Metis groups form joint venture to commercialize Alberta forests

Pulp & Paper Canada
July 23, 2014
By Pulp & Paper Canada

Active Energy Group Plc, an international supplier of industrial wood chip, timber products and forestry management services, has entered into a joint venture agreement to exclusively commercialize in excess of 100,000 hectares of mature forestry assets in Alberta, which are expected to yield more than 20 million m3 of commercial standing timber.

The forests are owned by three indigenous aboriginal groups: the Alberta Métis Settlements of Peavine, Paddle Prairie and East Prairie. The partners in the new venture include the three Métis Settlements, Grand Chief Ronald M. Derrickson of British Columbia, and Active Energy Group.

The Métis Settlements and Active Energy Group will each hold a 45% equity interest in the joint venture company, which will be incorporated in Canada and headquartered in Kelowna, B.C., with the remaining equity to be held by Grand Chief Ronald M. Derrickson.

Ronald M. Derrickson, Grand Chief of British Columbia and Chairman of RMD Group, commented:

“In AEG, the Métis Settlements have finally found a partner with the experience, vision and international network to enable them to properly and fairly commercialize their assets for the long-term benefit of their communities.”

He continued: “Richard [Spinks, Active Energy Group's CEO] and I have been working together for the past five years to assemble a deal that finally gives the Métis an equitable share in the economic development of their forests, and I know that it will set the standards and terms for further agreements with other Métis, First Nations and aboriginal groups across Canada to enable them to develop and commercialize their assets in an equitable and sustainable manner to bring long-term economic growth, employment and stability to their communities and their peoples."

Under the agreement, the Métis Settlements will, in exchange for their equity interest in the joint venture company, grant exclusive rights over all their forestry assets to the joint venture company; and AEG will commit to commercialize those forestry assets in exchange for its equity stake.

The joint venture company will be allowed to enter into sub-leases with third parties for periods of approximately 200 years to facilitate long-term economic development for the Métis peoples, in collaboration with international investors and commercial partners.

The forests are primarily composed of prime mature standing hardwood (Aspen, Poplar) and softwood (Spruce, Pine, Fir) species. AEG will aim to ensure that sub-lessees and other partners adhere to internationally-recognized environmental and sustainability standards, and the highest international forestry stewardship criteria.

All commercial transactions that the joint venture may enter into will include an obligation to provide local employment for Métis citizens, and a commitment to contribute to corporate social responsibility programs which benefit Métis communities.

To ensure fair and equitable participation for the indigenous groups in the management of the joint venture, Grand Chief Derrickson will be appointed Chairman of the new company, and will be joined on the Board by three representatives from Active Energy Group and one representative from each of the three Métis Settlements that are party to the agreement.

A logistics infrastructure, including road networks providing access to and around the forests, in-forest rail spurs, and connections to national rail networks and port facilities, is already largely in place. As a first step, the new venture intends to appoint an independent firm of surveyors and to employ its own team of Metis and international timber experts to prepare a detailed mapping and valuation report on the forestry assets, including an analysis of the existing transportation, manufacturing, logistics and utilities infrastructure.

The Métis people, descendants of mixed First Nations/native Indian and White/European families, are considered an aboriginal group under the Canadian constitution. The Métis of Alberta are the only Métis community in Canada to have a legislated land base, and the eight Métis Settlements cover a total area of about 567,000 hectares.

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