Industry Committee on April 29th, 2021

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you very much, Madam Chair.

Thank you to all our witnesses. You've brought an absolute wealth of expertise to your testimony today.

I would like to start with Ms. Bak.

Ms. Bak, in my riding of Markham—Stouffville there are so many small and medium-sized enterprises that want to do their bit in terms of reducing their carbon footprints. We heard earlier this week from Green Economy Canada that they're finding it particularly difficult to navigate the various opportunities, and as a non-profit, it is assisting those small and medium-sized enterprises.

You made reference to something in the EU where, as part of a project application, as I understood you to say, larger companies need to engage with SMEs as they put their projects forward. Could you expand on how that's working in the EU so that we might have some lessons here for us?

[Céline Bak]

The EU has a very concerted strategy to enable SMEs to become a more significant part of its economy. It's not a surprise, therefore, that when the EU decides to deploy over $700 billion in capital over three years, it includes a requirement for all public stimulus of private sector investment.... It requires large project proponents to include SMEs in their project proposals.

This is part of a multipronged strategy. I can tell you, for example, that there is an EU program under way in Canada that is enabling EU scale-ups to understand how to export to Canada. There are people at the EU delegation who have a responsibility now, a project under way, where they are enabling EU SMEs to meet with large Canadian companies—Maple Leaf Foods is an example—to solve their problems with new innovations coming from the EU. The committee might find it interesting to consider this very systematic approach.

I have, in the past, requested reports from Statistics Canada on exports from Canada by SMEs, and those reports are no longer annual. We don't know the relevance of SMEs to Canada's exports. At one point, it was 25% of the value of all exports—so, equal to that of the mining industry. They're very, very significant to Canada's economy. However, we don't know what it is now because we no longer keep track of it.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Your recommendation, obviously, would be that we should be keeping track of that kind of information.

[Céline Bak]

This committee could request it and require a report, yes.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you so much.

Ms. Sajedi, you ran out of time, and we were getting to some really interesting areas that you were talking about in terms of plastic waste and, obviously, the minimization of such waste. You were able to address some of the preventive strategies, but you also wanted to talk about corrective activities.

Could you perhaps expand on that area?

[Sarah Sajedi]

Thank you so much for looping me back in. I highly appreciate that.

Corrective measures are governmental intervention and help to create a sustainable, systematic process of recovery and reuse for recycling waste. We have done that in municipal water treatment and it has been extremely successful, but for some reason, for waste management it seems that it is very sporadic and there is no hard level like the rules and regulations that water has.

We have a really good method that we can follow because waste-water treatment and sewer systems have been extremely successful in cleaning our waters and making sure that our water quality is good. There have been many hundreds of chemists and environmentalists on this. Many methods have been developed to treat waste and reuse it, but it is not organized, and it's not government mandated. I believe that the government's mandating of this will help to organize it and give it structure, which it needs in order for it not to be the way it is currently.

Finally, on reuse of the materials by end-users—such as asphalt, cement and roof shingles—by companies that use the raw materials that are not so clean, the level of treatment that you have to do in order to make the waste reusable for clothing or bottles is much different than it is when you have to use it in cement or asphalt. Given that, intervention and giving them some sort of incentives would make it easier.

Thank you so much for the time you've given me.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

We just have a few seconds left. As you know, of course, waste-water treatment is a municipal responsibility in Ontario, Canada. Are you suggesting that there be a greater role at the federal level?

[Sarah Sajedi]

Federal and municipal: I think the federal level has to come with the rules and the possibilities for how to approach it, but it eventually goes to the municipal level.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Mr. Lemire, you have the floor for six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

Mr. La Salle, thank you for making us aware of the importance of critical, or strategic, minerals and intellectual property. In fact, I would like us to continue with that topic, because ownership is going to include not only intellectual property, but also the deposits, the processors, and the entire supply chain.

Why do you feel that owning our strategic minerals is key?

[Benoit La Salle]

We need to grasp the opportunity. A huge shift is coming in the green industry.

Canada is a nickel producer. As you know, Sudbury was the largest nickel-producing area in the world and it was all sold to the Australians and the Brazilians. Now we're seeing a second boom and a shift to solar power, to 5G technology and to electric cars and buses. All those technologies will depend on critical metals. We must own them. Otherwise, we will not be part of the 2.0 economic revolution. First came the oil boom of 1910, and now we're seeing the green oil boom of 2020. We can't let this opportunity pass us by, because the minerals belong to us. They are ours, and we need to keep them, not sell them.

Whether they are from Australia or from somewhere else, buyers have a strategy based on their needs, their economy, and what they are going to produce in their country. The only way to be involved and get in on this 2.0 boom of the green economy is to be an owner. Otherwise, it will not happen. We will end up selling minerals like they were trees, and we will see our resources processed in the same way: they will be made into boards in the U.S. and sold back to Canada. I don't want to say that is what's happening, and I certainly don't want to speak for my colleagues in the forestry sector.

However, nowadays you cannot sell lithium, nickel or cobalt, have it processed somewhere else and buy it back. That makes no sense anymore, especially since the best minds are in Quebec. You know, the mining world is scouting for Quebec, Ontario and Canadian minds, because that's where the most qualified people are. Are we going to go work around the world and let others come into our home? That would make no sense. But that's what is happening right now. The Chinese, the Australians, the Brazilians and the Turks are buying up natural resources around the globe, and we're not reacting.

I'm pleased to have been invited to appear today to highlight this issue. A very big shift is happening. We need action from the government and the community. That action absolutely requires those who manage and control things to live here in Canada, not abroad.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

We remember the infamous penny a ton price on the North Shore.

What advantage do Quebec and Canada have over the rest of the world in the strategic minerals sector? Can you tell us more about it?

[Benoit La Salle]

First of all, we have these minerals. That's better than the United States. The North American Lithium Mine, which is up for sale right now, has drawn interest from two U.S. groups, one of which is funded by U.S. defence. Why are they interested? The Americans need both lithium and graphite for weaponry, and they don't have any in their country.

Owning assets is important. We are lucky, we have the resources. We have them in Ontario and Quebec and in a few spots in the Maritimes. We have graphite and cobalt, among others. We have them, so let's keep them. We have what it takes to do the first two levels of processing and we're smart enough to do it. This is not the 1910s, this is the 2020s. We have universities, scientists and everything we need. They are going to be developed elsewhere. So why not develop them here? We just need to get support.

We're bidding today to acquire the lithium mine and we're competing with the Chinese, the Australians and the Americans. They're extremely aggressive when they come in to get resources. However, again, if we let it all go, we are going to be buying electric cars from China, and phones from Korea, and we'll have to find something else to do.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I am the member for Abitibi—Témiscamingue, where the mining sector represents a very big part of the region's economy. Can I hope that developing the mining of strategic minerals, such as lithium, will create jobs locally, especially in secondary and tertiary processing—that is the key sector—and leave the smallest possible carbon footprint?

Since sustainability is now part of the vocabulary in the mining industry, can we expect that in the lithium business?

[Benoit La Salle]

Absolutely. it's part of our vocabulary and our values. Everything will depend on the new owner. It will be a matter of setting out guidelines and saying what we want. The offer we've made for the lithium mine includes all stages of processing, right down to the product that will be used to make batteries.

People who come here should be absolutely required to do the processing on site and make anodes, cathodes, and battery components. One day, we may have a battery assembly plant, like Tesla, which has factories all over the world to assemble its batteries. Tesla doesn't make batteries, it assembles batteries to put in its cars.

We have to be in the supply chain, which is a very strategic sector, and we can't divest ourselves of our unprocessed natural resources for the next 100 years. That would be a real scandal. All electrification will happen in the next 100 years. Think solar panels, electric cars, electric trains and trucks. We have what it takes to be in that chain.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Masse.

You have the floor for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair, and thank you to our witnesses today.

I'm going to the Forest Products Association and Mr. Nighbor.

When I first got elected, I accompanied Pierre Pettigrew, the then minister of industry, to Washington, D.C., back in 2002, on a specific lobby effort for softwood lumber. We had the embassy involved and had hundreds of different Canadian organizations and companies to promote it. We brought in lobbyist support to get the Congress and Senate to show up, and we worked the room and did all those different things.

Sadly, fast forward to today, and we still have a lot of the systemic issues with regard to our trade with the United States. I'm also even more worried with buy America and buy American—there are two elements there—and, potentially, further consequences. Can you give us some thoughts about that situation? It has been a real hard nut to crack.

[Derek Nighbor]

Yes, and thanks for that question.

That's also why it wasn't included as part of the new CUSMA. It's just really tough.

The issue we have in the States has become worse with greater consolidation.

There's a big difference. In Canada, like I said, over 90% of our operations are on public lands under the purview of provincial governments. In the U.S., it's 80% plus for private landowners. You have a very different kind of power structure, with “power” being the operative word there. It's a very powerful lobby in the U.S.

The other interesting thing is that they need our lumber.

First of all, Canadian lumber is better than southern lumber. It has properties that are better for building. It's stronger. It's more durable. It's more wanted.

Number two, even though the U.S. mills have built.... We're down 24 mills in the last few years. The U.S. is up 17 mills, mainly in the southeastern U.S., because of the demand in the U.S. Even at that, the States can satisfy only about 75% of domestic demand, so they need our lumber, but the powerful land lobby in the U.S. continues to be the biggest barrier there. It creates a political problem for both Democrats and Republicans.

I would say just quickly in closing that in terms of this high lumber price environment we're selling more than we ever did in Canada because of the high demand here. As for the U.S., there was a report out of KMOX in St. Louis, Missouri, that U.S. imports from the EU are up by about 13%, so they're turning to Europe now to fill their shortfall.

It's a real problem that goes across political lines in the U.S. We appreciate the governments and all parties standing with us and the work that has been done on the legal pursuit to make sure the right outcome arrives in the end.

[Brian Masse, NDP, Windsor West, ON]

Further to that, the area I represent was logged in the 1700s and 1800s and now we have very little tree coverage, but that's a story for another day. We're trying to do better than what we did, but there's part of our heritage in that too.

There's something I wonder about. In the riding I represent, there's an automotive tool and die and mold-making industry which has reinvented itself. We've found that many of the patents and our value-added work was being shipped elsewhere and then sometimes even shipped back to us to be fixed.

I'm just wondering whether or not we're doing enough to look at our own domestic capacity. Instead of constantly fighting to try to penetrate to get it to the United States, can we do more domestically with an agenda to do more value-added production of our softwood lumber? You're right that it has properties that are much better than many of the U.S. products and it's also done in a better way, too.

Is there something more we can do here domestically? I just feel we're missing an opportunity.

[Derek Nighbor]

Yes. Let me start. We've retained 90% of our original forest cover in Canada. We have many sins for which atonement is due from before the 1970s and 1980s, and I think we've all heard those stories. The industry has come a long way and I'm really proud of the work being done on the ground.

I see value added as the place to go. When President Trump tried to stop that shipment of 3M masks at the border in early April last year, I remember getting a call from a couple of political offices in Ottawa. People were astonished. It was premium reinforced pulp from northern forests that was going into specialty paper that was being sent to the U.S. and then being sent back to us.

We have a scale problem in Canada for sure, but we are seeing opportunities to be better in that value-added part of the economy. That's part of the circular economy. It's turning waste into value and we have a huge opportunity in Canada to get value from every part of the tree that's harvested.

[Brian Masse, NDP, Windsor West, ON]

I'm a New Democrat. I've been talking with some of my Democratic friends in the U.S. and I'm a little bit worried about some of the next level, potentially, of protectionism with regard to their next wave of assistance to companies out there.

Is there any advice that you can give to us? I'm vice-chair of the Canada-United States Inter-Parliamentary Group and we work in a bipartisan way with the Senate even, in fact, when we lobby. We'll be doing some more. In fact, I'll be attending the Border Trade Alliance meetings a week from now, too.

Do you have any advice on how we can help support the industry better? I just see it as a missed opportunity for both our countries. At any rate, I'll let you finish.

[Derek Nighbor]

I agree, and they need us. I think that's a question that deserves more than a 30-second answer.

I'll take that away, Mr. Masse, and I'll talk to my team and get back to you. I appreciate the offer of support. We've appreciated your support and your former colleague, Tracey Ramsey, was really great on this stuff as well, so thank you.

[Brian Masse, NDP, Windsor West, ON]

Thank you very much. Please do so. We work in a bipartisan way and we keep pounding away on it, but the more we can do....

I see the flag, so thank you, Madam Chair.