Industry Committee on March 22nd, 2022

[Benoît Plante]

Thank you for your question, Mr. Deltell. I appreciate your giving me the opportunity to provide a real-life example.

Quebec introduced the Joint Research Program on Sustainable Development of the Mining Sector. It created dedicated funding for CSMs. The program has a leverage of 1:10, which is excellent. In other words, a company needs to contribute just 10%, and it can be in‑kind, which makes things a whole lot easier.

There isn't anything similar at the federal level. The Natural Sciences and Engineering Research Council of Canada has done a lot to improve partnership grant programs. For instance, it offers a 2:1 leverage through the alliance grant for small and medium-sized businesses.

The 1:10 leverage becomes a lot more attractive to companies with limited resources, like critical and strategic metal developers.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

I realize the leveraging effect is 1:10, but doesn't that require an enormous investment?

[Benoît Plante]

The leverage definitely requires a major contribution from the government.

That said, the Quebec government's total funding envelope isn't through the roof. We are talking about projects that receive a maximum of $300,000 in financial assistance over three years. Four or five projects a year receive that level of funding, so clearly, a lot more applications come in than the program can accommodate.

I think the federal government can play a role in increasing the available funding by establishing a similar leverage.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Plante.

Go ahead, Ms. Lapointe. You have six minutes.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

Hello. It's a great day when there are two companies that have a significant impact on Sudbury here today that I get to talk to, so it feels like home week on the Hill. Thank you to Glencore and Vale for agreeing to be here today.

My first question is to Vale. In March of last year, Vale testified at the natural resources committee during their study on critical minerals and associated value chains. What I'd like to do now is hear more from you about how Canada can position itself as a key supplier of critical minerals globally but also how can we ensure supply domestically.

[Juan Merlini]

Vale continues progressing on its EV strategy. We continue developing the relationship with the key customers and bringing to the attention of the Canadian market what we can offer. We can offer definitely not only our current nickel production, which has one of the lowest carbon footprints in the nickel industry with the highest standards in terms of ESG, but we also can offer a potential growth. We have been promoting all our potential in how we can enhance our strategy in fostering the battery material supply chain in Canada.

It is a significant effort. We have been into this process for almost two years. We are starting to see some of the results of the discussions become more effective, more direct. We are getting more alignment. But still it's a big challenge. I think we still have a lot of investments in order to bring more nickel and also to shape the profile of our nickel production in order to fulfill the requirements that are very specific for the battery materials.

We continue working hard. We have a strategy where we want to position a significant share of our nickel production into the EV supply chain, but more than that to enable the right support with the right alignment, the growth. We are also looking to other opportunities. We are studying recycling, so recycling the black mass, the material that comes from EV batteries. We are looking for ways to adjust our material. We keep progressing and I think there is a lot of opportunity for Canada finding the right alignment, finding the right opportunity. I think it's a unique opportunity that Canada can pursue.

[Viviane LaPointe, Liberal, Sudbury, ON]

Mr. Merlini, I have a question on your point on supply chains. Over the course of this study, this committee has repeatedly heard the need to develop our localized supply chain. Can you tell us what do you need from legislators to expedite a process that is evidently behind?

[Juan Merlini]

There's expediting the licensing, the coordination between all the levels of government, the federal, provincial and the local; supporting the right incentives for exploration in order to pursue some of the technological investments required to fulfill the demand for the battery material supply chain; and creating the right conditions for that supply chain to move here in Canada. We are upstream; we are in the mines and processing our nickel concentrates to a form that still requires significant investment in order to fulfill the battery materials.

I think on our side, we are very engaged with the government and very clear in terms of the requirements in terms of support and in creating the environment to attract all this investment. Canada has a long tradition of mining and it's a very stable jurisdiction. But we need to catch up now. The size of the challenge, the investments that are required, the amount, the volume, the stability that is required to fulfill the EV industry is unprecedented, and that's the support we need from all levels.

[Viviane LaPointe, Liberal, Sudbury, ON]

What is needed from a policy perspective to go from raw material mined, for example, in Sudbury, to a product that's ready to use in Canada's auto sector for EV batteries?

[A. J. Nichols]

The good news, Madam MP, is that we already have a lot of the processing in place in Canada. In Sudbury, as an example, we have a fully integrated operation where you have exploration, mining, processing, milling and final products being produced in Canada.

As Mr. Merlini alluded to, what is interesting is that now you have industry that's looking at how we can get into battery-grade materials, where we're shifting an existing production that could be used for interesting applications into the EV battery material market.

With provinces such as Ontario and Quebec, as we heard from the testimony of Minister Rickford and Ms. Méthot representing the Quebec Mining Association, there is a lot of excitement going around regarding the midstream, as well as OEM announcements on the downstream.

If you look at it in terms of a giant set of ingredients for baking a cake, Canada is attracting that because of its stable jurisdictions, its financial markets, its access to capital and its predictability in its regulatory and legislative regimes provincially, as well as federally. This already offers a lot of comfort and incentive for major tier one investors—both domestic and international—to look at Canada as a very attractive jurisdiction.

What has been reiterated by our fellow panellists is that we have to dot the i's and cross the t's to make sure that we have a coordinated approach to get that supply chain anchored and working in a very coordinated way throughout government, as well as industry, academics and associations. That way, we can sit around the same table and figure out what the problems are that we need to solve communally, as well as the opportunities that we can seize together. Having that whole-of-government approach at federal, provincial and local levels will even accelerate the attractiveness of a jurisdiction like Canada.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Nichols.

We'll now move to Mr. Lemire for six minutes.

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

Thank you, Mr. Chair.

I want to thank the witnesses for their wonderful presentations.

Obviously, I'm going to start with Mr. Plante, from the Université du Québec en Abitibi-Témiscamingue, or UQAT.

In his mandate letter, Minister François-Philippe Champagne is tasked with ensuring “that Canada is a world leader in clean technology, with a focus on critical minerals and the development of a sustainable battery innovation and industrial ecosystem”.

How does the partnership-based work you and the university are doing help to achieve that goal?

[Benoît Plante]

Thank you for your question, Mr. Lemire.

Our work will focus on the exploration and responsible development of resources, which means managing waste to minimize environmental impacts. That involves reducing the environmental footprint as well as the consequences of ecosystem contamination, the physical stability of works and so forth.

We work with graphite, lithium and rare earth mine developers. In most cases, our work is partnership-based. The work is carried out not by professors at the university, but by students, whom we refer to as highly skilled personnel. It's really a golden opportunity. Working on these challenges and training the leaders of the future, who will see to the responsible development of critical and strategic metals, means that their work is published in forums available industry-wide, ecosystem-wide, including developers, consultants and, of course, governments.

Any breakthroughs they achieve are available to the entire community of stakeholders. Those breakthroughs benefit not only the developers we work with, but also all members of the ecosystem. The problems, challenges and opportunities before them are similar, even if the mines aren't identical, geologically, physically or socio-economically speaking. That is an example of how we are helping to bring about advancements in the sector, so that Canada and Quebec can become world leaders.

Quebec and Canada have tremendous expertise, largely gained in the base and precious metal sector, and we can already apply that expertise to many common challenges in the critical and strategic metal sector. Nevertheless, a good many sector-specific challenges exist, including water treatment and contaminants. A lot of research and development work needs to happen, and the critical and strategic metal industry, as a whole, will benefit.

Minimizing the environmental impacts of processing, as responsibly as possible, poses numerous challenges. My area of focus is geochemistry, but the professors I referred to earlier will work on improving the stages of processing so that it can be undertaken responsibly, in a way that mitigates the negative impacts as much as possible.

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

That's quite the model. The focus is on building synergies with companies, investing in innovation and developing skills.

In its last budget, the Government of Canada allocated $9.6 million over three years to establish a critical battery minerals centre of excellence. Abitibi‑Témiscamingue would be an ideal place for the centre. You and your team could be one of the centre's leading partners.

What do you think?

[Benoît Plante]

Of course, if I were speaking for my own bailiwick, I would say that UQAT and the Cégep de l'Abitibi‑Témiscamingue provide a very significant pool of expertise that could contribute to R and D in the field. That doesn't include the many potential mining partners in the area who may want to participate in research. The conditions in Abitibi‑Témiscamingue are perfectly suited to a centre of this nature.

We have teachers at every level, from college right up to postgraduate studies. We are home to a high concentration of mining workers and mining companies with the capacity to invest. We have a site where new technologies could be tested. All that to say the area would make an ideal location for that type of centre.

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

Thank you, Mr. Plante.

I have a quick question for Ms. Méthot.

Ms. Méthot, how would you describe the condition of the secondary and tertiary processing sectors in Quebec? We could even talk about quaternary processing.

Where are projects being carried out involving chemistry, cathodes, anodes, cell production and reclamation? Can you quickly walk us through how the situation is shaping up for the future?

[Josée Méthot]

In my opening statement, I mentioned a few of the projects we anticipate in the future. For example, I talked about Nouveau Monde Graphite and its project to produce value-added graphite anode material. Sayona and Nemaska Lithium are working on projects to transform spodumene into lithium carbonate and lithium hydroxide. Sayona is waiting to find out whether its application will be approved, and Nemaska's project has received approval. The issue of financing has yet to be settled, however.

Lithium and graphite processing have their place in the new sectors. I have no doubt that, at some point, the possibilities of rare earths will be explored. As I understand it, more R and D is required on that front than in the case of lithium and graphite. The goal is definitely processing. Everyone wants to undertake processing in Quebec. Processing is being talked about all over Canada. More processing is on everyone's mind.

We need to plan for all markets. Some are already well established. You're talking to representatives of Vale Canada and Glencore Canada. The nickel sector is doing well, and the same is true of copper and cobalt in Ontario. We have always advocated the opportunities that new sectors present, so the processing of critical and strategic metals is a promising area for Quebec and the rest of Canada.

I said this already, but I can't stress it enough: the government needs to move quickly on approving projects so they can advance. The race is on.

[The Chair, Liberal, Joël Lightbound]

Thank you, Ms. Méthot.

Mr. Blaikie, you may go ahead. You have six minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Ms. Hall, I want to come back to you, first of all to congratulate you on your achievements, but also to follow up on a comment you made in your opening statement about the reticence of Canadian investors. I just wonder if you might have a little bit more to say about why you think that Canadian investors have been slow to get on what we're hearing is a train with a very promising future that's leaving the station. Do you think that's because international investors are just more bullish? Do you think Canadian investors are used to often being able to invest in contexts where government de-risks their investments?

What do you think are some of the reasons that Canadian investors aren't trying to get more aggressively into this developing Canadian market? What are some things you think might respond to whatever concerns are out there that are impeding Canadian investment in our own resources?

[Amanda Hall]

I believe international investors have a broader perspective of what the opportunity is, and they have more confidence in the solutions that we're offering from a sustainability perspective and from an advanced materials perspective.

I don't think Canadians are uneducated in this space at all, but the risk tolerance is a little bit lower. They tend to sit back and follow rather than lead in most cases. Even the BDC, the Business Development Bank of Canada, sat out on my last financing round just to wait and see what would happen. Then, of course, the international investors swooped in. They want us to leave Canada and set up shop somewhere else, but I've been fighting to stay in Canada and continue our progress here.

It's a shame that we don't have more Canadian investor support, but I think it's just a little bit of a risk tolerance issue.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much for prioritizing Canada.

We've talked a lot already, just in this panel alone, about the importance and the significance of having a federal strategy in Canada for critical resource development. To what extent do you think that might help? Certainly the Business Development Bank of Canada has a pretty obvious role to play in a federal strategy.

When we talk about electrification and the professed climate goals of the current government, clearly there's room to try to advance that strategy.

I guess I'm just curious to know what elements you think could be incorporated into a Canadian critical minerals strategy that might spur more Canadian investment in the industry.

[Amanda Hall]

I think what investors are looking for in new start-up companies or companies that are in the resource extraction space for sustainable battery metal development is customer traction. You just don't get that in Canada the way you do internationally.

My customers are in South America because they're willing to pay for this technology. They're willing to pay for the scale-up and the development of the technology. Canada just doesn't seem to have that appetite. When our customers are all international, then our investors become international as well.

I'm finding that even EV manufacturers from outside of Canada are looking to secure the upstream supply chain by investing in the resource itself and in the extraction technologies themselves. It's in their best interest to secure that and be able to have some control over where the product is going.

BHP out of Australia and Temasek out of Singapore want to know where the lithium is coming from and where it's going in the world. It's in their best interest to invest early and invest upstream as much as possible to make sure they have some say in where the product ends up.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

To what extent would you say those international customers that are helping to drive investment from outside Canada in our talent and in our resources are supported by their national governments, which have strategies?

Is this just something they're doing on their own, kind of spontaneously, or would you say they have a little more courage and a little more confidence because they're operating within a national strategic context where they're from, which Canada figures into?

[Amanda Hall]

One advantage that Canada has is that these international producers of battery metals have been in production for decades. I'm speaking mostly of lithium because that's my specialty.

They have 20- or 30-year offtake agreements with battery manufacturers out of Asia. They need to satisfy those offtake agreements by making sure that their supply chain is optimized and never has any downtime, of course.

The governments in Chile and Argentina are supporting lithium development and production. The Chilean government asked me to join their clean tech board for helping get lithium out of the country in a more sustainable way because they know that Canadians have a reputation for doing things the right way. We can fly that sustainability flag up our pole and people do look to us as an example of the right way to do things.

In Australia, Chile and Argentina, they know they need to improve on those archaic methods of extraction in order to comply with social demand and ESG regulations from government. They're looking for new technologies like ours to help them achieve those goals.

Canada is behind the eight ball because we haven't started producing yet. That urgency and that sense of needing to do that as fast as we can isn't as strong here. We're a little bit slower in the adoption of new technologies. However, the good thing about Canada is that we can develop processes from the ground up using new, sustainable processes, and advanced materials and technologies that are coming out of Dr. Plante's labs.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

If Canada wants to be a big player in EV manufacturing, what does it mean for manufacturers that might operate in Canada if in other countries they're already kind of securing Canadian resources and technology for their supply chains? How does Canada then come late to the game to position itself as a serious EV manufacturer?