Industry Committee on Jan. 27th, 2022

[Simon Kennedy]

Mr. Chair, I would say that there's a fairly systematic and rigorous process to engage the town, as folks in Ottawa would know, but obviously, depending on the transaction, there will be some ministries that will be potentially a lot more implicated. There's a table of assistant deputy ministers who meet regularly to discuss reviews, and we obviously engage with and rely very heavily on our security and intelligence community as well, so the answer to Mr. Masse's question would be, in general, “yes”. We don't just say “Okay, we're going to talk to only this department for this transaction.” There is a broader table at which these issues are ventilated.

[Brian Masse, NDP, Windsor West, ON]

Would that process be impacted by current events? Is that part of the process? I appreciate your answer to the previous question, but would current events be part of that assessment? I suppose they would, but I don't want to just assume that.

[Simon Kennedy]

I would say that current events are absolutely very much part and parcel of our work, and I can give you a very concrete example. Maybe it's obvious, but when the pandemic hit, it became immediately apparent that there was growing interest, and not always positive interest, in medical supplies, vaccines and those sorts of things. That was one of the reasons the government promulgated new guidance. There were actually changes to the law in relation to temporary COVID measures to give us additional time to review transactions, because we were actually concerned—

[Brian Masse, NDP, Windsor West, ON]

I'm sorry, but I have only two minutes. I have a really quick question of importance that I want to get to you.

EV production hasn't started in Canada. Other countries are way ahead of us. How do we get ahead? What do we do to stop this poor trend?

[Simon Kennedy]

For what it's worth, as the senior civil servant at the Department of Innovation, Science and Economic Development, I must say I'm feeling quite bullish about Canada's prospects. There's intense work going on now with the OEMs, with the parts sector, with all of the various players in the battery supply chain, as I described earlier. Obviously the proof will be in the results, but I think we have real cause for optimism. There are advanced discussions going on in a whole variety of areas, and I'm very hopeful that we'll see some results.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Kennedy.

We'll move now to Mr. Fast for five minutes.

[Ed Fast, Conservative, Abbotsford, BC]

Hello, Mr. Kennedy. It's nice to see you again.

[Simon Kennedy]

It's nice to see you, sir.

[Ed Fast, Conservative, Abbotsford, BC]

Listen, I still want to get into the process of making a decision on national security.

The minister has asked us to take his word that in fact an enhanced security review was conducted, but in fact he didn't provide any details on it. Deputy, I'm not asking you to get into any of the details of this particular transaction, but more broadly speaking, when a state-owned enterprise is buying out a Canadian company and attracts the enhanced review, would you normally consult with the Minister of Public Safety?

[Simon Kennedy]

It is normal for us to consult with our security and intelligence partners in any national security review, whether that's the scrutiny we're providing prior to the formal triggering of this cabinet process or afterward. Those are key partners for us. CSIS, CSE, and the various players in the security and intelligence community are normally the partners we work with quite regularly.

[Ed Fast, Conservative, Abbotsford, BC]

What about the national security advisor to the Prime Minister?

[Simon Kennedy]

Certainly when we have reviews that go through the Governor in Council process, for example, that would be standard, because those are reviews that are going through a cabinet process. As part and parcel of that, the national security advisor would be engaged because the Prime Minister is the chair of the cabinet.

[Ed Fast, Conservative, Abbotsford, BC]

Would you consult with our allies, specifically the United States?

[Simon Kennedy]

Certainly consultation and discussion with allies is not at all unusual. I think the answer in general is that yes, that could certainly be part and parcel of discussions we have.

[Ed Fast, Conservative, Abbotsford, BC]

Did all of those consultations take place in this particular transaction?

[Simon Kennedy]

It's very difficult for me to enumerate specific details of exactly who we talked to and when.

I certainly appreciate the member's question. The ICA, as members will know, has extraordinarily strict provisions regarding what I can and can't disclose about specific transactions. What I can say is that this transaction underwent a very thorough review involving our colleagues in the security agencies and certainly involving experts in the domain, and the result is the one that we're all obviously talking about here today.

[Ed Fast, Conservative, Abbotsford, BC]

Okay.

Did I hear you say that in fact this review did involve our allies?

[Simon Kennedy]

I'm sort of saying what I said before, which is that we work with our colleagues in Ottawa, but I'm not really in a position to publicly discuss discussions with foreign governments and whether they did or did not happen—

[Ed Fast, Conservative, Abbotsford, BC]

I mention that because—

[Simon Kennedy]

—but I can say, Mr. Fast, that it would not be unusual for that to be part of the discussions we would have when we're looking at very sensitive transactions.

[Ed Fast, Conservative, Abbotsford, BC]

I hope that's the case, because a tweet has already come out from an American congressman asking whether in fact the Biden administration was consulted on this transaction.

Let me talk very quickly about batteries. We talked about the capacity to build EVs and batteries in Canada. If we had a lithium battery plant ready to go in Canada today, would we have the lithium in Canada to be able to supply that factory?

[Simon Kennedy]

We don't currently have production of lithium in Canada. We certainly have significant deposits. As I noted earlier, in the discussions we are having with proponents in the battery supply chain, there are certainly active discussions going on at all parts of the chain, including mining and processing.

My colleagues at NRCan could maybe offer more detail, if necessary.

[Ed Fast, Conservative, Abbotsford, BC]

Why would we allow a Canadian company to be disposed of to a Chinese state-owned company that is actually producing lithium that is of battery grade? I'm going to challenge the minister on that.

There's lots of evidence at this table and elsewhere that in fact this mine is producing, or will produce, battery-grade lithium, and yet here we have the government approving the sale of a Canadian company that has access to battery-grade lithium to a Chinese state-owned enterprise. Can you explain that?

[Simon Kennedy]

I would maybe reiterate that the advice and the decisions that are made through this process look at the facts on the ground in individual specific cases. The question that would be asked here would be, is this particular deposit in this particular part of the world, given all of the circumstances, relevant and of value? Is it something that would ever be exploited by the North American supply chain? The conclusion, the answer to that question, was no. This was not of strategic value to the North American supply chain.

Many experts can comment on this, but as has already been noted, there are different kinds of lithium deposits. They require different sorts of processing. There are transport costs. There's the distance to the market. There's the issue of....

Oh, I see I got the red card, Mr. Chair. Thank you.

[The Chair, Liberal, Joël Lightbound]

Yes. Thank you, Mr. Kennedy. The time is up.

I'll move now to Madame Lapointe for five minutes.