How Canada’s nation-building push could still get stuck in regulatory limbo

Unclear rules around First Nation consultation, permitting and infrastructure challenges are problems developers say they face on the groundYou can save this article by registering for free here. Or sign-in if you have an account.After more than two decades of Indigenous consultation and hundreds of millions of dollars in investment, Seabridge Gold Inc. believed its KSM project in northwest British Columbia — one of the world’s largest undeveloped gold-copper reserves — had finally cleared a critical hurdle in the summer of 2024.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.The province reaffirmed the project’s environmental approval, confirming that the company had met the necessary standards to move forward. The milestone reflected years of planning, consultation and investment to bring the more-than-US$6-billion project closer to production.But Seabridge now finds itself awaiting a court decision on a legal challenge filed by a First Nation with fewer than 50 members. The ruling could potentially send one of Canada’s biggest mining projects back into regulatory limbo, even as the company continues to spend hundreds of millions of dollars to maintain momentum.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.The dispute underscores a broader challenge for Canada’s nation-building efforts and its resource sector: Indigenous consultation is a constitutional requirement and widely supported in principle, but companies, governments and communities often face unclear rules on the geographic and legal scope of competing land claims, timelines and what constitutes completion.At the centre of disputes such as KSM is a growing problem about how Canada can balance the government’s obligations to Indigenous peoples with a regulatory system that can deliver timely, predictable decisions on major projects.The Justin Trudeau government adopted the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) in 2021, which emphasizes “free, prior and informed consent.” But the resulting legislative framework has not explained how that principle should be applied in practice. Without clear rules, courts are left to decide each case individually, leaving companies, investors and communities navigating a process with no obvious endpoint.84% of Canadian executives are worried that major infrastructure projects will face delays due to legal challenges stemming from insufficient Indigenous consultationTom Flanagan, professor emeritus of political science at the University of Calgary and a senior fellow at the Fraser Institute, said the federal government’s messaging adds to the uncertainty.“The prime minister often talks about turning Canada into a resource superpower while also saying nothing will move forward without Indigenous consent,” he said. “There’s an implicit contradiction there and so far no one has explained how those two goals are supposed to be reconciled.”The unease extends well beyond mining, given that 84 per cent of Canadian executives are worried that major infrastructure projects will face significant delays and setbacks due to legal challenges stemming from insufficient Indigenous consultation, according to a KPMG Canada survey of 501 business leaders last fall.These concerns are coming to a head with the federal government’s Major Projects Office, which was created under the Building Canada Act last year to fast-track nation-building projects.The office aims to cut approval timelines for projects to just two years, but Indigenous leaders have criticized it as “political theatre” that prioritizes corporate schedules over constitutional rights. Instead of providing certainty, some say the push for speed could increase the risk of even more delays and litigation.“Everyone agrees consultation is necessary,” Seabridge chief executive Rudi Fronk said. “The problem is nobody can tell you when you’re done. There’s no timeline, no finality and without that, projects can sit in limbo indefinitely.”He said the issue is not consultation itself — which he described as ongoing by definition — but the lack of coordination among federal, provincial and Indigenous governments once a project moves past the environmental assessment stage and into the permitting and construction stages.“Each of the federal and provincial processes are defined very specifically,” he said. “In general, the feds permit only those areas that require an authorization from a federal act, such as the environmental or fisheries acts, while provincial processes are focused more specifically on the issuance of so-called operating permits, given that mining authorizations are granted under provincial authority.”The KSM project sits in B.C.’s Golden Triangle, about 65 kilometres northwest of the small municipality of Stewart, on lands claimed by multiple First Nations. The project lies within the Nisga’a Treaty area and recognized Tahltan territory, but the Tsetsaut Skii km Lax Ha Nation asserts rights over the full project’s footprint.The Gitxsan Nation formally supports the project, but it and the Gitanyow Nation are focused on downstream monitoring to protect the Nass and Skeena watersheds from potential tailings storage risks.Seabridge has spent roughly $1 billion navigating approvals and consultations. The company signed benefits agreements with the Nisga’a and Tahltan Nations, directing nearly $400 million in contracts to Indigenous-affiliated businesses over the past four years. It also provided funding to the Gitanyow Nation to conduct independent monitoring of wildlife, fish and water quality.These consultations prompted more than 100 design changes and added over US$330 million to the project’s capital estimates before B.C. granted an Environmental Assessment Certificate (EAC) in 2014 — the province’s “master permit” confirming that a project meets environmental, social and economic standards.With the EAC set to expire in July 2026, Seabridge applied to have the project formally recognized as “substantially started” to ensure the permit would remain valid for the life of the project. The government granted this status in July 2024, but construction did not immediately follow as Seabridge has been seeking a major joint-venture partner to finance the multibillion-dollar build, a process later slowed by the pandemic and volatile market conditions.The project has, however, advanced well beyond the exploration stage, with major power, site, water and environmental infrastructure underway or completed, including transmission connections, roads, drilling and water-diversion tunnels.But the Tsetsaut Skii km Lax Ha (TSKLH) Nation has challenged B.C.’s decision, saying it was not meaningfully consulted before the EAC was effectively greenlit. It initiated a judicial review, with the court’s decision expected in the first quarter of this year.Environmental group SkeenaWild Conservation Trust also joined the legal effort, saying the project’s long delays have made its original environmental data and tailings safety standards outdated. If successful, the ruling could undo more than a decade of approvals and potentially restart the environmental review process.Under a US$375-million financing deal with Sprott Inc. and the Ontario Teachers’ Pension Plan, investors could demand full repayment if the permit expires, a scenario that could place severe financial pressure on Seabridge.The ongoing process shows that even a single community, acting within the legal framework of consultation, can potentially stall a project of enormous scale, creating uncertainty for governments, investors and developers alike.In this case, Seabridge followed B.C.’s direction to consult with the community. It invited the TSKLH Nation to participate, shared project information and included it in engagements tied to the environmental assessment and the “substantially started” determination. These claims appear in company statements and provincial filings.The TSKLH Nation said that “participation” in a process is not the same as meaningful consultation, claiming the province and Seabridge merely treated it as a marginal group to be “checked off” a list.Fronk said that even when companies do everything they can to consult, progress can stall if communities choose not to engage.“You can’t force people to meetings and to the table,” he said.The bottlenecks involve more than just First Nations. Fronk said as Seabridge moved from environmental approval into construction and operating permits, consultation requirements involving different levels of government and even departments within those governments often overlap.The result is further delays in obtaining the permits required by those agencies to construct and operate the various aspects of the project.“For KSM, we will require approximately 130 permits to get the project into operation,” he said. “Of which approximately 12 permits will be issued by the federal government.”Seabridge currently holds about 80 permits, including about 10 federal permits, but the remaining approvals are spread across multiple agencies.Thousands of kilometres east, companies involved with Ontario’s Ring of Fire — a mineral-rich region with deposits of nickel, copper, chromite and other critical minerals — are experiencing similar delays due to ongoing Indigenous consultation, permitting and infrastructure challenges.Development has been slowed for more than a decade and projects such as Wyloo Pty Ltd.’s Eagle’s Nest nickel mine are still in the midst of consultation and regulatory reviews, pushing the target for commercial production to 2030.Wyloo chief executive Luca Giacovazzi said consultation with First Nations in the Ring of Fire has led to design changes similar to those at KSM to minimize environmental disruption: the Eagle’s Nest mine’s footprint was reduced to roughly one square kilometre to limit impacts on peatlands, tailings will be stored underground rather than on the surface and the operation is designed to be almost fully electric to reduce diesel use. All these changes were directly shaped by community feedback.He also said consultation is not a linear or measurable process.“It’s not a defined, ‘We’re 80 per cent of the way there’ kind of thing,” he said. “For us, consultation is just continuous engagement; continuously working with the communities, really hearing what they’re saying, adjusting our design.”The delays and uncertainty reflect a broader sector-wide pattern, stemming from capacity constraints within some communities rather than opposition to development.“Communities want to engage,” Fronk said, “but some lack the staff, advisers or resources to participate at the pace regulators expect.”Both Fronk and Giacovazzi said governments could allocate more funding to ensure communities have the capacity to complete environmental assessments and other consultation requirements and to do so in a timely manner.Section 35 of the Constitution has long guided Indigenous consultation, though its application has often been very unclear. But over time, courts have set some guidelines and overturned flawed decisions, thereby clarifying what counts as adequate consultation, Flanagan said.Traditionally, he said, consultation did not give any single First Nation a veto; companies could meet reasonable demands through agreements, jobs, benefits or compensation, and projects would generally move forward.But the adoption of UNDRIP has introduced a new layer of complexity. Early court decisions, Flanagan said, suggest that UNDRIP’s principle of “free, prior and informed consent” could be interpreted to give individual communities veto power over projects.He pointed to a Federal Court decision last year in Ontario — Kebaowek First Nation vs.

Canadian Nuclear Laboratories Ltd. (CNL) — that said UNDRIP creates a “new added layer” of requirements for regulators.While that ruling is under appeal, the court initially quashed the licence amendment issued by the Canadian Nuclear Safety Commission that would have authorized CNL to construct a nuclear waste disposal facility at Chalk River on Kebaowek First Nation’s unceded traditional territory. The judge clarified that this “lens” does not constitute an absolute veto, but Flanagan said it creates a similar hurdle in practice.“Even linear projects, like roads or pipelines that pass through many territories, could be blocked by a single community under this precedent.” he said.Industry leaders say the resulting uncertainty can deter investment, delay infrastructure and prolong uncertainty for Indigenous communities themselves.Construction of Eagle’s Nest remains stalled until at least 2027 as the project navigates federal regulatory requests and infrastructure hurdles. The mine sits on the traditional lands of Marten Falls First Nation, but the necessary road networks cut across the territories of multiple First Nations, some of whom have not granted consent.Ontario has signed agreements totalling more than $149 million with First Nations, including a $39.5-million Community Partnership Agreements with Webequie and Marten Falls. The deals are intended to accelerate construction of all-season roads to the Ring of Fire. Federal support for roads, energy and other infrastructure, however, remains limited, leaving companies largely dependent on provincial action.Giacovazzi said road access, not the mine itself, is the primary bottleneck for Eagle’s Nest, adding it is difficult to set construction timelines without certainty on infrastructure. He said environmental assessments for Ring of Fire roads have been among the most extensive ever conducted in Canada, and that momentum has accelerated as Ontario stepped in to address long-standing community needs.“Industry cannot take the role of government,” he said. “We can’t be the ones building schools, hospitals or water systems. Communities need the infrastructure first if mining projects are to create real opportunities.”Giacovazzi said communities’ concerns often centre on protecting the environment and achieving long-term economic independence, including participation in mine-related businesses and services.Mines function like small cities: they require power, water, logistics, accommodation and a skilled workforce. Those who live in Indigenous communities increasingly want to participate, but often need training and government-supported capacity-building to get those jobs.Some Indigenous leaders say the uncertainty surrounding major resource projects is driven less by consultation itself than by governments attempting to impose timelines and approval frameworks without consent.Grand Chief Alvin Fiddler of the Nishnawbe Aski Nation, which represents 49 First Nations across Northern Ontario, has emerged as a leading critic of Ontario’s Ring of Fire strategy and the province’s use of Bill 5 to fast-track mining through “special economic zones.”He said these approaches risk increasing litigation and direct confrontation rather than delivering the regulatory certainty industry seeks, and that meaningful consultation must occur before legislative frameworks are passed or construction begins.“What they’re doing is the opposite of creating certainty,” he said. “By imposing their processes on us, there will be conflict, either in the courts or on the ground.”Free, prior and informed consent must include the right to withhold approval, Fiddler said.“It’s our land; anything that happens in our territory has to be up to us,” he said.A member of Muskrat Dam First Nation, Fiddler points to what he calls the hypocrisy of pushing for rapid mining development while his community has had to put up with a boil-water advisory since 2003.“It’s hard to have meaningful consultation with a community that doesn’t even have safe drinking water,” he said.Several attempts were made to reach the Assembly of First Nations for comment, but nobody was available to speak on the matter.Karen Rees, president of the Prospectors and Developers Association of Canada, said existing consultation and permitting processes suffer from duplication, confusion, unpredictable timelines and delays. The sheer number of players, from federal, provincial and territorial governments to departments such as the Impact Assessment Agency, Fisheries and Oceans Canada and Transport Canada, can cause delays.Evolving expectations under UNDRIP and free, prior and informed consent “have created an environment in which litigation often accompanies consultation,” she said.Still, there are examples of First Nations forging meaningful partnerships with mining projects.In Ontario, the Taykwa Tagamou Nation invested $20 million in Canada Nickel Co.’s Crawford Nickel Project, which has been referred to the Major Projects Office and fast-tracked by the Ontario government, securing an 8.4 per cent equity stake and a board seat.

The Norway House Cree Nation fully owns the Minago nickel project in Manitoba after acquiring it for $8 million from Flying Nickel Mining Corp.First Nations such as Wahnapitae, Sagamok Anishnawbek and Atikameksheng Anishnawbek have formed joint ventures providing drilling and services for other projects, while training funds from Newmont Corp. and Orla Mining Ltd. focus on workforce development and skills building.More than 500 First Nations relationship agreements now exist nationwide, according to the Mining Association of Canada, including provisions for education, employment, business development, environmental stewardship and community investment.Rees said that early, coordinated engagement is essential.“When government sets clear expectations, industry and Indigenous communities can engage with confidence and explore diverse and unique partnership opportunities,” she said.Beyond traditional impact benefit agreements, she said “more and more communities and proponents are exploring dynamic, innovative relationships, such as cooperative infrastructure, equity and asset ownership and ancillary business development.”But the challenges of balancing multiple voices, timelines and approvals can’t be overstated.“At the end of the day, consultation is messy and complicated,” Fronk said. “Even when you do everything you can, there are still disputes, delays and uncertainty.”• Email: arankin@postmedia.comPostmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.