Industry Committee on April 17th, 2024

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Mr. Pécresse, you are no doubt aware of the fact that in 2007, conditions were placed on Rio Tinto's acquisition of Alcan. Everyone also knew about these conditions. One such condition was that $3 billion was to be invested in Quebec and British Columbia, $2.1 billion of which was for an aluminum smelter here in Saguenay—Lac-Saint-Jean, which amounted to 240 cells for the production of 450,000 tonnes. Another requirement was maintaining the same level of activity at the Montreal headquarters, to maintain the same level of activity for regional development, and to maintain the research and development activities.

As far as I can see, 34 cells have been installed and there are plans to increase this number to 96. That's nowhere near 240 cells. It's also 10 years behind schedule. As for the strategic functions at headquarters, many might consider them to have been outsourced. And research and development has been considerably reduced. There used to be approximately 200 scientists working at Rio Tinto, and now there are barely 100.

I have one relatively straightforward question for you: Do you believe that Rio Tinto has met its 2007 commitments?

[Jérôme Pécresse]

Yes. I wasn't there at the time, but as you know, Mr. Simard, these commitments were renegotiated in 2018. That's something that can happen when there are black swan events. For example, there was the financial crisis and the COVID-19 pandemic. The commitments had to be altered at some point. In any event, the commitments were met. Rio Tinto has been investing in industrial tools. We invested $1.4 billion in AP60 technology. That was a huge amount, and other investments were made or are now in the works. So we have been meeting, and will continue to meet, our commitments.

As for headquarters, global activity in the aluminum sector is controlled from Montreal. I'm in Montreal, and except for the head of the Pacific area, who is quite rightly in Australia, and the director of strategy, who is in Montreal only half the time, my teams are in Montreal with me.

[Mario Simard, Bloc, Jonquière, QC]

Okay, thank you.

Mr. Chair, I see that we're not going to be able to ask all our questions today. So if you are in agreement, we could submit questions in writing. That might be easier.

[The Chair, Liberal, Joël Lightbound]

Yes, that's always an option.

[Mario Simard, Bloc, Jonquière, QC]

Excellent. Thank you. So we will be able to continue the discussion by sending questions in writing.

You are no doubt aware that there is a Saguenay—Lac-Saint-Jean optimization committee to ensure that regional benefits are as strong as possible. Rio Tinto does after all have significant energy advantages. I have a straightforward question for you. What role does Rio Tinto play on this optimization committee?

According to what I've been told, contracts were awarded to regional equipment suppliers for the first 34 cells that were built. That includes structures, superstructures and the cells themselves. However, for the 96 cells currently under construction, it would appear that no contracts were awarded to the regional suppliers.

I'd like to know why it was impossible to award contracts to the regional equipment suppliers for these 96 cells, when it had been possible to do so for the first 34 cells.

[Jérôme Pécresse]

You are talking about a specific part of the equipment. I want to be clear, Mr. Simard. Regarding the AP60 technology, I looked into the issue again recently and I can tell you that for a very large majority, we are working with suppliers from Saguenay—Lac-Saint-Jean and Quebec. When we have finished installing the AP60 pots, the portion of the $1.4 billion allocated to spending in Quebec will be considerably higher than 50%.

When we make investments like these, we also have economic and budgetary constraints. As well, Saguenay—Lac-Saint-Jean is not capable of providing all of the equipment we need.

Regarding the situation you spoke about, which represents only a small part of the project, we have in fact had economic concerns in terms of sticking to budgets. We must not forget that we have a duty to create value for shareholders. For some particular equipment, that may mean that we look outside Saguenay—Lac-Saint-Jean.

I would reiterate that at the end of the project, the percentage of the equipment that will be supplied in Saguenay—Lac-Saint-Jean will be very considerably over 50%.

Since I arrived, six months ago, a lot of Quebec suppliers have come to see me, first, to get to know me, but also, second, to tell me they are pleased to be working with us in Saguenay—Lac-Saint-Jean. They tell me they want to work more with us and preserve the excellent relationship we have. I would say that this is one of the positive surprises I have had. You can ask STAS, EPIQ Machinery, Groupe Alfred Boivin, Charl-Pol, or all the other companies we work with. I believe we are completely integrated into the local economic fabric.

[Mario Simard, Bloc, Jonquière, QC]

So you see no objection to participating on the maximization committee and collaborating within the framework of a regional dialogue.

[Jérôme Pécresse]

To be frank, this maximization committee is not entirely familiar to me. You will forgive me, but I have only been in this position for six months.

[Mario Simard, Bloc, Jonquière, QC]

Yes, I don't want to pick on you.

[Jérôme Pécresse]

There are a lot of organizations in Saguenay and I am not yet familiar with all of them. In any event, I want to reiterate our desire to integrate into the economic ecosystem of Saguenay—Lac-Saint-Jean and work with the local businesses. We are already doing that, in fact. I think that really is what is happening today.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

In 2018, the provincial and federal governments made an initial investment in ELYSIS in the amount of $60 million each. An additional $20 million was invested in 2021. Initially, it was announced that the technology would be commercialized in 2023 or 2024.

In 2022, in response to shareholders, Mr. Vella said that modernizing the facilities using the ELYSIS technology would be impossible before 2030.

The 2023 annual report also says that the technology will not be ready to be used before 2030.

Do you have a clear timetable at present for when the ELYSIS technology will be deployed?

[Jérôme Pécresse]

I don't know what you call a timetable, Mr. Simard.

I reiterate that with ELYSIS, for the first time in the world in the last 100 years, we are reinventing how aluminum is produced. This is not an easy process. If it were, someone would already have found a way to do it.

As for where the ELYSIS project will have got to in 2030 or 2031, I have no idea. If I gave you another answer, I would be lying. This is a technology that we are going to industrialize step by step. We will start building industrial-sized plants when we are satisfied that it can work at that scale. Other than telling you that I believe in this technology, the good news is that we have managed to produce aluminum at a sizable scale with no carbon emissions, thanks to the ELYSIS technology, so this is a project that has moved out of the laboratory.

Now, between leaving the laboratory and industrializing, we have to be able to replicate the process at the scale of the real pots. You have not said it, but, as you know, we have already announced that after producing aluminum with ELYSIS in 150 ampere pots, we were going to move on to 450 ampere pots. As for the timetable, what you asked me about, we said we would do it in 2024 in Saguenay—Lac-Saint-Jean, and we are working on it. We are also working on other stages of ELYSIS and, as I said, I hope to be able to announce them soon.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[Jérôme Pécresse]

To avoid any misunderstanding on the committee's part, I want to point out that there is actually aluminum being produced using the ELYSIS technology. I do not know whether you have any, but if not, I will be happy to give you some. I have an aluminum ingot here produced with no carbon emissions using ELYSIS.

[Mario Simard, Bloc, Jonquière, QC]

I will be happy to pick it up a bit later.

We know that the ELYSIS technology requires 15% more energy than the current technology, but is going to need a lot fewer operators.

[Jérôme Pécresse]

In fact, that is what we are assuming, but we do not know yet. We are not at a stage where we can know that.

[Mario Simard, Bloc, Jonquière, QC]

However, we do know that the inert anodes will have to be replaced much less frequently, compared to the current process.

[Jérôme Pécresse]

Exactly.

[Mario Simard, Bloc, Jonquière, QC]

So we know that, inevitably, fewer employees will be needed for this new process.

[Jérôme Pécresse]

When you say “inevitably”, you are being categorical. We are not that categorical. Let's say we can assume it.

[Mario Simard, Bloc, Jonquière, QC]

Right. So we can assume it.

To restore the balance of power, has Rio Tinto already arranged to have a discussion on this subject with representatives of the region, or is it open to the idea of having one, given all the energy invested in it?

[Jérôme Pécresse]

We do not yet have enough certainties to have a discussion on these subjects.

Deploying ELYSIS is not solely a matter of installing new electrolysis pots. We also have to build a supply chain for producing different pots and anodes and cathodes with different materials, using different processes.

So if there is a discussion to be had today with representatives of the region, I think it really has to be about what support they can give us for the project, and as things progress, how they can help us build a supply chain for ELYSIS that will enable us to supply our plants. I think that is the right discussion there has to be had in the coming years.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you.

The conversation was so interesting that I lost track of time. You went past your speaking time by two or three minutes.

Mr. Masse, you have the floor.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you for being here.

The first part of the motion that brought you here says:

Whereas, in May 2018 and June 2021, the Minister of Innovation, Science and Industry provided $80 million in funding to Rio Tinto and Alcoa for the development and deployment of ELYSIS technology in the industry’s existing aluminum smelters for the production of carbon-neutral aluminum;

Is that correct and accurate?