The Fort McKay and Mikisew Cree First Nations have taken a combined 49% ownership share in a Suncor Energy storage facility at the new Fort Hills tar sands/oil sands mine near Fort McMurray.
The deal, three years in the making, depended on outside investors buying C$545 million worth of bonds that will pay more than 4% interest and mature in 2041, in what Bloomberg calls the biggest debt sale ever for a Canadian Indigenous group. Fort McKay owns 34% of the facility, while Mikisew takes 15%.
“A lack of cash has often prevented First Nations from taking equity stakes in projects, as opposed to signing a traditional impact and benefit agreement that outlines how they will be affected and share in production,” the U.S.-based news agency notes. “Mistrust between the peoples who have inhabited the country for thousands of years and the newcomers who have developed businesses is another hurdle.”
For some of the investors, the deal was a first opportunity to do business with Indigenous people. “It was very enlightening for them to be sitting across from a First Nations group who were directly involved in a bond issue,” said Fort McKay Chief Jim Boucher. “Some of the people were quite impressed.”
“We really started with a blank sheet, working with Suncor and the First Nations on how to develop the governance documents and the financing approach that was going to be a win-win for everybody,” said Mark Saar, head of North American project finance at RBC Capital Markets. “What made it successful at the end, in all the negotiations we had, is the implicit trust between the parties.”