Industry Committee on April 17th, 2024

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Thank you, Mr. Pécresse. Thank you for being with us.

First, I have to tell you that for our part, we find the questions the Bloc Québécois is asking and the position it is taking to be somewhat bizarre. With me is my colleague from Chicoutimi—Le Fjord, Richard Martel, who is a proud Saguenayan and is also very proud to have Rio Tinto in his region. The purpose of the questions asked today should be to understand the progress being made on the ELYSIS project, which is extraordinary. To someday succeed in producing carbon neutral aluminum would be a world first. We are very proud of this project. We know that it may be complicated in terms of research and development, as you explained earlier.

With that said, I am going to come back to the main subject of the motion. I would like to understand your business model and the federal government's contribution a little better.

For example, you said that certain figures in the Bloc Québécois motion were not accurate. So can you explain your business model and the federal government's contribution more precisely?

[Jérôme Pécresse]

Based on the business model, we have received subsidies of approximately the same value from the federal government and the Quebec government. As I said, those subsidies initially represented approximately 70% of the investments. Since then, the joint venture partners have financed the subsequent stages of development themselves. Now, if we consider everything that has been invested in ELYSIS since the outset, we can say that 70% of the funds comes from the joint venture partners and 30% comes from the subsidies granted by the Quebec government and the federal government.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

The objective was to begin production in 2024, but we understand that in terms of research and development, it takes longer. As you said, you are able to produce small quantities using the ELYSIS technology, but producing it at industrial scale is another matter altogether.

Your ultimate objective is to achieve this, but it is difficult to assess. Is that it?

[Jérôme Pécresse]

Yes, and we are focusing on the next steps. As you said, we are able to produce small quantities. Without going into very sensitive details, I would say that what we are now going to try to do is to produce quantities that will still not be industrial scale, but will be more substantial and be in a way that can be replicated. That is what is in front of us.

What I would really like the committee to understand is that industrializing technologies like this cannot be rushed. In my own life, I have worked on offshore wind projects where we went from three megawatt turbines to 15 megawatt turbines in four years. I am saying that the best way to kill technology like this is to go too fast and speed through steps. At some point, you realize that you are industrializing the technology without understanding everything and you find yourself with $500 million invested that has served no purpose and you have to tear it up. That is what we are trying to avoid.

So we are not going to go from small quantities to 100,000 tonnes overnight. We are going to try to produce more sizable quantities in a way that can be repeated and completely mastered. That is the objective for 2024. It means creating projects that will enable us to do that. When we have succeeded, in 2025, we will sit down and look at the next step. That is the approach we are taking.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I imagine that the company has assessed the impacts that the ELYSIS technology will have for Canada and Quebec after it is commercialized. Have you assessed what those impacts will be, whether in terms of jobs, investments, or other benefits for the country?

[Jérôme Pécresse]

We have 4,300 or 4,400 employees in Saguenay—Lac-Saint-Jean today who are working on the best technology, AP60, and on the others. We are trying to recreate a competitive advantage for the benefit of those people so that in 50 years our successors will say that this is what ultimately preserved those jobs. That brings me back to what Mr. Simard said. Will it be exactly the same jobs and the same number of jobs? I don't know. However, I am convinced that if we are not the first to get on the aluminum decarbonizing train, those jobs will be in danger one day. The Americans will be telling us that our aluminum is very nice, but they want a product with a very small carbon footprint, and otherwise they will buy it elsewhere.

So we are already trying to preserve the leading role played by the Quebec basin in the production of aluminum for North America. That is what ELYSIS is. I cannot tell you today whether they will be the same jobs and whether there will be more jobs or fewer jobs. In any event, this leading role creates jobs in our company and in all our suppliers and subcontractors, and puts Quebec in a position of influence in North American industry. That is what we want to do.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

In any event, as is the case for any technological change, the jobs will adapt, so that people are working more electronically and less mechanically.

[Jérôme Pécresse]

They will not necessarily be the same jobs. Yes, Mr. Simard was right to mention that the anodes will not be changed as often. So there will be things that will need to be repositioned in terms of skills, too. On the other hand, we will try to use suppliers in Saguenay—Lac-Saint-Jean to supply us with the new equipment and new materials we are going to need.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I have to say that I visited your facilities in January and attended the presentation where Rio Tinto emissions were compared with emissions in China. Canada is already the best in the world on that point. With the new technology that is going to be developed, we will be the model for others to follow.

[Jérôme Pécresse]

In fact, Mr. Martel asked a question about this. The Americans are going to try to catch up to us, so we have to stay one step ahead.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

We have to be competitive and continue moving forward, yes.

Thank you.

[Jérôme Pécresse]

I would like to take a few seconds to point something out regarding our integration into the Lac-Saint-Jean community. You say we are a source of pride in that community, but the community is also a source of pride for us. I have been in this position for six months, and when I go to Saguenay, I am struck by the level of symbiosis. I am not saying that everything is perfect, but the level of symbiosis between us and the Saguenay—Lac-Saint-Jean community in the broad sense is something I have rarely seen in my experience in industry.

[The Chair, Liberal, Joël Lightbound]

Thank you.

Mr. Gaheer, you have the floor.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you, Mr. Chair.

Thank you, Mr. Pécresse, for appearing before the committee.

Mr. Pécresse, my initial question is one that's been asked, but I want to give you a chance to be very clear about this. There was $60 million invested in 2018, and there was $20 million invested in 2021. What has the money gone towards exactly? You mentioned 100 scientists who were hired and are still employed. What else has the money gone towards?

[Jérôme Pécresse]

It has gone towards building equipment like the first electrolysis pot, where you put the aluminum ore; building the anodes and the cathodes that allow you to produce aluminum out of this aluminum ore; building around that, the logistics equipment that allows you to move anodes into the pot and take them out; starting to build the second facility, where we'll do the same thing on a scale that is three times bigger, which is a different location; hiring 100 R and D people and funding R and D work in the central labs of Rio Tinto and its partner; and building laboratory equipment that allows us to do a number of tests that are necessary to validate what we are doing.

It's for pilot equipment for scale one and scale two, laboratory equipment, R and D people in Quebec, and R and D work in the central labs.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

It's new technology, so it's obviously a very unprecedented path that you're following.

Has the technology been demonstrated at scale?

[Jérôme Pécresse]

I don't think we have communicated the number of tonnes, but we have produced this. We and our partners have sold some tonnes of this to real industrial users for industrial use so that they could qualify it in their process. We have not produced anything close to the amount of aluminum that we produce today with traditional technology. We have produced meaningful amounts that are not immaterial.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Can the technology itself be scaled up?

[Jérôme Pécresse]

The technology works. It works out of the lab. It works on something that is one-third the size of real equipment. We now have to make it work on something that is the size of the real equipment in a repeatable manner. We did manage to do that, but sometimes we failed. Then we tried again. The question is this: Can we scale it up and repeat it? When we are past that stage, which is what we are working on, then, at some stage, you build a plant. Then it becomes massive. Then your supply chain needs to follow because it needs somebody who can produce not 10 or 20 anodes but hundreds of anodes. You need to ramp up the global supply chain behind you.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

This might be putting the cart before the horse, but can you retrofit old plants with this technology, or do you have to first demonstrate that it can work at scale and then you'll be able to see if you can retrofit old plants?

[Jérôme Pécresse]

We don't know yet. It's far from certain—very far.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

What I've read about this technology is that it will be a paradigm shift in the entire industry. If it's that big of a change, I would assume that there are other folks who are trying to replicate this technology or have some version of this technology worldwide. Do you feel that's happening?

[Jérôme Pécresse]

We know there are some attempts to do it in Russia and China, particularly in Russia. We are not aware of similar programs anywhere else. It is a joint venture between us and other major North American producers. We went together because we have complementary investigation fields on the topic.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Mr. Chair, do I have more time?

[The Chair, Liberal, Joël Lightbound]

You still have one minute, Mr. Gaheer.