Huu-ay-aht councillor Cook stands on beach in the aboriginal village of Anacla, British Columbia Thomson Reuters By Julie Gordon

PORT ALBERNI, British Columbia (Reuters) - In Sarita Bay, a remote cove on Canada's Vancouver Island, aboriginal-owned land used for decades by loggers is slowly being reimagined as a multibillion-dollar export terminal to ship liquefied natural gas to Asia.

Aboriginal groups in the West Coast province of British Columbia are often in the news for opposing major resource projects. But the Huu-ay-aht First Nation, who own the land where the plant would be built, have partnered with Steelhead LNG on the proposal.

Both parties say the alliance was facilitated by a so-called modern treaty reached in the past decade, which granted the Huu-ay-aht ownership over a swath of their traditional territory and jurisdictional powers.

"We wanted to open our doors to business," Huu-ay-aht councillor John Jack said of their 18-year effort to achieve treaty status. "We wanted the soft power of being in the boardroom."

"We weren't really able to have those kinds of relationships before self-government," he added.

It is a sentiment shared by other aboriginal communities with modern treaties, illustrating how such deals, though rare, are providing one model for fostering growth in poverty-hit communities and reducing conflicts over resource development.

Between 1701 and 1923, aboriginal people across much of Canada signed treaties giving up claim to their traditional lands. But in British Columbia, few signed on, leaving vast swaths of the province subject to land claims.

This has led to conflict when industry and aboriginals disagree over development on these contested lands.

Enbridge Inc's Northern Gateway oil pipeline, for example, has faced protests and lawsuits from aboriginal groups.

Such conflict is less apparent in pockets of the province with modern-day treaties, first negotiated in Canada in the 1970s.

In northern British Columbia, the Nisga'a Nation have signed a deal on a natural gas pipeline that will cross their treaty lands, giving them numerous benefits including the option to tap pipeline capacity in the future for their own LNG plant.

"By supporting these projects we've secured long-term benefits for our people," said Nisga'a President Mitchell Stevens, adding that the community pushes its industry partners to take a sustainable approach to development.

"No one wants to get into a business to fail," he said. "We want to create a climate that encourages businesses that are willing to work with us."

PROCESS QUESTIONED

To be sure, communities like the Haisla on British Columbia's northern coast and the Osoyoos in the Okanagan Valley have attracted business to their communities without treaties.

And negotiating a treaty can take decades. So far just nine of roughly 200 aboriginal groups in British Columbia are covered under fully ratified modern treaties. Others have preliminary or partial agreements.

Critics of the process say it takes too long, costs too much and is too arbitrary in settling disputes between aboriginal groups with claims on the same land. Those who sign deals say they are often criticized for "selling out" to government and industry.

The appeal of negotiated deals took another hit late last year, when Canada's top court awarded land and self-governing rights to a nontreaty aboriginal group, in what was seen by some as a more favorable outcome than settlements achieved through talks.

Still, many leaders of aboriginal groups who already have a modern treaty say they are past dwelling on such details and are focused on rebuilding communities plagued by poverty.

BETTER FUTURE

Just south of Vancouver, near the suburb of Delta, the imposing metal frame of a major shopping mall complex is rapidly taking shape on Tsawwassen First Nation (TFN) treaty lands.

The Tsawwassen have partnered with two major Canadian developers on the malls and the construction of a nearby residential subdivision. They have also scored industrial ventures like a container inspection facility for the nearby port.

But transforming a tiny urban reserve into an independent municipality will require improved infrastructure, including a new sewage treatment plant, new roads and drainage - all at a cost of roughly C$100 million ($78.79 million).

"We've taken a huge business risk," said Tom McCarthy, the TFN's chief administrative officer. "We're willing to take that leap because we know our development model is going to work."

($1 = 1.2692 Canadian dollars)

(Editing by Jeffrey Hodgson and Matthew Lewis)