Industry Committee on Nov. 2nd, 2006

[Ron Watkins]

I think from the point of view of the steel producers, if you were into a regime where you had to buy credit simply to comply, that's not an investment you're making back into your enterprise.

We have operated very much on the principle of BATEA. You use the best available technologies economically applicable. And so the approach under the MOU that we've signed with the governments would be to, first of all, focus on what we can do to achieve the maximum possible, and as I mentioned, against the backdrop of a lot of progress already.

And then looking out over the longer term, which is part of the clean air plan, what are those breakthrough technologies? To get immense change, you need some breakthrough technologies in the way steel is made. There is participation by the government and the industry in what's called the carbon dioxide breakthrough project run by the International Iron and Steel Institute.

We are part of that as Canada and looking to that as a way to develop complete step functions in the environmental efficiency of the process.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll go now to Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you for your presentation here today.

One of the things I noted in your “Action Required on Multiple Fronts” is that under the heading “Domestically” you've addressed the issue of competitiveness factors through domestic policies; in particular, innovation, skills, energy, environment, and infrastructure. I think you're absolutely correct there.

Canadians will generally support public policy initiatives, be they on clear air or better infrastructure, where they can see value for the general good and as a goal, and it if boosts employment and competitiveness. I'm not informed in depth about the whole project itself, but one of the things that have been talked about is the cogeneration of the Stelco plant and moving that forward. Does that fit within those elements there? I know that in the Hamilton area they argue that obviously this would improve air quality, and they have a significant problem there. Coming from Windsor, Ontario, we have the same thing as well, but where you can't control, you can improve things.

And second to that, it would improve the competitiveness of Stelco itself.

Maybe you can expand upon that situation to see if it falls in line with what you're....

[Ron Watkins]

The short answer is yes, it does. I think it has the double impact of not simply being better for the environment but also having some bottom-line consequence if we can figure out the way to do it.

There have been issues in cogeneration. I don't speak with expertise in this area, but there are questions, I think, related to how you interconnect with the grid and on what basis, and questions about combination of pricing and about surge power. There's a range of factors that need to get worked through.

Cogen, I know in the case of Stelco, has been one of those projects that can be seen to have a positive impact, but it has to make the hurdle to the next level. I think some combination of regulatory change regarding how it would interact with the grid, along with some of the investment-oriented measures that might make it a more viable proposition could lead to some genuine progress in that area.

I'm not sure if you're aware of this, but just in the last week or two, Algoma announced a cogeneration project in its area, which is a very positive step as well.

[Brian Masse, NDP, Windsor West, ON]

In terms of your partnership council, if there is public support and incentives or grants with conditions for doing such projects with, say in this case, Stelco, or another company, how are those seen by your partnership there? Is there general consensus that as long as there's a fair, open process, public policy initiatives and supports are there that can be used by all? Is that generally how the organization is constructed?

[Ron Watkins]

It's a bit of an untested proposition, frankly. I think the general view would be, first of all, that programs that are more generally available and those focused on something like cogeneration clearly have a lot of different forms of public benefit associated with them.

What we as an industry, for a very long time, have taken a view against are capital or production subsidies to the industry, because, first of all, we oppose them when they occur in other countries, and secondly, they do change the basis for competition. Projects targeted at environmental enhancement, which obviously could have some competitive benefit as well, I think, would be favourably looked at. But that's kind of the distinction we would draw.

But as I say, we haven't really had to face that in a broad way just yet.

[Brian Masse, NDP, Windsor West, ON]

It'll probably be a good situation to face, though, in respect to challenge, if you get there. I guess that's the new reality. We can continue to complain about other countries' using innovative strategies, often from companies that have one plant in North America and another plant somewhere else. Obviously we have to address that. We're not going to end that practice since it's happening pretty well unilaterally across a number of different countries.

I have one quick question, though, with regard to production by country. You have the ranking there. Canada is sixteenth. Where have we been in the last few years? Have we gone--

[Ron Watkins]

We've held pretty stable in that range. It's plus or minus a little bit. We're fairly close to Mexico. They may have overtaken us over the last, say, two to three years. But I looked at these data a couple years back; I think we were still number 16 at that point.

[Brian Masse, NDP, Windsor West, ON]

I don't know if it's possible for your organization to say, but I'd be interested to know, maybe over the last five years, who has really moved up or down, or if there have been big shifts or swings. That would be very helpful.

[Ron Watkins]

We could definitely get you that information. I can tell you that the current number one was not number one five years ago.

[Brian Masse, NDP, Windsor West, ON]

That was the obvious--

[Ron Watkins]

If you look at the numbers, over a quarter of the global production is by China.

[Brian Masse, NDP, Windsor West, ON]

That's incredible.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Masse.

We'll go now to Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Chair, with your indulgence, I'm not sure if Monsieur Arthur wants to ask a question. I might be able to shorten my questions if he has one. It's up to you.

[The Chair, Conservative, James Rajotte]

I just have Mr. Van Kesteren and Monsieur Arthur.

But if you're willing to do it, that would be great.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

That's fine.

I have just one question dealing with the percentages of exports versus domestic consumption. I didn't see that in your table. I mean domestic exports of your industry as a whole.

That's really the only question I have.

[Ron Watkins]

I apologize. That's probably not in the presentation deck, but it's in my remarks.

Our exports last year were in the order of 5.4 million tonnes. Imports were 9.3 million tonnes. So the net trade deficit for steel was about 3.9 million tonnes.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Do you have any idea how much your domestic consumption would figure into all of this?

[Ron Watkins]

Total domestic consumption in Canada is about 18 million to 19 million tonnes.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Which would be what percentage? Do you have any idea, roughly?

[Stephen Sampson]

Last year, imports made up about 51% of the Canadian market.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you.

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McTeague.

Mr. Van Kesteren.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Chair, if it's all right with you, Mr. Arthur can ask a question first, and then I'll take the question last.