 deal wit the Voisey Bay Nickel Mine.
“I think there’s been a significant change,” said Grand Chief Joseph Riche, whose community attracted national attention more than a decade ago with images of despair and gas-sniffing children.
What’s happening
To succeed, communities often must find a way around a key hurdle: the fact that property on reserves is communal. This means that people have no collateral to offer when they want a personal or business loan.
Long-term leases between first nations and their members are starting to fill that void. Banks increasingly recognize them as a form of security, and offer special on-reserve mortgages. Some native leaders and academics are pushing to tackle the land issue head-on, prompting strong debate as to whether the 19th-century Indian Act’s restrictions should be scrapped entirely in favour of full private property.
First nations still block some projects with protests and barricades, but corporations increasingly realize the futility of battling aboriginals in courts of justice and public opinion. It is virtually impossible to be in the natural resources business in Canada without dealing with natives, and companies now try much harder to build positive relations.
Ontario’s Green Energy Act – a controversial 2009 law that critics warn will drive up consumer prices – is turning into a good news story for many communities. Provincial programs pay energy producers a higher fee per kilowatt if they are at least 10-per-cent aboriginal-owned. Henvey Inlet is one of 16 aboriginal groups to sign power-generation deals. Many others are in the works.
In British Columbia, Chief Clarence Louie has received lots of attention for the dramatic turnaround he engineered for the Osoyoos Indian Band in the Okanagan Valley, creating many jobs with a winery, golf resort and other real-estate ventures.
The major banks are trying harder to deal with the complicated web of rules that block natives from access to capital. As national chief of the Assembly of First Nations, Phil Fontaine once led the AFN’s “day of action” protests; today he is a senior adviser with the Royal Bank of Canada, overseeing regional aboriginal banking projects.
“We do have a ways to go, but we are making some progress,” RBC president Gordon Nixon said in an interview, pointing to his bank’s growing number of loans to aboriginal clients.
Story 6
Finavera gains support from First Nations for northeast wind projects
Northeast B.C.’s Halfway River First Nation has agreed to support the construction of four large wind farm projects in their traditional territory.
The agreement came in the form of a memorandum of understanding the Halfway signed with Vancouver-based Finavera Renewables Inc. (TSX-V:FVR), the company planning to build the projects.
“This is a good day for us,” said Halfway River Chief Ed Whitford. “Our community is looking forward to the opportunities in working with Finavera and we sincerely support green energy. I believe this is a win-win situation for our community, Finavera and the Peace River country.”
The agreement revolves around the Tumbler Ridge, Wildmare, Meikle and Bullmoose wind projects, which in 2008 were awarded electricity purchase agreements with BC Hydro totalling 301 megawatts.
Finavera believes the projects will collectively generate more than $100 million in annual revenue when built.
Finavera CEO Jason Bak said, “We are extremely pleased to have in place with the Halfway River First Nation an agreement that confirms support for the project while recognizing the nation’s interests.”
The Halfway River has agreed to support the project in exchange for training, employment, business opportunities and financial participation in the projects.
Northeast B.C. is a hot spot for resource development these days as dozens of companies look to develop wind farms, unconventional gas projects and coal mines in the area.
In August, West Moberly First Nation Chief Roland Willson told Business in Vancouver his people were being “overrun” with development (see “Development deluge” – issue 1088; August 31 – September 6).
Both the West Moberly and the Halfway River are members of the Treaty 8 Tribal Association, which also includes the Doig River, Prophet River, Saulteau, Blueberry River, McLeod Lake and Fort Nelson First Nations.
Finavera has signed a partnership agreement with the McLeod Lake that outlines a staged process to reach a final memorandum of understanding. The company said discussions with the West Moberly and Saulteau are also underway.
B.C.’s environmental assessment office has instructed the company to consult with the Doig River as well. In a release, Finavera said it looked forward to “building a strong relationship” with the Doig River.
