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Q&A: How buying a pipeline could change the Indigenous business landscape

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A group of First Nations have plans to become the new owners of the Trans Mountain pipeline and its controversial expansion plan. Leaders are gathering in Calgary this week to work out the details of how they would buy it from the federal government.

The idea that Indigenous leaders are considering purchasing the multi-billion dollar project is extraordinary, according to Ken Coates, a University of Saskatchewan professor and the Macdonald-Laurier Institute’s senior fellow in Aboriginal and Northern Canadian issues.

The price tag would be steep, since the federal government bought the existing pipeline and related infrastructure for $4.5 billion last summer and constructing the expansion pipeline could cost more than $7 billion.

The federal government should want to sell the project to Indigenous groups, according to University of Saskatchewan professor Ken Coates. (Jason Warick/CBC)

The expansion project is currently stalled after the Federal Court of Appeal ruled in late August there needed to be more consultation with First Nations. The National Energy Board was also instructed to explore the potential impact on the marine environment.

CBC News asked Coates about whether Indigenous groups could one day own the project and the significance of such a proposal. The interview has been edited for length and clarity.

Is there a legitimate chance Indigenous groups could buy the pipeline project?

First thing I’ll say is, five years ago people would have thought it was crazy. The fact people don’t think it’s crazy now tells you how much has happened in terms of Indigenous business over the last half decade or so.

I think it’s very serious. The people are not doing this casually. They know it is a financial risk, but they know there is some substantial financial upside.  Yes, it’s possible. It would be extremely difficult to pull off because you have to find ways of getting all the members on board, you have to find ways of raising the capital, you have to find a management system that works.

But I think it’s a sign of confidence of Indigenous business people. It’s a sign of the determination of First Nations with oil and gas reserves to have far greater control than they have ever had before over the nature of their industry. It is an exciting possibility and I’m delighted that they’re looking at it so closely.

The 1,150-kilometre Trans Mountain expansion pipeline aims to move oil from Edmonton to a terminal in Burnaby, B.C., near Vancouver, where it will be exported. (Scott Galley/CBC)

Would it change the landscape for Indigenous groups owning a massive asset like the pipeline?

It changes the game on a number of levels, the most obvious one is sort of a politics of pipelines and oil and gas development in general.

The Indigenous folks who are behind the pipeline are very aware of the environmental issues, very concerned about protecting their own ecosystem and the global ecosystem. They have thought about it very carefully. So it would change the game dramatically in terms of the false dichotomy that put Indigenous people and environmental people on one side of the equation and business and government on the other.

But boy does it ever change the game in terms of Indigenous economic development and the role of Indigenous people within Canadian society at large. Now you’re all of a sudden talking about Aboriginal folks being owners or part-owners perhaps of a multi-billion dollar initiative.

It is a declaration of confidence and a declaration of economic independence on behalf of the Indigenous folks who are talking about this.

Watch: Stephen Buffalo explains the rationale

Stephen Buffalo, chief executive of the Indian Resource Council of Canada, says the pipeline is an opportunity to get out of poverty. 1:15

Does it make sense politically for the federal government to sell the Trans Mountain project to Indigenous groups?

I think the government of Canada would be delighted to negotiate the possibility of this kind of a takeover and I think it fits into a whole bunch of their narratives. One part of the federal government’s concern is that much-promised new relationship with Aboriginal people.

For more than 150 years, the government of Canada very deliberately blocked Indigenous people from full participation in the economy whether through the Indian Act or a whole bunch of other rules and regulations. They made it really hard for Aboriginal people to own a business. If you owned a business you had to give up your status, etcetera. So, they blocked Indigenous participation in the economy. Logic says then that when new opportunities arise, the government of Canada should go out of its way to create openings for Indigenous folks.

From the government of Canada’s point of view, this actually fits very nicely on the new relationship/reconciliation front and it really fits nicely on this commitment to basically break and destroy welfare dependency as the cornerstone of the reality of Indigenous people on reserves, in particular.

Steel pipe to be used in the oil pipeline construction of the Trans Mountain expansion project at a stockpile site in Kamloops, B.C. (Dennis Owen/Reuters)

Can the Indigenous groups wanting to buy the pipeline overcome the challenges they face?

I think they can be. Remember, from the Indian Resources Council point of view, an investment in a pipeline is actually an investment in their resource development, their oil and gas properties and their overall economic well-being. It’s not just investing in a pipeline, which might be a good business deal on his own. But you’re actually unleashing an awful lot of economic potential in these communities. When that money comes into these communities, they reinvest in everything from cultural programs, regional economic development, they invested in housing, elder support, etcetera.

So, is it possible? Absolutely possible. A lot of this hinges on what price the government of Canada would charge for the pipeline and what the financial arrangements could be. Then the question is will they actually be able to build it and that then becomes a really interesting question on its own.

Watch: Rachel Notley reacts

The Indian Resources Council is spearheading a push to purchase the pipeline and the expansion project. 0:35

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Canadian Tire and NuPort Robotics to commercialize Canada’s first automated heavy duty trucks

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Canadian Tire Corporation and Toronto based start-up NuPort Robotics, Canada’s first autonomous trucking company, are partnering with the Ontario government to invest $3 million to undertake an automated heavy duty trucking project to test a “first-of-its-kind-in-the-world” technology. 

The breakthrough technology provides a transportation solution for the middle mile, the short-haul shuttle runs that semi-tractor trailers make between distribution centres, warehouses and terminals each day.

It is designed to enable next-generation automated trucks that are more fuel efficient, safer to operate, and provide an enhanced driver experience.

Backed by $1 million in support from the Ontario government through Ontario’s Autonomous Vehicle Innovation Network and matched by $1 million investments from Canadian Tire and NuPort Robotics, respectively, the two-year project is applying proprietary, artificial intelligence technology from NuPort Robotics to retrofit two conventional semi-tractor trailers – which will always be attended by a driver – with high-tech sensors and controls, a touchscreen navigation system, and other advanced features such as obstacle and collision avoidance.

Caroline Mulroney, Minister of Transportation, says: “Ontario is proud to be a global leader in automated and connected vehicle technology and this innovative project is an exciting milestone toward automated vehicle tech in the trucking industry.

“Ontarians rely on goods being delivered by trucks across the province every day and projects like this are demonstrating the ways that automated truck technology could help businesses meet delivery demands more efficiently while supporting a strong supply chain in Ontario.”

Vic Fedeli, Ontario Minister of Economic Development, Job Creation and Trade, says: “This project applies unique and made-in-Ontario Artificial Intelligence technology that offers increased safety and efficiency, with a reduced carbon footprint, to the goods supply chains on which we all rely.

“This is the latest example of how Ontario’s Autonomous Vehicle Innovation Network acts as a catalyst, fostering partnerships between ambitious technology start-ups and industry to develop and commercialize next generation transportation technologies that strengthen our economy and benefit society.”

Raghavender Sahdev, CEO of NuPort Robotics, says: “The trucks are currently transporting goods between a Canadian Tire distribution centre in the Greater Toronto Area and nearby rail terminals within a 12.5 mile radius, and early results are promising.

“The aim of the project is to develop a system that incorporates an autopilot feature for conventional trucks with a driver, leading to the most efficient way to drive and increase safety.

“The sensors work as a ‘safety cocoon’ to cover blind spots and prevent accidents and the end result is peak fuel efficiency, meaning lower carbon emissions, and peak driving performance for an overall more optimal transportation experience.”

NuPort Robotic’s approach to autonomous trucking is unique in the industry because it focuses only on solving the middle mile challenge, using a known set of predetermined trucking routes that are repetitive and high frequency as opposed to general highway driving.

Ultimately, when implemented on fixed routes in the future, Canadian Tire will benefit from faster commercial deployments and improvements in supply chain sustainability.

Gary Fast, vice-president of transportation, Canadian Tire, says: “Canadian Tire embraces innovation and is always testing new technologies to improve our operational efficiency and safety.

“As proud Canadian companies, the safety of all stakeholders, including drivers, employees, customers, and public will be the top priority as we work together towards deployment of this technology.”

Cari Covent, vice president of intelligent automation, Canadian Tire, says: “Over the last three years, Canadian Tire has made a significant effort to solve complex business problems by using the Canadian start-up Artificial Intelligence ecosystem, and NuPort Robotics exemplifies what we look for in a start-up with a focus on innovation, automation and artificial intelligence.”

Sahdev says: “As NuPort Robotics continues to develop new technologies to overcome middle mile supply chain problems and advance autonomous trucking, I am extremely grateful for the support of the Ontario Government through AVIN and the Ontario Centre of Innovation.

“With their continued support, we are striving to position Canada as the leader in autonomous transportation.”

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Constellation Software is money in the bank, this fund manager says

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If you’re looking for a long-term hold in Canadian tech then Constellation Software (Constellation Software Stock Quote, Chart, News, Analysts, Financials TSX:CSU) should definitely be on your radar. So says Jason Del Vicario of Hillside Wealth Management who likes not only Constellation but its recent spin-off Topicus (Topicus Stock Quote, Chart, News, Analysts, Financials TSXV:TOI) which Del Vicario says could do even better than CSU over the next ten years.

Software consolidator Constellation has been running on the same game plan for years, buying small vertical market software companies providing so-called mission critical software solutions globally. Over the years CSU has completed over 500 such acquisitions, buying the top names in their respective niche verticals and then using its clout and breadth to grow the business and expand into new markets. The resulting cash flow is then plowed back into more acquisitions and the cycle repeats.

The strategy has worked wonders for Constellation, which has grown its revenue from $631 million in 2010 to almost $4 billion for 2020 while taking earnings from $4.12 per share in 2010 to $20.59 per share this past year.

Shareholders were given a special treat last month when Constellation spun out recently acquired Topicus, giving CSU owners about 1.9 Topicus shares for every Constellation share as a dividend-in-kind. Constellation bought Netherlands-based software company Total Specific Solutions BV (or TSS) in 2013 and that subsidiary recently acquired Topicus BV, a Dutch information service company focusing on sectors such as healthcare, education and finance.

Topicus was singled out by Constellation founder Mark Leonard for its ability to grow without using outside shareholder funding. Leonard said the spin-out was part of the intention since a purchase agreement was struck last year.

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Nuvei wins price target raise from National Bank

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Strong quarterly results and an even brighter outlook for 2021 are reasons to celebrate for Canadian payments company Nuvei (Nuvei Stock Quote, Chart, News, Analysts, Financials TSX:NVEI), according to National Bank Financial analyst Richard Tse. In an update to clients on Wednesday, Tse left his rating unchanged at “Outperform” while raising his price target from C$85.00 to C$100.00.

Montreal-headquartered Nuvei is a provider of payment technology solutions to merchants and partners around the world, with a platform geared for high-growth mobile commerce and e-commerce markets. Nuvei’s solutions include a fully integrated payments engine with global processing capabilities, a turnkey checkout solution and a suite of data-driven business intelligence and risk management tools and services.

The company released its fourth quarter and full year 2020 financials on Wednesday, showing Q4 revenue of $115.9 million, up 46 per cent year-over-year, and adjusted EBITDA of $51.3 million, up 61 per cent year-over-year. Total dollar value of transactions processed by merchants (‘total volume’) with Nuvei rose by 53 per cent to $13.9 billion. (All figures in US dollars except where noted otherwise.)

The 2020 year featured revenue up 53 per cent to $375.0 million and adjusted EBITDA up 87 per cent to $163.0 million, with total volume rising a full 76 per cent year-over-year to $43.2 billion.

“Our performance continues to be driven by strong momentum in the high-growth verticals we serve, as well as by our customizable, scalable and feature-rich technology platform which provides one of the industry’s most complete payment technology solutions going well beyond merchant acquiring,” said Philip Fayer, chairman and CEO, in a press release.

The company said the fourth quarter represented the strongest growth yet experienced by Nuvei, driven by wallet share expansion from current merchants along with accelerated uptake of new merchants. New e-commerce business almost tripled compared to a year earlier, Nuvei said, while the company expanded its connectivity coverage over the quarter, introduced new product innovations on its platform and continued to execute on M&A.

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