Indigenous and Northern Affairs Committee on June 2nd, 2020

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

I have to start off by saying that like Mr. van Koeverden, I'm a little out of my league here in talking about financial stuff.

I have to say, Mr. Daniels, that a lot of what you talked about is a language that I don't speak, I'm afraid, but specifically, you talked about wanting to have shovel-ready infrastructure projects and to be able to fund them. I was wondering about this. I think of infrastructure projects as basically being things that.... You give loans, right? They have to pay back the money, whereas a lot of infrastructure projects that I think about are investments. They're investments used by the community, but they're things that money doesn't come back from, and therefore you can't use them to pay off your loan.

I'm wondering what kinds of infrastructure projects you're talking about when you say you want shovel-ready projects. Is it things like you just mentioned, such as solar and wind power projects, which would certainly bring in revenue? Is that the kind of thing, or do you make loans for other kinds of projects? I'm thinking here of community centres and sports centres and, in my riding, Fort William First Nation has a chronic care home. Do you invest in those sorts of things, or is it only those revenue-generating things?

[Ernie Daniels]

Thank you, Mr. Powlowski, for that question.

We actually make loans for pretty well anything a first nation wants to do. It's kind of a running joke we have that it just has to be legal. It can be anything socially or economically. It can do equity into revenue-generating operations.

What we're talking about in terms of infrastructure is that in the first nations communities there's an estimated $35-billion infrastructure gap, so this is housing, this is water and sewer, this is roads, all of those types of infrastructure, as well as health centres, which are much needed. It's anything like that.

Our proposal to Canada is to consider using some of the existing infrastructure budget dollars to allow us to leverage that into the capital markets so that we can build more of that today. We address a number of health issues by doing that, such as overcrowding, which can have a deadly effect with regard to COVID-19, and the proper water and sewer that we need to fully live healthy lives, and adequate facilities that somebody who is sick can go to, such as a health centre. We do provide loans for those types of things.

Right now, first nations are funding those things with their own-source revenue, and we estimate that their own-source revenue is going to be good to about $6 billion, but after that, it's a far cry from the $35 billion. What we're suggesting will actually really help to narrow that gap significantly.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

You're saying that your suggestion is to throw your money into money for infrastructure that's coming from the long-standing funding agreements between first nations and Indigenous Services and then, additionally, give loans to be able to, say, build health centres?

[Ernie Daniels]

Yes. That's correct. That's what we call “monetization”. It's a leveraging of dollars.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

How do they pay you back, then? You give loans, not grants.

[Ernie Daniels]

Yes. What happens is that there's usually an agreement with the Government of Canada.

I'm just going to digress a bit. Right now, the majority of the loans that first nations have are backed by revenue-sharing agreements with provinces. Through Ontario, the lotteries share revenue with first nations. Each first nation gets a certain dollar amount that they can leverage. Those are 35-year agreements, which are excellent for our type of work, and they utilize those revenues to build that infrastructure. It's the same thing. We're asking Canada. We're saying, “Okay, Canada, step up now and help us to build the infrastructure that's really needed in our communities by utilizing Canada's dollars.”

The way we lend to a first nation has to be based on existing revenue streams. It can't be that you're going to build something and hope to make something down the road. They have to have existing revenue streams in order to build that. Hence, we really have no bad loans or anything like that, because it's pretty secure.

[The Chair, Liberal, Bob Bratina]

We're at time. Now we'll have a five-minute question round with Mr. Vidal. Please go ahead.

[Gary Vidal, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you, Mr. Chair.

I want to go back to the chemical folks. Mr. Huntington or Mr. Austin, I'll let you decide who wants to answer the questions.

I think in your presentation and in your answers to questions so far you've been very modest as to the impact this may have had on your own company, and then you expressed your concern for a bunch of your community partners and your contractors and other indigenous businesses. My understanding is that potentially the lack of access to the CEWS legislation or the wage subsidy for your company is very significant to your bottom line. If you're willing, I would appreciate it if you could give us some sense of the impact that's having on you and your business in northern Saskatchewan.

The follow-up to that would be that you talked about a number of contractors and other indigenous businesses that you procure both supplies and services from in northern Saskatchewan. I'm just curious as to the impact of any of the programs, or what you're hearing from the people you work with day to day in terms of what their success has been with some of the programs and their ability to be there for you when you need them again when you're able to mine again.

[Jonathan Huntington]

I would say that we've been very fortunate that with the wonderful leadership at Cameco, we've been able to manage our company financially the best that we possibly can. There's no doubt, though, that the uranium market had its challenges before COVID came, and certainly COVID has added to some of those challenges. We certainly don't want that to be lost.

You're right that we have been putting some of the focus on our northern partnerships. When it comes to our contractors, we have several of what we would call key northern preferred contractors. We meet with them every second week in the middle of COVID to talk to them about how they're faring, how they're coping and if they are able to diversify into some other areas.

There is no doubt that we're one of the biggest partners for a lot of these contractors, and they certainly want us to get back into business as quickly as we can. I want to make it as clear as possible that safety is number one at Cameco. It always has been and always will be. When we look at restarting our mines, we need it to be safe and we need these communities to be safe.

I know that we have a Cameco-Cigar Lake restart committee that's looking on a weekly basis at how we can bring these back in the safest way we can. We're not there yet on a decision, but I can tell you that as each passing week goes by, it gets more difficult for some of our contractors.

That's why we continue to say, please, as a government, look at shovel-ready infrastructure projects where you can invest in northern Saskatchewan over the next couple of years that will help those contractors, and just as importantly help those indigenous communities gain employment. That's what this is all about. It's one big circle in northern Saskatchewan. We're a small part of it and we want to make sure that the rest of the circle is looked after.

[Gary Vidal, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you.

In your presentation you also talked about the help to northern airlines and specifically those north of 60, but then you referenced those in northern Saskatchewan that don't quite qualify under that north of 60 idea. I assume we're talking about Transwest and West Wind and those people who serve those northern communities that you're very much a part of.

Can you talk a little more about the impact that all of that has on those northern communities, and on your business specifically, and the help that those airlines might need?

[Jonathan Huntington]

We certainly covered already the number of employees who are tied to the uranium mining industry. We're very proud of the fact that we strive to have RSN—which is residents of Saskatchewan's north—be a significant portion of our workforce. We talked about how more than 1,800 people are employed on a yearly basis, according to the latest statistics we have in the uranium mining industry in Saskatchewan.

In our industry, we fly our workers to work and home from work. That's the model we have, for all those folks who are on this Zoom call who don't know our uranium mining business. It's not like you hop in your car or you hop on a bus and you drive to work. You fly to work and you fly home. We need healthy, stable airlines, and we have partnerships with Transwest and West Wind Aviation, along with Good Spirit Air in the eastern part of the province. We need those airlines to be stable and successful for us to continue to operate.

That $17.3 million that came from the federal government to help air carriers north of 60 I'm sure is great for them, but what we're trying to have the government focus on at the same time is a lot of those communities—Stony Rapids, Black Lake, Fond du Lac, etc.—that fall just below that line. They're at 59 or 58 degrees of latitude, and we certainly would like to see some help coming to our airlines that are just below that line so that they could get some aid and some help to be stable and move forward as well as they possibly can. We need those airlines, but so do those communities.

The last point I would make is that Fond du Lac First Nation and Hatchet Lake First Nation are two areas we draw employees from. We are now in the position for the next several months of being able to get to those communities only by flying or going by barge. We won't see ice roads again for six or seven months now. That shows the importance of the airlines.

[The Chair, Liberal, Bob Bratina]

Thank you.

You have five minutes now, Ms. Damoff. Please go ahead.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Thank you, Chair.

To our witnesses, I just want to thank all of you. This is a truly fascinating panel, and you provided really important testimony to us.

I'm today in the traditional territory of the Mississaugas of the Credit First Nation, and I'd like to acknowledge that.

Mr. Daniels, I'm going to start with you. You've said that every dollar invested in first nations is equal to six in terms of impact in the general economy. I was wondering if you could quickly expand on that.

[Ernie Daniels]

Recently there was a study done in southern Manitoba that looked at leakage. This is for every dollar that's spent. When they did their study, they looked at net contribution to the economy. The first nations in Manitoba are net contributors to the economy. I think the general population sometimes thinks that we are net takers from the economy, but we're actually not. There are tremendous amounts of revenues being generated as a result of activities going on in first nations communities.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Would you be able to send us a link or a copy of that study?

I have some specific questions on the commercial paper program that you want to do. That's normally unsecured debt, right?

[Ernie Daniels]

I'm going to get Mr. Berna to answer that.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Okay.

[Steve Berna]

No, commercial paper is a secured debt. It's backed up by FNFA's name, so all of the safeguards in our act, all of our money in the bank account, which is called liquidity, and our credit rating back it up.

It is the same as the Government of Canada raising money, the provinces raising money or the cities raising money. It is a way to raise money, but it's backed up by credit rating agencies auditing your numbers and putting out a report to investors for their security. It is definitely backed up by the assets and the safeguards we have in place.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

I was looking at some of the term sheets you have on your website. You issue debt now on the debt capital markets, right? Is that how all of your capital is raised to provide these loans?

[Steve Berna]

We have two types of loans. Our first loan is called a line of credit program, and that's money available every day. Currently we raise that through a banking syndicate. The chartered banks raise the money on our behalf, add one per cent for their own profit—they are profit-based—and then we re-lend to communities.

The commercial paper program would bypass the banks and allow us to raise the money on our own name, which means that the one per cent we pay to the banks would now go to ourselves, which means we could reduce the loan rate to our communities and dollars would go further.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

What needs to change for you to be able to do that? Are there legislative changes that are needed?

[Steve Berna]

I don't know what's needed on Canada's end. The Bank of Canada has opened up to protect issuers, the provincial and municipal issuers, so that if they cannot raise the monies, the bank will buy what's left over to ensure that the amount they're looking for can be raised.

We are looking for the same treatment. It would be an investment by the Bank of Canada. If the interest rate we paid on our commercial paper was 1%, the Bank of Canada would receive that 1%, so it is a backstop to ensure that the program would be successful and that we can pass those savings on to the communities to allow their dollars to go further.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Mr. Huntington was talking about English River wanting to do some infrastructure programs. Could they access financing through you?

[Ernie Daniels]

Yes, they can. Any first nation that's under the Indian Act at the current time can access loans from us.

There is a process. They need to request scheduling. It's a voluntary process to work under the act. From there, they need to have a financial performance certificate that's done by our sister organization, the First Nations Financial Management Board. Once they do that, they're eligible to borrow from us. We assess them and look at their revenues. Based on that, we leverage those into the capital markets, based on how much it is.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

You're looking for $50 million for an emergency fund. Do you currently have any funding coming directly from the Government of Canada that you can hold like that?