Welcome back to Adjournment Proceedings, our weekly deep-dive into the issues and people driving Canadian politics. Today, we look at the growing number of First Nations seeking equity stakes in major projects, and the challenges and opportunities they face along the way.

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Ginoogaming First Nation recently had to decide what role it wanted to play in the rapid build-out of transmission infrastructure to northwestern Ontario’s Ring of Fire region. 

The community has experience with major projects, having signed a benefits agreement with the nearby Greenstone Gold mine years ago.

But Chief Sheri Taylor wants to see a new kind of arrangement for the proposed transmission line that would run through her community’s territory.

“In a lot of past projects in our area, we’re treated like stakeholders, like the rest of the public, but we are rights-holders,” she told iPolitics. 

“We want to be at the table. We want a piece of the project, an opportunity to have oversight, to have a say.” 

Taylor and six leaders from neighbouring Anishnaabe communities have signed on to become co-owners of the proposed Greenstone transmission line through Hydro One’s 50/50 equity partnership model. 

It’s still early days, and the First Nations are evaluating different financing options, but Taylor believes an equity stake would be the best way to create long-term wealth and economic independence.

“Having our own revenues, we could do what we need to do, we wouldn’t have all these bureaucratic policies attached to our funding,” she said. 

Surge of interest in accessing capital

Taylor is among the growing number of Indigenous leaders pursuing project equity in lieu of benefits agreements, as demand for Indigenous financing programs can attest.

The Canada Indigenous Loan Guarantee program, for example, has already held over 300 meetings since its inception a little over a year ago.

“There’s a strong demand across Canada,” said newly minted CEO Kristan Straub.

“We’ve approved one loan guarantee already, and there are several other deals that are advancing along.”  

The First Nations Finance Authority also noticed an uptick in the number of communities looking to access capital, with CEO Ernie Daniels saying they are responding to more calls every day.

“We issued our first bond in 2014 for $90 million, and just this past year we issued $1.2 billion in financing,” he told iPolitics. 

“Some of the projects that we are seeing now are larger amounts for equity ownership, whether in LNG, shipyards, seafood, you name it.” 

Daniels wants to see this trend continue – but he also wants to see it scale up. 

“Right now a lot of these First Nations in major projects start out with small amounts like a 10, 20, 30 per cent equity ownership,” he said. 

“I want to see at least 50 per cent, because that gets you in a position where you’re at the boardroom table, making decisions on what to do with profits and investments.” 

Finance Canada’s broad definition of major projects does not mention Indigenous interests, climate

A major projects requirement 

There are signs that the federal government backs this vision, with Prime Minister Mark Carney speaking of meaningful Indigenous partnership and ownership at every major projects announcement so far. 

Ottawa has said eligible projects championed by First Nations will be given priority for advancement, and that was on display during the last tranche of projects referred to the Major Projects Office with Crawford Nickel making the cut. 

Taykwa Tagamou Nation has invested $20-million into that proposed Timmins-area mine. 

The company says it is the largest direct equity investment by a First Nation in a critical mineral company in Canada.

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Equity as the ultimate partnership arrangement

It’s a noteworthy first that illustrates how much project partnerships agreements have evolved since the signing of pre-confederation treaties.

In these early exploitative agreements, the Crown would secure land resources while leaving Indigenous groups with annuities representing a fraction of the wealth extracted from their territories. 

Over time, those arrangements gave way to royalty payments and, more recently, negotiated impact benefit agreements (IBAs). 

These contracts vary in scope and complexity, but typically involve better mitigation measures, a fairer share of the project’s profits, direct payments, employment opportunities, and community support. 

But there are important limitations. 

They may involve an advisory role, but very rarely do they include decision-making powers or voting rights. 

They may offer immediate financial benefits, but aren’t conducive to building long-term wealth. 

For proponents, IBAs act as the basis for First Nation consent for a project, and reduce risk of conflict or litigation. 

Still, nothing guarantees support and collaboration more than an ownership stake. 

For these reasons, equity arrangements are emerging as the ultimate partnership arrangement in Canada’s major projects era. 

Legally disenfranchised

But historical barriers remain, driven by laws that prevent First Nations from using their land as collateral when trying to access capital. 

Hence institutions like the Canada Indigenous Loan Guarantee (CILG) program or the First Nation Financial Authority (FNFA), who can facilitate access to millions of dollars up front for large investments by backing up loans or securing affordable interest rates.

The federal government recently doubled CILG’s capital envelope to $10 billion, allowing the new funds to be disbursed to projects with a higher risk profile after consulting with Indigenous groups. 

Provincial programs also add to the amount of loan guarantees currently available to Indigenous groups in Canada, with some estimates citing a $20 billion figure. 

Straub is convinced that loan programs will continue to grow as Indigenous groups achieve success in project co-ownership. 

“We may also see different programs that fit different metrics,” he said. 

Global capital eyes Indigenous equity

Publicly-backed financial entities can help level the playing field, but they only go so far. 

McCarthy Tétrault LLP partner and Canadian Indigenous Investment Summit co-founder Robert Brant is working to connect international investors with Indigenous leaders. 

“There is only so much capital to go around,” he said. “We’re telling Indigenous people: you need to get outside Canada. Canada can only provide so much, we need to think about some other sources of capital.” 

The Canadian Indigenous Investment Summit launched in 2024 and serves as a forum for international investors to meet with Indigenous leadership in Canada. 

Brant has noted a shift in how the investment community perceives Indigenous partnership in Canadian projects, which he attributes to economic reconciliation, court rulings, and federal policy.

Last year’s forum attracted the largest-ever Canadian Indigenous business delegation to the U.K., and Brant believes momentum is building this year as well. 

“There’s still a big social impact investment community in Europe, and also sovereign wealth funds, who we understand are looking at Canada a little bit differently,” he said. 

“Chiefs and business leaders are telling their stories about why and how Canada has changed, and why investors should think again.”

The forum provides resources to Indigenous groups and investors, including fact sheets examining risk levels and investment structure opportunities for projects that could obtain a national interest designation under the Building Canada Act. 

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Equity means taking on risks

Equity might be the most meaningful form of project partnership, but it involves risk — and that means it’s not for every project, or every community. 

Speculative mining exploration, for example, might not make sense for a community that doesn’t have a highly diversified investment portfolio. 

But other projects, like electricity transmission lines, have drawn Indigenous investors because they provide long-term, stable and predictable revenue streams. 

Daniels says First Nations are going into projects with eyes wide-open in terms of risk, because project failures could compound existing problems. 

“I just think we can’t afford to go down that road where we’re having risk, especially with the infrastructure gap that exists in our communities,” he said. 

“It would be catastrophic if we end up in failures.” 

Chief Taylor in Ginoogaming has contemplated this as well. 

“There’s always risk, especially if you’re looking at equity and putting in your own money,” she said. 

But Taylor feels reassured that her community isn’t going at it alone, and that it will be shouldering the risk with six other First Nations. 

She also feels like the risk is worth it if it leads to economic sovereignty.