Canada’s road to resource development

Posted on Apr 03, 2017
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Aboriginal empowerment and Canada’s resource sector have been on a collision course for three decades, but with a reset of the relationship, Canada could still realize its full resource potential.

After a First Nation winning streak of 236 court cases forced governments and resource companies to the negotiating table, the way we develop resources in Canada has fundamentally changed according to Bill Gallagher, the author of Resource Rules Fortune and Folly on Canada’s Road to Resources.

“Without support and economic participation of the First Nations, it’s pretty easy to predict the outcome of a resource project. Corporate litigators who adopt the mantra of ‘We’ll see you in court’ are not going to help resource projects proceed. These days it’s about building relationships and negotiating economic participation agreements with Natives,” says Gallagher.

In his book, Resource Rulers, Gallagher provides a survey of recent court rulings dealing with First Nation rights in resource exploitation. The judicial results reflect what Gallagher labels Native empowerment and in practical terms has resulted in Aboriginal people becoming key players whose support or opposition determines the future of resource development in Canada. Resource Rulers provides a road map for governments and resource companies to approach consultation, engagement and accommodation.

The courts have long been the place where First Nations assert their rights in Canada and Gallagher notes that they are often successful. For this reason, he has been sounding a note of caution to those ignoring treaty rights in the resource industry.

“We are living in transformative times,” says Gallagher.

Supreme Court decisions from the 2004 Haida Nation decision establishing the Crown’s ‘duty to consult and accommodate’ and ten years later the Tsihqot’in decision on the Aboriginal title have given Aboriginal people tremendous new power to influence the terms of resource development. This legal activity has been backed up by social and civil actions from local road blocks and protests to the ‘Idle No More’ movement.

But there is also an opportunity, as many resource companies are demonstrating a more open, collaborative approach.

Getting to this point has not been easy for either First Nations or resource developers. It wasn’t until 2004 the concept of rights and title began to register with the resource sector and it took even longer for the federal government to take off their blinders.

For the resource industry, the list of projects that were being delayed or derailed was growing exponentially.  The Voisy’s Bay Mine, Mackenzie Valley Pipeline and Kemess Mine had all become bogged down in negotiations and it was clear aboriginal land rights were dictating if resource projects were going to proceed.

Yet while the resource industry began to see the benefits of engaging with First Nations on proposed projects, governments were slow to react leaving the door open for more court wins for First Nations and more de-railed resource projects.

“The Harper government had a blind spot when it came to Native empowerment. Much of the Native court winning streak happened under the Harper Government’s watch,” says Gallagher. “The Harper government brought about an entrenchment attitude when thinking about resources. They had a ‘We were going to do it alone’ attitude and were determined to gain access to tide water at any cost.”

Gallagher notes the current Liberal Government were quick learners and have decided to do the opposite of the Harper Government, and as such, through a series of actions – symbolic, financial, practical and relational have made it clear that the Government of Canada intends to create new and different partnerships with First Nations, Métis and Inuit peoples.

“We can now have an intelligent, promising conversation on Canada’s resource bounty and access to resources and how we can all mutually all benefit from it. First Nations are the new player on the road to resources and governments and companies have had to make appropriate adjustments and work collaboratively to bring about more constructive project outcomes,” says Gallagher.

It’s a question of risk management for resource projects. “The people in the board room now view their actions with First Nations as providing regulatory insurance for their project,” says Gallagher. Projects that are under attack on multiple fronts—say, landowners, municipalities and environmentalists are against it—can turn things around simply by getting local First Nations’ support. “The Native stamp of approval is a key form of regulatory insurance,” Gallagher says.

Gallagher suggests that bankers will ultimately play the most profound role in Native self-empowerment and participation.

“We are so far past the tipping point and we have a resource sector in free fall in terms of access to resources, that bankers have to know there is serious risk to fund a project if the First Nations are not stepping up and supporting it,” says Gallagher

But do First Nations have a project veto? Kinder Morgan’s TransCanada Pipeline and British Columbia’s Site C Hydroelectric projects are cases in point. Either project had full support of the First Nations, but have been allowed to proceed based on the broader benefits for Canadian economic well-being.

Many had woken up to the possibility of a First Nation’s Veto on resource projects when the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) was first floated before the Harper Government, who later begrudgingly and conditionally accepted it in 2010. The Liberal government has embraced the document unconditionally which states that resource projects can’t be imposed without “free, prior and informed consent of the Indigenous people impacted by the project”.

Gallagher says we didn’t need UNDRIP as a guide. First Nations already had a de-facto veto before the UNDRIP was adopted in Canada.

“In law we have a similar document. If you take the legal rational and all the courts instructions about how it might handle similar situations from all the court cases First Nations have won and put it in a compendious document, you would have something that approaches the UNDRIP document in its own right,” says Gallagher “If a First Nation wants to take out your project, they have the tri-partite power—they have on the ground power, legal power and negotiating power.”

While the main responsibility for consultation falls on the shoulders of government, “the business community recognizes it must respectfully and meaningfully engage with aboriginal communities when looking to develop projects in First Nations’ traditional territories and also find ways to ensure that economic development benefits aboriginal Canadians.”

The result on the ground for Indigenous peoples has been dramatic, and positive. According to the Prospector and Developers Association of Canada (PDAC), there are now 800 plus communication, collaboration and impact benefit agreements in Canada between resource developers and Indigenous groups amounting to billions of dollars in jobs, skill training, business contracts and payments to communities.

Today, there are 250 Aboriginal economic development corporations operating across the country, many with direct engagement with the resource sector, hundreds of collaboration agreements between resource developers and Indigenous groups. A recent TD study shows the direct aboriginal contribution to Canada’s GDP is more than $32-billion.

Resource revenue sharing exists or is under development across much of the country. An increasing number of Indigenous communities are taking up equity positions in major resource projects.  The Tahltan Nation Development Corporation recently took an equity position in Imperial Metal’s Red Chris Mine project and have a seat at the co-management table.

“There is still work to be done,” says Gallagher who is working on his second book, but recognizing rights and title exist and that collaboration is necessary in the resource sector as elsewhere – is proving to be good for business for all Canadians.

By 

Robert Simpson 

Robert Simpson is the president of PR Associates and his work in facilitating collaboration between corporate Canada and Aboriginal communities was recognized by the Council of Aboriginal Business.

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