Industry Committee on May 8th, 2024

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Of course, this discussion is ongoing. You also know that there are two partners, Rio Tinto and Alcoa.

I think that what people are looking for is talent. I would venture to say that the talent that Canada has in aluminum was somewhat concentrated in Shawinigan back in the day. Now, it's certainly concentrated in Saguenay—Lac‑Saint‑Jean.

The people at Rio Tinto are very interested in what's next, and they know that the talent is right here in Saguenay—Lac‑Saint‑Jean, in Quebec.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thank you, Minister.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Martel.

To pursue the discussion, I'll now turn it over to MP Arya.

I'll just take a moment to wish him a warm welcome to the committee. It's his first official meeting as a member of INDU, so I welcome MP Arya.

The floor is yours.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

Minister, thanks for coming.

I would like to commend you on consolidating the different research and development programs we had and starting the strategic innovation fund, which is doing quite well.

When I was elected in 2015, I told the first innovation minister—the name was changed from industry—not to use the word “innovation” in any sentence that does not have the word “commercialization”.

I want you to tell the committee whether commercialization is a focus when we give more funds to IRAP, SIF and any other R and D programs.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I want to thank you, and, if I may, I'll add my words to the chairman's. Your involvement is a great addition to this committee. This is one of the very serious committees of the House.

You're quite right, and I think ELYSIS is a prime example of that. We went from something in the labs to something that we're trying to commercialize. This is exactly what we need to do in all technology. I agree with you.

Let me also say thank you to the officials I have. I just want to acknowledge Deputy Kennedy, who is with me. He has been helping me at every step of the way.

I think that the industrial policy of this country has taken a track like we've never seen before. Sometimes I go back to what C.D. Howe wrote in his time in the building that I sit in. We have really pushed the boundaries now of industrial policy to a new high.

I would say, if I come back to your question on ELYSIS, that Quebec has the largest smelter in the world, if you exclude China. The last one was in Iceland about 10 years ago. You have companies like Apple, if you can imagine, that would invest, and that is a testament to what we have achieved as a nation.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Minister.

Thanks for the investment of $2.4 billion in artificial intelligence and especially the $200 million for industries in health care, agriculture and manufacturing to adapt and use AI in their operations. That's a good thing.

I'll come to the electric vehicle industry. “From Mines to Mobility....” Things are going quite well with the critical mineral industry. The time taken to implement a mineral exploration project is very long. I'm glad to note that, for one project, an environmental impact assessment strategy is taking place.

I also note that we have a lot of battery plants coming up and a lot of electric vehicle plants coming up, but people are not hearing much about the mineral processing aspect of it. As you know, China is the leader. I think 70% to 90% of the critical mineral processing happens in China. It is a tough business. Sometimes people think that it pollutes much more, but that is the critical part of the entire chain.

In relation to mining critical minerals, in relation to having battery plants and in relation to having electrical vehicle industries, can you highlight where we are with this particular key component in the chain of mineral processing, and what the plans are?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Well, that's a very good question. That might also be a study for the committee in the future, when you've passed Bill C-27, because that is a very interesting part.

I'll give you an example. I was just in Washington recently, and in Nebraska over the weekend.

First, I'll tell you about cobalt—colleagues may know or not know. When I was in Washington, I asked my colleagues if they knew that there was only one refinery of cobalt in all of North America. Everyone was pretty surprised by that. I asked if they wanted me to tell them where it was. They said they guessed I was going to tell them even if they didn't ask. I said it was in Cobalt, Ontario. I asked them whether they knew how long it took to permit that. I said it took about a good part of a decade for that. I said to my American friends that it would probably be better if we worked together to scale, because what we need now is speed and scale. If they wanted to have theirs, it was going to take at least a decade. So, cobalt is a good example.

If I come back to the motion you had on Rio Tinto, you may have seen that now Canada is the largest producer of titanium in the world. We've displaced Russia, thanks to an investment by Rio Tinto, in fact, which invested close to $1 billion in Sorel, which is a small town in Quebec.

Now, what do you do with the titanium? Imagine, now you can produce titanium powder, and with that powder, you produce 3D printing of titanium parts. With that, you can basically repair jets on aircraft carriers. That's just giving you an example of where we're making headway. However, I would say we need to work together—and this committee has a role in that—because it's all about speed and scale, like you say, to make sure we have a resilient supply chain in North America.

[Chandra Arya, Liberal, Nepean, ON]

Thanks for mentioning titanium. Obviously, in addition to the applications you mentioned, it's greatly used in the aerospace industry, because of its light weight and other properties. Titanium is a very good addition to the Canadian industrial landscape.

The aluminum and steel industry always had a concern, but I've not gone in depth into this Rio Tinto investment. Hopefully, that's very good news.

I've had previous concerns. Several times I've spoken in the House of Commons of there being 100% foreign-owned companies in the aluminum and steel sectors. There was no capital addition. I know there has been modernizing. We have green steel; we've green aluminum, etc., but there has been no additional installed capacity during the last 20 years, although maybe now things are changing.

The steel and aluminum companies are not exporting beyond the North American market—that's my concern. We have the talent, as you rightly highlighted, and we have the natural resources; however, we have to go out to the world market.

On aluminum, if I'm not wrong, beyond the North American market, maybe they export some small portion to Europe, but I don't think they're exporting anywhere in the Indo-Pacific region. It's the same with the steel industry. If I can remember, the installed capacity of that industry has been around 17.5 million tonnes for the last 20 years. There is no growth in the installed capacity. I always say that economic security is national security. Is the 100% foreign ownership of these two critical sectors stalling our growth in the installed capacity?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Well, I would say the great thing is that our vision was to be the green supplier of choice to the world when it comes to steel, aluminum, batteries, semiconductors and beyond. There's the fact that Rio Tinto have their largest installed base, if I recall correctly, in Canada. I know they have a number of assets in Australia. However, the fact is that they have invested, and this is for more than a century. Like I said, I come from a riding that had the first plant in the world, I think, of aluminum, and it was there for a century. Clearly they're long-term investors, to say the least.

I would say to you that now ELYSIS is bringing us to the next century, because now what I hear from the original equipment manufacturer, the automakers, is that they want green aluminum. I will bet you—and I hope it's going to be on the record—that people will move from electric cars to green cars. You don't need to take it from me, but take it from the CEO of Mercedes-Benz. Mercedes-Benz has a vision that in 2035, if you buy one of their cars, they will give you a certificate of zero carbon.

Obviously, what we're doing with Quebec and aluminum, and what we're doing in Canada is that we're putting ourselves ahead of the game, because if you want to be integrated in these long supply chains, you will have to have decarbonized. Thanks to the vision we had and the investments that we've been making with the company, now we're ahead of the game—a bit like we were on the ice. For me, we are betting on the future, betting on our people, our capacity to innovate. I can tell you that I've been on the site in Saguenay-Lac-Saint-Jean many times. Those are some of the best in the world. A generation of people have worked in aluminum, just like my uncles. Most of my family worked at the plant at the time.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Minister.

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

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much.

Minister, I just want to correct some facts. You said that this was a new technology and that there hadn't been any for 100 years. In the field of aluminum, this is not exactly the case, since we went from Soderberg tank rooms to pre-baked tank rooms, and then to AP60 technology. So there have been many developments in this field. However, ELYSIS technology will enable us to significantly reduce the carbon footprint of the aluminum sector.

At home, Minister, aluminum is a constant topic of debate. I hold discussions with Quebec's Minister Laforest, which have been reported in the media.

In addition, we recently had a meeting with people from Rio Tinto in Saguenay—Lac‑Saint‑Jean. At the end of this meeting, the minister told us that there was to be an announcement in April on the ELYSIS project. We're there, and so is the Quebec government. The only thing missing is the federal government.

So I'm obliged to ask if the federal government is ready to make this investment. We know that ELYSIS technology will be installed at the Jonquière complex, in my riding.

Are you ready to make this announcement soon? Have you had any discussions with Mr. Pécresse on this subject?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Yes, absolutely, and I will invite you to be present at this announcement. You must understand, however, that I can't announce all the good news in one day, Mr. Simard.

We'll definitely be going to your area. My riding goes all the way to Lac-Bouchette. Your world is my world. We'll certainly be making that announcement. We're working hand in hand with the Quebec government and Ms. Laforest. You'll be with us for the announcement of this good news.

I'd say that ELYSIS technology is still a great revolution in the field. There have been others, but that's nothing compared to what this technology brings. In any case, what the CEOs of Rio Tinto and Alcoa tell me is that this is a major revolution.

[Mario Simard, Bloc, Jonquière, QC]

Yes, that's absolutely the case.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

The directors of these companies, like BMW's CEO, tell me that this is one of the biggest revolutions we've ever seen. These are people who know a thing or two about aluminum who are saying this.

[Mario Simard, Bloc, Jonquière, QC]

We should accept this.

I just want to clarify one point, because I like things that are crystal clear. So there will be a participation, which will be announced soon, of the federal government in the deployment of ELYSIS technology.

Is that right?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Yes, we're going to do more, but we're already there. I started this in 2018—

[Mario Simard, Bloc, Jonquière, QC]

I'm aware of the $60 million that was announced. I know all about it.

My time is very short, Minister, and you're very voluble. Can you just confirm that the government will soon be announcing its participation in the deployment of ELYSIS technology?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Yes, I can confirm that.

[Mario Simard, Bloc, Jonquière, QC]

All right.

I'm delighted.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I'm here to please you, Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

That's excellent.

I'm still wondering if the federal government is also looking at secondary or tertiary aluminum processing.

There's someone back home who makes aluminum pylons for cellular tower construction, and his aluminum comes mostly from Malaysia, which is a problem. The extruded aluminum he uses comes from that part of the world, because the Midwest premium makes it very difficult to do secondary or tertiary processing.

Has the department ever looked into this issue?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

The problem with producing aluminum using ELYSIS technology is production capacity. I was even told that we should stop selling it, because we weren't producing as much as we were selling.

[Mario Simard, Bloc, Jonquière, QC]

Excuse me, Minister, but I'm talking about aluminum in general, not just that produced using ELYSIS technology. We're still using pots from AP60 technology and pre-baked pots.

It's the Midwest premium that makes it difficult to market aluminum, in Quebec as in Canada.

Has the department given any thought to ways of facilitating this?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Yes, and I think one of the things we should all be pleased about, as Quebeckers, is the launch of major construction projects. I'm thinking in particular of Northvolt, which represents the biggest private investment in Quebec since the hydroelectric dams.

These major worksites, like GM's and Ford's, to name a few, will create demand, because we've brought Quebec into the automotive industry. That's the achievement we've made together, Mr. Simard. In my opinion, it's one of the greatest success stories in a century, because Quebec had no presence in the automotive industry. Quebec and Ontario are now part of it.

We will certainly work to move the Quebec aluminum sector forward.

[Mario Simard, Bloc, Jonquière, QC]

I understand, but when you look at the numbers, there's a lot less aluminum processing going on in Quebec and Canada right now than there was in the past. The Midwest premium is one of the main reasons for this.

I'd now like to take you elsewhere, Minister. People who work in the aluminum transformation sector here at home, particularly at the STAS plant, have been advocating an idea for over 15 or 20 years, namely the creation of an aluminum observatory.

They believe that this could greatly help the Saguenay—Lac‑Saint‑Jean region and the aluminum sector. It would allow us to have objective and neutral data, as is the case in the forestry sector. Today, I can tell you how much it costs to produce 100 cubic metres of wood and how it's made, but I can't do the same for aluminum, unless I consult the index used in the United States, which is the Commodity Research Bureau Index—also known as the CRU index.

Would you be in favour of setting up an aluminum observatory?