Industry Committee on Jan. 27th, 2022

[The Chair, Liberal, Joël Lightbound]

Noted. We'll look into it with the help of the IT service so that it doesn't happen again. I'm trying to find out from the clerk whether we have any—

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

He's speaking with the technicians right now. Perhaps I should continue asking questions.

[The Chair, Liberal, Joël Lightbound]

Yes.

Mr. Kennedy, could you try to speak more slowly?

[Simon Kennedy]

Yes.

[The Chair, Liberal, Joël Lightbound]

Mr. Généreux, you have the floor.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Kennedy, could you repeat the last part of your response?

[Simon Kennedy]

As I explained, we want to be more transparent. We've tried to make our annual report increasingly transparent. However, we wonder whether it's a good idea to be too transparent about the specifics of each report, because that might give a [Technical difficulty—Editor].

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Chair, the sound cut out at exactly the same time as earlier. It's as if they didn't want us to hear the answer.

[The Chair, Liberal, Joël Lightbound]

I'm sorry, but on our end, in the virtual format, we can hear everything.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Here, we aren't hearing everything, unfortunately. I don't think that I'm the only one. Am I dreaming?

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

It's not only you.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Kennedy.

Mr. Chair, I lost some time because of the technical issues. I'd like to ask Ms. Henderson a quick question.

Ms. Henderson, you said that China is both an ally in several areas and a very fierce competitor that sometimes wants to steal some of our technologies or spy on our activities.

Lithium is an important commodity. Do you see the Neo Lithium transaction as a disadvantage or a risk for Canada?

[Cherie Henderson]

I'm not going to be able to answer specifically in regard to lithium, but I would like to say that we have watched, over the past few years, a definite increase in what I would term economic espionage across our country. Canada is extremely advanced in much of its research and development, and we have excellent intellectual property. We have seen a definite interest by foreign states in that kind of information.

What we have attempted to do over the past couple of years really started with the advent of COVID. As I believe one of my colleagues mentioned earlier, we did see a huge interest in attempting to get access to our research and intellectual property—

I'm sorry; I'm out of time.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Is it from the Chinese government mostly, or...?

[The Chair, Liberal, Joël Lightbound]

Mr. Généreux, your time is up. I gave you a little more time because there were some technical issues.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Généreux and Ms. Henderson.

We'll now continue with the final round of questions.

Mr. Erskine‑Smith, you have the floor.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

Ms. Henderson, just so I have it right, I think Mr. Kennedy said it was obvious that there were no national security concerns over this particular transaction in the way that it went ahead. To clarify, you're a national security expert. In relation to this transaction, is it fair to say there were no national security concerns?

[Cherie Henderson]

As I'm sure you can appreciate, I'm not able to speak on a specific transaction. What I can say is that we did do our work. We provide our advice to government, and then, as mentioned earlier by my colleagues, it is actually a community decision. While we provide our advice, there are other departments that provide their advice. Then there is a decision made as to what is actually in the best interests of our national security.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Let's speak at a general level, then. Mr. Rochon was saying this would apply to you. If you and your agencies and your expertise were to provide advice to the government, would it be typical, if your advice is that there are national security concerns here and this deserves a full review, that the government would engage in a full review? Is that fair to say?

[Cherie Henderson]

Our advice is taken in with the advice of all the other departments. At that point, they determine whether or not there is a need to go forward for a full review.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Okay. I appreciate that.

Mr. Kennedy, the reason I asked those more specific questions is that you said, or I think you said, that it was obvious that there were no national security concerns at play here. It seems obvious, though, that there were strategic considerations at play here. We have a strategic mineral, a critical mineral; we have a company in which a major shareholder, to say the least, is state-controlled; and we don't yet have our critical minerals strategy in place.

The question I have refers to the question I put to the minister about a case-by-case look versus a broader strategic look. Would it have made any sense to pause this transaction until the fuller strategy was in place?

[Simon Kennedy]

Maybe I can give a quick answer to this but widen the lens a little bit.

The threshold for going to a full national security review is that something “could” pose a danger—not “would”, but “could”. I want to assure the committee that if we get a clear recommendation from the security and intelligence community that they see a problem, that's going to weigh really heavily on whether a “could” threshold is met. We do not disregard the advice, certainly, coming from the national security folks.

When we do reviews, just to come back to this, the number one thing is whether or not this transaction could pose a risk to Canada's national security. What is the Canadian interest? In terms of the honourable member's question, in this circumstance, a key issue is this: Is this asset likely to ever be of use or exploited by the North American supply chain, by our allies, by the Canadian industry? If the answer is yes, that would obviously merit a lot more depth of review and discussion. If the answer is no, then that would tend to indicate that it's not going to meet the threshold of concern.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

We can read between the lines as to whether it would, based on the outcome here.

To that point, Mr. Labonté, I'm no expert, but when I look at the domestic critical minerals supply of lithium and the potential [Technical difficulty—Editor] growing global demand, it's fair to say.... You mentioned, I think, that the Quebec mine is going to make up a significant percentage, but it's still 10%, I think you said, of the North American market. Is it not also fair to say that we're going to need to access global supply, that the North American supply is going to be insufficient for North American demand for lithium in particular?

[Jeff Labonté]

I think it's a question about what the market looks like and what will happen over time. Lithium is a critical mineral, but as was pointed out, not all critical minerals are alike. Canada does have domestic critical mineral resources for lithium, and so does the U.S. In fact, Australia is the largest country in the world, with Chile, in terms of lithium resources.

In terms of lithium's accessibility and where it's found on the global market as a resource, it is fairly broadly available in countries that are more similar, if I could put it that way, to how Canada would expect countries to operate, some of whom—