Industry Committee on Jan. 27th, 2022

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

Mr. Labonté, as you know, Canada released a list of critical minerals last March. The critical minerals list was created in collaboration with exploration, mining and manufacturing industries and through extensive consultation with the provinces and territories over a period of several months. The list certainly provides greater certainty and predictability to industry, trading partners and investors about what Canada has to offer.

For example, Canada is the only western nation that has an abundance of cobalt, graphite, lithium and nickel, metals that are essential in creating the batteries for electric vehicles of the future. Of course, minerals that can be produced in Canada are essential to domestic industry and security and have the potential to support secure and resilient supply chains to meet global demands.

Can you tell us more about the essential mining strategy that the government is currently developing?

[Jeff Labonté]

Thanks very much for the question. I appreciate the chance to talk about it.

You are correct that the Government of Canada published a list of the 31 different critical minerals that are the most important. As you pointed out, that list was compiled through fairly extensive consultation and analysis. The things that were being looked at for that list were really in relation to their importance to our economic security and the need for Canada to have these critical minerals for the transition of our economy to the economy of the future and a low-carbon economy. They were also things that would be important to potential partners and sustainability activities.

In looking at the list, we established minerals that Canada has as an endowment, minerals that exist in our landscape. Those minerals have the potential to be developed or are already being developed, depending on the nature of that particular material.

Doing so was a way of convening an understanding among the minerals community or the investment community and among the downstream or manufacturing community of where materials and minerals would come from. It was also to rally an understanding of where the direction would be going vis-à-vis the importance of these minerals for the economy, as well as working to grow an understanding of how minerals are developed. That is an important part, because the minerals themselves are one thing, but how they are developed, the partnerships that are involved and the regulatory standards are another. Protection of the environment to the highest standards possible and to the highest standard necessary is part of the way that Canada sees itself and part of the way that Canada presents itself globally.

Canadian mining companies operate in 100 countries around the world and have over $200 billion worth of assets that are part and parcel of their ecosystem. Similarly, there are over $300 billion worth of assets in Canada in our mineral resources. There are some 1,400 different companies operating, developing, prospecting and working through those resources.

[Viviane LaPointe, Liberal, Sudbury, ON]

Specifically with regard to lithium, what is your assessment of the current state of our domestic industry?

[Jeff Labonté]

That's a good question. Canada's fortunate in that there are 20 different lithium projects active in Canada, spread across Alberta, Saskatchewan, Manitoba, Ontario and Quebec.

Canada has two different types of lithium resources. We have lithium brine resources, which are similar to the resources that are found in brine water or liquid sources. The lithium is produced by ventilating, drying and evaporating those resources, and the lithium is what's left over. That lithium is most commonly the lithium that finds its way into the lithium carbonate processing services through the way that it's produced.

The second type of lithium comes from lithium hardrock, which is a hardrock ore body that contains lithium. It is mined, and then the ore body is processed to separate the lithium, which is more predominantly put into lithium hydroxide. It's possible to go either way. Brine can produce hydroxide and the hardrock may be able to produce lithium carbonate. However, the energy cost, the cost of transporting the ore body and the cost of processing that body make it more efficient to do otherwise.

We have 20 different projects active in Canada. The most active ones that are nearer to coming to market are in Quebec, where the mining community has already developed lithium resources. Other active projects are under way in Alberta on the lithium brine side, and in Saskatchewan.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you Mr. Labonté and Ms. Lapointe.

Mr. Kram now has the floor for five minutes.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you very much, Mr. Chair, and thank you to all of the witnesses for joining us this evening.

I would like to talk a bit about the way CSIS conducts its intelligence assessments.

I would like to give a bit of background regarding the net assessment practice. I'm referring to a practice that originated in the United States for the strategic analysis of threats. This practice originated some 40 years ago and is still practised today in the United States. It involves considering a threat from multiple perspectives, including ways in which it could enhance the strategic advantage of a competitor or adversary.

I was wondering if the witnesses from CSIS could expand a bit on whether CSIS conducts intelligence assessments in this way.

[Cherie Henderson, Assistant Director, Requirements, Canadian Security Intelligence Service]

Thank you very much for the question. I'm pleased to answer it.

At the service, as an investigative body, we go out looking for any intelligence that can support an assessment or basically answer the question as to whether there is a national security threat we could potentially be facing. We go out to numerous sources and we gather as much information as we possibly can, so that we can get the most comprehensive picture in order to answer the question. We then do a full assessment looking at all different aspects, and from that assessment we provide our advice to government.

[Michael Kram, Conservative, Regina—Wascana, SK]

My next question is for Mr. Kennedy.

Did you provide a final recommendation to the minister on this transaction?

[Simon Kennedy]

We do many reviews per year. When it comes to ones that are found to be sensitive or when there's some issue, certainly the minister is kept abreast of those and engaged as a matter of course.

That's what I would offer at this point.

[Michael Kram, Conservative, Regina—Wascana, SK]

Mr. Kennedy, in your opinion, was this transaction particularly sensitive?

[Simon Kennedy]

Because it involved critical minerals and because of the involvement of a state-owned enterprise, it would certainly be one that would be on the list or that would rise to the level of not being ordinary.

To elaborate a little bit, if you look at the number of transactions that we reviewed last year, you'll see that it was into the hundreds. It was 800-and-something. The year before that it was 1,000. There's a relatively smaller number that would be sufficiently interesting to cause us to be talking about them to the government or that would indeed go to the cabinet.

[Michael Kram, Conservative, Regina—Wascana, SK]

Was this particular transaction interesting enough to be brought to the attention of the minister?

[Simon Kennedy]

Yes, absolutely. This is something that we would have kept the minister apprised of.

[Michael Kram, Conservative, Regina—Wascana, SK]

When did you first inform the minister about the details of this transaction?

[Simon Kennedy]

I would reiterate what the minister said in his opening statement and maybe add a bit of detail.

The investigative powers of the minister to conduct reviews don't require the triggering of a special measure. In this case, I can certainly confirm, for example, that our review was longer than the 45 days prescribed by the statute. When we become informed of something, whether through press reports or otherwise, we have the ability to actually start looking at it. I'm not really in a position to get into the specifics of when I talked to the minister and when I didn't. I think most members can appreciate that. However, I can certainly say that we were reviewing this for some time. It was certainly over a period of months. It was not just confined to the 45-day period. As a matter of course, because we do this for sensitive transactions, certainly the minister and the government were informed.

We were working with our allies in other ministries as well, as we do in any security review.

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay. Let me put it this way.

I see that it was on October 8 that this transaction was first reported in the mainstream media. Can you at least say whether the minister would have become aware of this transaction before the mainstream media?

[Simon Kennedy]

I'm not quite sure what the question is.

[Michael Kram, Conservative, Regina—Wascana, SK]

Would the minister have been made aware of this transaction before it was reported in the mainstream media on October 8?

[Simon Kennedy]

I don't really think I'm in a position to be getting into the details of when I spoke to my minister or not. As a deputy minister, I think most members understand that my advice to the minister is confidential. I can speak in general terms.

We inform the minister of and discuss transactions with the minister. This is a very thorough multidepartmental process. That process was followed in this case. It was longer than the 45-day period, because we certainly became aware of it in the fall, before any official notification. With regard to the threshold for a formal decision of the government, that decision is made by the cabinet, and it is only undertaken if it is found that there's a possible risk to national security. As is obvious in this case, that risk was not found.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Kram and Mr. Kennedy.

I'll turn now to Mr. Gaheer for five minutes.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you, Chair.

My question is for the deputy minister, but others can chime in.

Yesterday one of the witnesses talked about the importance of co-operation with our allies in North America and Europe to secure critical minerals and to counter Chinese interest. Can you speak a bit about the measures that are taken by this country and maybe the U.S. along the lines of that strategy?

[Simon Kennedy]

I can say that we have an active dialogue with our allies on the issue of critical minerals, in particular with the United States, which would be a very good example of that. Also, we have an active program of work to support the development of supply chains to develop Canada's critical mineral base as a contribution to the work we're doing with allies. There is a great deal of activity in this space.

On the issue of critical minerals specifically, if you wish to have more details, Mr. Labonté could probably talk a bit about that as well, because his ministry is deeply involved in the work.

[Jeff Labonté]

Sure. Thank you very much for the question.

We have a very active dialogue that has been ongoing for two and a half or three years with the United States as a critical mineral joint action plan and we have collaborative work with the U.S. under five working groups. It's shared among federal departments. Mr. Kennedy's department co-chairs some of those, as do our defence department and others. We have areas of collaboration around defence. We have research into [Technical difficulty—Editor]. and innovate. We're focused on sharing information, sharing data, having researchers work together and having trade and promotion activities in which U.S. companies are thinking about Canada and Canada is thinking about the U.S.

We have a similar dialogue with the EU. We're in a raw materials partnership with the European Union, which was started about a year ago, and we're co-operating there in research and development and having multilateral dialogue as well.

In all of these, we're aligning where we have common interests around sustainable development, around trying to crack some of the research codes on how to process better and around how to have better environmental performance, for example. That kind of collaborative work has been a priority on critical minerals for a number of years now, and at this point we are continuing that collaboration quite extensively.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you.

We've talked about our relationship with the U.S., but the U.S. doesn't have a critical mineral strategy. How far along is Canada compared to the U.S. when it comes to a strategy like that?