Finance Committee on Oct. 26th, 2010

[Ted Menzies, Conservative, Macleod, AB]

Thank you.

My question is for Mr. Tak. Fourteen and a half thousand jobs is what we're talking about, and $1.2 billion in revenue, so this is a growing industry.

Explain a fuel cell in layman's terms.

[John Tak]

Thank you. That's a great question because there are a lot of issues. People think, oh, it's a fuel-cell car. A fuel cell is simply a type of battery.

For a battery, the chemistry is inside the battery. We're all familiar with that. In a fuel cell, the chemistry is on the outside of the battery, usually in the form of hydrogen or natural gas—anything that carries hydrogen. You put the chemistry in and it makes electricity.

A fuel cell can be the size of a credit card. It can be the size of a laptop. You can scale it up for any application. It's simply a type of battery with the chemistry on the outside.

[Ted Menzies, Conservative, Macleod, AB]

In what form do we export it?

[John Tak]

Currently we have early industrial markets that can afford a higher price. Those are in materials handling, for forklift trucks, where they're replacing lead acid batteries with fuel cell power packs that can run twice as long and that drivers can refuel in under one minute themselves, and as backup power for telecom towers, again to replace battery applications, because they run longer. But all fuel cells use a battery together; this isn't about batteries versus fuel cells. There's a growing market for both of them.

[Ted Menzies, Conservative, Macleod, AB]

Are there retrofits available for existing equipment or is this only for new manufacturing?

[John Tak]

The target is for new equipment because ideally you design a product to use a fuel cell from the ground up. The forklifts are all retrofits; they're existing forklifts in warehouses. You just slide out the lead acid battery and slide in a fuel cell.

[Ted Menzies, Conservative, Macleod, AB]

Thank you.

To the Mining Association and Mr. Stothart, there were articles this morning about rare earth metals. Need we be concerned when China says they're going to close their borders? It's just like Russia saying they're not going to export wheat. Is that a little troubling?

[Paul Stothart]

It's an interesting area, for sure. Right now, China controls the vast majority of rare earth production and processing. There's a lot of investment activity taking place in Canada, probably in four or five provinces and in a couple of the northern territories.

[Ted Menzies, Conservative, Macleod, AB]

Will this benefit our rare earth extraction sector?

[Paul Stothart]

There is a need for Canada to bring some of these mine proposals into production. It's going to take a couple of years.

The movement of rare earth around the world today is fairly small. It's a very strategic area as it relates to clean technology, defence technology, and communications, but the movement is still fairly small. I think there is a need for Canada to bring some of these mines into production.

The U.S. is facing the same kind of issue, as are some European countries. There's some concern that the flow of this today is largely controlled by the Chinese. It's not just rare earth. You see it with some other minerals as well. There are some Chinese export constraints on various minerals. There's an effort to control as much of the mineral flow within your own country as possible. We're certainly seeing that in China in a number of areas.

[John Tak]

Most of the lithium for lithium batteries--about 70% of the world's supply--is controlled by Bolivia. That's a real issue.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Menzies.

We'll have Mr. Brison, for five minutes.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much.

The discussion this morning on science, research, and development and their importance to the jobs of tomorrow, I thought was important. For some reason, despite quite a significant level of government investment in science in Canada, we're not good at commercialization yet.

Our commercialization rates pale in comparison to those of many of our competitors and trading partners. Why is that and what public policy prescriptives should we be implementing to address it?

For instance, everyone is talking now about Israel and some of what they're doing. If you look at our historic lack of commercialization, combined with the current challenges in the VC industry, I think we have to take action. I'd be very interested in your insights on how to do the research development science and on how we're going to create the green technology jobs of tomorrow.

I think Mr. Monk spoke to this. Mr. Tak spoke to it. Some of the technology that can be developed and commercialized is even in the mining industry. I'll keep it fairly broad in terms of who responds.

[The Chair, Conservative, James Rajotte]

Mr. Monk.

[Richard Monk]

Thank you, Mr. Brison.

You're correct in saying we're slow on the commercialization side. That's an issue we are facing.

First, you need to have people investing in the research and development, and we are getting some of that, but we're probably not getting as much as we should. That's one of the reasons we were recommending that the tax refundability provisions be provided to larger corporations as well as smaller corporations--to get them investing. Having this refundability, you then generate some cashflow, which may assist in commercialization.

The other side of it would be collaborating with the various universities and colleges and with the business community to develop some strategies on how to enhance the commercialization of some of this research product.

[The Chair, Conservative, James Rajotte]

Mr. Tak.

[John Tak]

That's a very good question, one that is hard to answer in a few seconds, but there are sometimes conflicts with traditional industry with regard to the innovation we create. Right now, innovation is a subset of Industry Canada and there is a minister of state for innovation. It might be interesting to look at a separate department that looks solely at innovation.

In Ontario, the agriculture sector is very supportive of biomass, because you sell more corn. In B.C., the forestry sector is very supportive of biomass, because you sell more wood fibre and lumber. But any sector that doesn't have a traditional stakeholder base, such as new technology like the hydrogen and fuel subsector, doesn't have that industry out there advocating for it.

Separating traditional industry from innovation and focusing on each separately may be an interesting approach to see how we can ensure that we commercialize the new and bright future industries and the innovation that takes place in Canada and ensure that we get the benefit in Canada, rather than seeing that innovation go to other countries when it's ready to be commercialized.

[The Chair, Conservative, James Rajotte]

There are 45 seconds left.

Mr. Stothart.

[Paul Stothart]

I'd just add that there have been a lot of studies over the years as to why Canada isn't more effective at commercializing and I wouldn't have a lot to add to that.

In the mining sphere, certainly there is a lot of attention being paid--and a lot of need for more attention--to tailings management and how to better manage the waste products of the mining industry. A lot of money is being invested in the oil sands in trying to manage the tailings ponds better. Suncor has added a new polymer to the tailings that will help them dry much more quickly and then they can be reclaimed.

[Scott Brison, Liberal, Kings—Hants, NS]

But if you look at some of the innovation that's coming out of our traditional sectors--for instance, the extractive sector and the oil and gas sector--we have to consider what we can do in terms of government policy to encourage your members to spin off those technologies, perhaps with new companies, new ventures that will be valued differently and that could attract separate pools of capital.

There has to be a way that we take what is already going on in terms of innovation within your sectors and encourage your members to spin them off in terms of new ventures. And that's a longer discussion, I realize.

[The Chair, Conservative, James Rajotte]

I'm sorry, but yes. My friend Mr. Brison is bumping up against a minute over time, and that's a big question, so we'll have to return to that in the next round.

Monsieur Carrier, s'il vous plaît.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Good morning, ladies and gentlemen.

I have a question for Mr. Stothart from the mining industry. I read your statement with great interest. From your document, I understand how important the mining industry is to this country. I am aware of this because I am an engineer. In fact, my son worked at the Raglan mine in northern Quebec. I am therefore very aware of how important it is. However, I would like to talk about the environment. You have a chapter on the environment. You recognized that this is not an unimportant issue for the mining industry. I believe that the environmental consequences of mining are still very significant.

I had the opportunity to visit a gold mine in another country, namely Burkina Faso. The environment seems to have been well protected there, both the physical environment of the mine and the place where the population lives. However, the record of the Canadian mining industry abroad is not very good. This is why we introduced a bill which is being debated. You mentioned this a little earlier. Bill C-300 would regulate or impose environmental standards. We are trying to apply them here, but when we engage in mining activities abroad, it seems we forget them. I would like to hear what you think about Bill C-300. I think you do not support it. I would like to hear some good arguments for your position.

[Paul Stothart]

Thank you very much for the question.

Certainly, the mining industry takes its responsibility in the environmental and social area very seriously. I would highlight the mining industry's contribution to the whole emergence of the clean energy economy and the fact that minerals are essential for hybrid cars, catalytic converters, and lightweight materials, etc. There's a harmony between those goals.

On Bill C-300, I think our main concern is that the mechanism proposed doesn't really bring any due diligence or due process to it. It's a mechanism that would be out there basically to damage companies' reputations. Companies' reputations would be damaged over the period of a year or two until there is some resolution brought to whatever the complaint may be.

There are already two mechanisms that exist today for people who want to complain about the operations of a company overseas. There's the OECD counsellor and the national contact point within the Foreign Affairs department, and there is the CSR counsellor, who has been established and has laid out a process that she would envision for resolving disputes.

There are already two mechanisms that exist. We don't see the need for a third, especially one that has a very low regard for due process.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

I wonder why you think that the reputation of mining companies will be affected by a bill. Did you know that already many environmental regulations are not respected? Don't you think that it would be an encouragement or an advantage for the Canadian mining industry to know that it is respecting a very demanding law?

[Paul Stothart]

It's not a concern with that. It's just a concern with the fact that anybody could lodge a complaint, whether it's a competing company in another country.... Then, the process in which the complaint is being investigated, that might take who knows how long. This sort of spectre of a Canadian company being investigated by its own government would hang there for a year or two.

So it's not that companies aren't respecting laws abroad and implementing extensive CSR programs in their own right. It's the fact that this mechanism is out there for anybody to complain, whether it's a competing company or another company from another country, and this sort of spectre would hang there for a year or two as it's being investigated.