Industry Committee on Feb. 4th, 2022

[The Chair, Liberal, Joël Lightbound]

I call this meeting to order.

Welcome to meeting no. 6 of the House of Commons Standing Committee on Industry and Technology. Pursuant to Standing Order 108(2) and the motion adopted by the committee on Wednesday, January 26, 2022, the committee is meeting to consider a draft report on critical minerals.Today’s meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members may attend in person in the room or remotely using the Zoom application.

First I want to thank all the witnesses for joining us. We thank them for taking time from their busy schedules to speak with us today.

We have Jeff Dahn, Professor at Dalhousie University; Benoît La Salle, President and Chief Executive Officer of Aya Gold and Silver Inc.; Meredith Lilly, Associate Professor at the Norman Paterson School of International Affairs, Carleton University; Pierre Gratton, President and Chief Executive Officer of the Mining Association of Canada; Brendan Marshall, Vice-President, Economic and Northern Affairs, also with the Mining Association of Canada; and Sarah Houde, President and Chief Executive Officer of Propulsion Québec.

Witnesses will have five minutes each for your remarks. To facilitate the proceedings, please note that I will raise a yellow card when you have one minute left, and when I raise a red card, that means you're speaking time is up. That applies to opening remarks and rounds of questions.

Without further ado, we will give the floor to Prof. Dahn from Dalhousie University.

[Dr. Jeff Dahn, Professor, Dalhousie University, As an Individual]

Thank you for inviting me as a witness.

I'm a professor in the department of physics at Dalhousie University. I'm also chief scientific adviser to Novonix of Bedford, Nova Scotia. My research group of about 30 people is funded by Tesla and NSERC from 2016 to at least 2026 under the NSERC partnerships program.

I have been working on lithium and lithium-ion batteries since 1978. From 1985 to 1990, I worked at Moli Energy Ltd. in Maple Ridge, B.C., where we commercialized the world's first rechargeable lithium battery. We also developed lithium-ion technology that was commercialized in 1994. I am a lithium-ion battery chemistry specialist who focuses on increasing the energy density, increasing the lifetime and decreasing the cost of lithium-ion batteries.

Canada has plenty of research horsepower in the advanced battery space. World-class programs exist at Dalhousie, Waterloo, Western, NRC, Canadian Light Source, Hydro-Québec and others. Just as in other sectors, Canada lacks manufacturing.

Making a lithium-ion battery is not like making toast. For toast, one puts the bread in the toaster, pushes the button and, 90 seconds later, toast pops out. Lithium-ion batteries are made by a series of precision machines, such as electrode coaters, electrode slitters, cell winding or electrode stacking machines, electrolyte filling machines and cell formation machines, etc. The specifications and use of these machines require extensive know-how and expertise.

There are two companies in Canada that have the required know-how and that make lithium-ion batteries: Electrovaya in Mississauga and E-One Moli Energy Canada in B.C. These relatively small companies have a track record of making excellent lithium-ion batteries, which does not exist elsewhere in Canada. Electrovaya supplies forklift batteries to manufacturers like Toyota and others. E-One Moli supplies Dyson for its portable vacuum products, as well as other companies. Both of these companies have applied to the strategic investment fund to expand their manufacturing operations in Canada. Electrovaya's applications have been rejected. New York State is now wooing Electrovaya for its expansion. It appears that E-One Moli's application may be successful, but the application process started in 2019. It takes far too long. These companies should be encouraged, not discouraged, and in fact even pushed by the federal government to expand in Canada.

Moving to lithium-ion battery materials and a North American supply chain, Novonix has established a synthetic graphite manufacturing plant in Chattanooga, Tennessee, which is targeted to expand to 40,000 tonnes of graphite per year by 2025. There is access to inexpensive nuclear and hydro power from the Tennessee Valley Authority. In principle, Novonix could establish operations in Quebec, where there is also access to green hydro power. However, the incentives from the Tennessee government were very attractive. Governments must realize that it's a competition to woo companies to a particular place.

Canada has lithium, nickel, cobalt, iron, phosphorous, manganese, copper, aluminum and natural graphite, all of which are used in lithium-ion batteries. However, getting lithium and graphite from the ground to a form suitable for battery material production is not a trivial endeavour. Similarly, synthesizing cathode active materials at large scale and at low cost from the metals or metal compounds requires expertise that does not widely exist in Canada.

Government support will be required to attract partners with know-how, capital and experience to develop these resources through to value-added battery materials in Canada. The selection of these partners and the structure of the deals made to attract them will require great care.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Dahn.

I will now turn to Mr. Benoit La Salle.

Mr. La Salle, go ahead for five minutes.

[Benoit La Salle, President and Chief Executive Officer, Aya Gold and Silver, As an Individual]

Thank you, Mr. Chair.

Thank you for inviting me to appear before the committee.

My name is Benoît La Salle, and I am the founder and owner of several mining sector businesses.

We operate internationally in the field of metals that are required to manufacture batteries: nickel, copper, cobalt and graphite. The only thing we're lacking is a lithium project. The race to acquire battery-related metals is the reality we face every day.

Prof. Dahn just outlined the technology and know-how necessary to manufacture batteries. Canada is a leader in this field, but, for reasons I don't understand, we haven't securely protected the inputs required in that process. That was recently brought home to us with respect to lithium, when Quebec sold its lithium projects to Australian interests, and also recently in Ontario with the Noront Resources project, which was to be acquired by BHP but is about to be sold to Australians. This is an everyday situation for us. We're mining one of the largest natural graphite deposits in the world, located in Guinea, and foreign businesses approach us every day.

Prof. Dahn said that processing companies should be supported, and he's absolutely right. The Netherlands, France, Belgium and Norway have asked us to build processing units for natural graphite, our raw material, in their countries.

The same is true of nickel. We're mining a nickel-rich massive sulfide deposit, which is very rare. We have sulfides here in Canada, including in the magnificent Voisey's Bay deposit, which was discovered in the 1990s. It was sold to Vale, a Brazilian company, several years ago.

What I'm seeing these days is demand for all the metals needed to electrify transportation. They're also in demand in many other fields, such as communications, 5G technology and information technology. All these metals are used in batteries and thus in the electrification of transportation, aeronautics, communications and defence. We're very much in demand.

As I mentioned, we have a massive sulfide deposit in Ivory Coast that's rich in nickel, copper and cobalt; it's a major find.

Do you know who's coming to visit us on site next week? A Chinese team. When their representatives saw our results, they immediately called us to express interest. They intend to come and see us and want to support and finance our operation.

Our group consists of a number of Canadian corporations based in Montreal. We mine our resources around the world, but the fact is that a real metals race is shaping up every day.

When we met eight months ago, I told you we were going to lose control of lithium. Do you know how high the price of lithium carbonate has gone up since we spoke? Did you know the price of lithium carbonate has risen 743% in the past 14 months? What Quebec sold to the Australians for $80 million is now worth $1.2 billion. The price of lithium hydroxide is up 504%, cobalt 100% and nickel sulphate 59%.

The next resource to explode will be graphite. We have graphite in Canada, in Ontario and Quebec. We also have an enormous deposit in Conakry, Guinea. People want to form partnerships with us because the reality is that it's all well and good to have the technology and to say we know how to manufacture batteries, but if the plant doesn't have inputs, we can't make anything with water, air and sand. We need nickel to produce cathodes and natural graphite to make anodes.

There's going to be a war for inputs. The Chinese, Australians and Europeans are positioning themselves, and we're helping them. We're selling them our natural resources; that's what we're doing. I have the resources so I'll work with people who want to work with us, but what's been done with lithium is unacceptable. I've said this openly, I've said it in the newspapers, but the deals have nevertheless been made and we've sold our projects.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. La Salle.

I will now turn to Professor Lilly for five minutes.

The floor is yours.

[Dr. Meredith Lilly, Associate Professor, Norman Paterson School of International Affairs, Carleton University, As an Individual]

Thank you, Mr. Chair.

Thank you for the opportunity to be here today to speak with members of the committee. I have reviewed previous testimony to the committee, so I know that members are well versed on the importance of critical minerals to the 21st century and in powering the transition to a green economy.

The committee's previous meetings were focused on the sale of Neo Lithium to a Chinese state-owned enterprise without full national security review. I know that members have already heard a great deal about that process.

Under the enhanced scrutiny guidelines for critical mineral transactions, the government deemed that no potential harm to national security could occur to warrant a full national security review. This was despite the fact that this was a billion-dollar sale of a Canadian company in the critical mineral sector to a Chinese state-owned enterprise.

It is my view that those three simple factors—the value of the sale, the sensitivity of the sector and the involvement of a state-owned enterprise—should automatically have triggered a full national security review. Given that this didn't occur, and to address the committee's broadened mandate, I'd like to focus my time on how Canada can better use the national security review process to safeguard Canada's interests in the critical minerals sector in the future.

First, much of the evidence presented to the committee suggested that Canadian officials are focused on building Canada's own critical mineral capacity, particularly Canadian-based mines and processing. I believe this is essential. I have conducted research into how Canada can best position itself geopolitically. However, as Canada seeks to build a domestic supply chain, we are also deeply invested in the broader global context. We are, after all, a trading nation. We must make it our business to understand the global supply chain, which countries control it, and what their relationships are to Canada and our allies.

We must also be concerned about the sale of Canadian mining firms, even when the mines are located outside of Canada. My own research has examined the relationship between the viability of Canadian-based extraction in critical minerals relative to foreign-based mining. More than half of the world's supply of cobalt is sourced in Congo, often extracted with enslaved child labour, in mines owned or controlled by Chinese firms. Canada has significant cobalt reserves of its own, as you've just heard, but extraction here is often deemed not cost-effective, in part due to our comparatively steep labour costs, environmental standards and regulatory processes. But as the United States and Europe become more concerned with the national security implications of reliance of China, and as they reckon with the poor labour and environmental values reflected in the current foreign supply chains, Canada can actually become a strong competitor precisely for our high standards.

The second point I'd like to make is that while Canada should pursue its own critical mineral capacity, it is not in the interest of the international community for global supply chains to be dominated by any single country, and particularly not China. Between 2010 and 2012, China used its monopoly on key critical minerals to reduce global supply and increase prices. Fortunately, the United States, Canada and others were successful in our WTO challenge then, but I would advise against relying on a similar strategy for the future.

The current global supply chain crisis has taught us that both greater self-reliance and diversification are key for supply chain resilience. Countries such as those in Europe that are not blessed with Canada's natural bounty of critical minerals are just as reliant on them for the green transition. Current events at the border of Russia and Ukraine demonstrate why Europe has a national security interest in resilient supply chains that can't be weaponized by one or two authoritarian countries.

I'll wrap up by saying that Canada can play an important role in a global strategy for critical minerals, both through the establishment of Canadian-based mines and through a more strategic application of our national security review process in which we formally consult allies on major transactions in the sector, even if those mines are not based in Canada or extracting minerals deemed to be of immediate interest to Canadian companies. But to be such a global leader, Canada's national security process should reflect a more nuanced and strategic approach that can adapt to changing geopolitical circumstances around the world, rather than a narrow focus on individual transactions and immediate Canadian interests.

I would be pleased to answer any questions from the committee.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Professor.

I will now turn to Mr. Walker.

You have five minutes.

[Trevor Walker, President and Chief Executive Officer, Frontier Lithium]

Thank you for the opportunity to speak today, Mr. Chair.

My name is Trevor Walker. I am the CEO of Frontier Lithium, a Sudbury-based, Canadian-owned pre-production mine development targeting to become a manufacturer of battery-quality lithium to support vehicle and battery supply chains in North America.

We are developing the PAK lithium project, located in the Oji-Cree Treaty 5 region of northwestern Ontario. The resource was originally discovered by the Government of Ontario through the OGS in the late 1990s. I have personally been working on advancing the project since early 2010.

I am supported by a strong Canadian leadership team and board of directors who see the importance of building a strong northern Ontario-based company feeding supply chains that will benefit Canadians, including indigenous peoples. It is worth noting that our board representation includes a member of an Oji-Cree community located near our project.

To give you an idea of our current size, our recent preliminary economic assessment released in 2021 indicates a 26-year mine life—enough lithium chemicals to support the production of roughly 500,000 electric vehicles annually. It contains a net present value—or NPV—of $1.25 billion post-tax. We are currently growing our resource, and we are undertaking a pre-feasibility study of the project, which will be released in 2022.

The PAK project is a tier one global lithium resource here in North America, and it is a top-three resource in the world by quality. It is a resource that has attracted international interest. Perhaps more importantly, due to its size and purity, it is the key to attracting cathode and battery production to Canada and will support the battery electric vehicle supply chain on both sides of the border. It is by all definitions a strategic resource for Canada.

It's important to acknowledge that in the advancement of our business, we have been the fortunate recipients of government innovation funding, namely through Ontario's invest north program, to help in the advancement of the chemical-processing portion of our planned business.

I understand that the Standing Committee on Industry and Technology produced a comprehensive report on the development of critical mineral supply chains last year. I am hoping that my experience in bringing the PAK lithium project towards production will be helpful to you in advancing at least some of your current areas of study so that we can enhance Canada's response to this critical and important issue.

Canada is blessed with an abundance of critical minerals and is well positioned to be a world leader in green technologies. To realize our competitive advantage on the world stage, however, we must answer one question: How do we use our advantages and overcome a myriad of domestic and business complexities, all within a time frame dictated by the market, while preserving value to shareholders and the strategic interests of Canadians more broadly?

To do this, we have to understand what our advantages are, be honest about the complexities we face, understand the markets we're working within, revise our plan as required and expedite its implementation.

Given the time I have, I will explore this question and walk through what I see as possible solutions.

In my mind, the advantages that Canada has are as follows: an abundance of natural resources, including minerals, water, energy and renewable energy; critical minerals like lithium, on which the battery supply chains are dependent; proximity to supply chain end-users and markets, such as car manufacturing in Ontario and Michigan and the North American market; mature resource and financial sectors; a skilled workforce; the low relative costs of mining inputs such as land, power and water; rule of law; political will; business-minded indigenous peoples; entrepreneurial spirit; and resolve.

Complexities I see include the fact that our critical mineral deposits are often remote, not proximal to infrastructure, and we have become reliant on industry to permit, design and fund their development. Additionally, mine development and processing, though predominately a provincial jurisdiction, can be regulated federally and municipally and require strong relationships and input from indigenous people; it is very complex.

Our regulatory systems, by their complexity and lack of time limits, inhibit us from achieving the first-to-market advantage and jeopardize our ability to be leaders and, in some cases, even players. Unpredictable permitting timelines needed to permit the development of a mine, the infrastructure, and to locate and build chemical-processing plants are a barrier and can leave mine developers financially weakened and at risk of being taken over by larger, often foreign-owned, entities. We're facing that now.

[The Chair, Liberal, Joël Lightbound]

Mr. Walker, I'll have to ask you to conclude. We're past the time.

[Trevor Walker]

Sure, no problem.

In conclusion, as I've said before, Canada is blessed with an abundance of critical minerals. We have to live up to our potential. We must advance beyond rhetoric and focus on timely, coordinated actions to overcome the barriers we're seeing right now.

We need action.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Walker.

I now turn the floor over to Mr. Gratton and Mr. Marshall from the Mining Association of Canada.

Go ahead, Mr. Gratton.

[Pierre Gratton, President and Chief Executive Officer, Mining Association of Canada]

Thank you very much, Mr. Chair.

My name is Pierre Gratton, and I am president of the Mining Association of Canada, as you said. I'm here with my colleague, Brendan Marshall, who is vice-president for economic affairs.

To help frame the issue, it's important to differentiate between the two general categories of critical minerals at the heart of the supply chain security-sustainability nexus: rare earth elements and clean energy materials. Materials from both categories are listed on Canada's critical minerals list, but the policy actions required differ.

Nickel, cobalt, lithium, manganese and graphite are the predominant battery minerals presently. Canada is in possession of all these materials, some at production scale and others being developed. In the case of nickel, we have world-leading upstream and downstream nickel extracting, smelting and refining capacity. We produce the second-lowest carbon intensity nickel in the world. Relatively significant volumes of low-carbon cobalt are also produced in Canada. Manganese and graphite are produced in smaller volumes, while manganese, graphite and lithium advanced projects are all in various stages of development.

Being in possession of the minerals and metals needed for battery production, however, does not equate to having the capacity to produce value-added battery-grade materials. Canada does not as of yet manufacture battery-grade nickel, cobalt, graphite or lithium. All of its current production goes into other uses.

To position ourselves for success, we need government policies like enhancing targeted public geoscience, increasing incentives for exploration of critical minerals to find new mines, reducing bottlenecks in the regulatory approval process, and incentivizing the production of value-added battery-grade materials that address the entire value chain. We also need to avoid unintended policy outcomes such as climate change actions that put Canada's current and future off-grid mines at risk when those very mines supply the feed to grid-connected world-class smelters and refineries that export metals with the lowest carbon content in the world.

Beyond battery minerals, a recent McKinsey report on critical minerals and clean technology identified 17 materials, including uranium—of which Canada is the second-largest producer and without which getting to net zero is impossible—copper, zinc and steel—coking coal and iron ore—many of which are on Canada's critical minerals list. Without vastly expanded quantities of critical minerals, the desired carbon transition will never materialize, and the world is frankly better off on climate when they come from Canada, because of our carbon advantage.

No set of materials characterizes the security of supply dilemma more than rare earth elements, used in a wide range of essential battery, medical, energy and advanced manufacturing applications. To date, China has dominated the market for these key materials, controlling the majority of production and distribution, and that's creating an overreliance on one country for procurement.

Unlike battery minerals, Canada does not have a pre-existing supply chain for REEs and has fewer established strengths in this space than with battery minerals. Canada has deposits, with companies seeking to develop them, and it produces some rare earths as by-products from the smelting processes of other metals. Much of the rest of the world is similarly import-reliant on China and lacks a pre-existing world-leading mining industry to build upon.

While more work needs to be done to establish an REE supply chain in Canada than with a battery supply chain, Canada should not be deterred from leveraging its competitive advantages to create greater supply of REEs for domestic use and export. Doing so presents a significant opportunity for the country.

Development of the critical mineral strategy presents an opportunity to solidify a recognition of the essential nature of Canada's mining industry to the government's broader climate change, clean technology and reconciliation objectives. It will position Canada as a reliable, secure, sustainable critical mineral supply chain partner over the long term, while simultaneously increasing our domestic attractiveness as a destination for sought-after large-scale downstream clean-technology manufacturing investments. The sooner these signals can be sent to the market, the greater Canada's overall propositions for these investments become.

In the interest of time, we have distributed to you our key recommendations, which I will thus refrain from reading out to you. Brendan and I both look forward to your questions.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Gratton.

I now give the floor to Sarah Houde, president and chief executive officer of Propulsion Québec, for five minutes.

[Sarah Houde, President and Chief Executive Officer, Propulsion Québec]

Thank you very much, Mr. Chair and members of the committee, for this opportunity to speak to you.

My name is Sarah Houde, and I am the president and CEO of Propulsion Québec, Quebec's electric and smart transportation cluster. On behalf of our 250 members, I would like to thank you for this invitation to present our vision of Canada's position as a responsible source of critical and strategic minerals, or CSMs, as I will call them to save time, and of the Canadian electric vehicle battery industry.

As the previous speakers noted, Canada occupies a unique global position as a result of its vast CSM resources, particularly those in high demand as we enter the energy transition, deploy green technologies and build a sustainable post-COVID-19 economic recovery. It also has recognized expertise, a point that I believe was clearly made by Prof. Dahn, who is a worthy representative of that expertise. Canada has excellent and acknowledged expertise in responsible industrial development. It also has an energy mix dominated, in certain parts of the country, by types of renewable energy that have a low carbon footprint and are available at low cost; one of the strictest environmental regulatory frameworks in the world; a skilled labour force; and, especially, a stable and predictable geopolitical situation. All this gives Canada a competitive advantage, as the previous speakers mentioned.

These strengths have solidified Canada's position as a supplier of CSMs and batteries that are safe, stable and responsible, three terms that must be central characteristics of any long-term Canadian strategy to develop the CSM and battery sectors.

If Canada wants to develop these sectors successfully, it will have to add a hitherto missing fourth dimension to those key characteristics: a truly national approach to this strategy. As the other major international players active in these same sectors have previously shown—Canada is well organized and we do have an advantage—no other regional entity alone is capable of combining natural mineral resources, the technical and technological capability to exploit those resources and the essential financial capacity to develop these sectors solely within its borders without interstate synergies.

That is why it's extremely important that the Canadian government take on the role of coordinating the actions of all provinces and territories by establishing a broad Canadian alliance dedicated to developing the CSM and battery sectors relying on the strengths and assets of each of the provinces.

This should be achieved within the framework of the Canadian industrial policy for the entire electric and smart transportation industry. That industrial policy must cover all aspects of the industry's development, from the supply chain, furthering research and development and financing the manufacturing industry to developing an extensive world-class talent pool to support the exponential growth that awaits those businesses here in Canada.

Canada must also take advantage of its historical position as an ally of the United States to work toward establishing a Canada-U.S. coalition to enable the Canadian CSM and battery industrial ecosystem to position itself as a safe, stable and responsible supplier of value-added materials and components, not merely unprocessed raw materials—once again as other speakers before me have stated—for these fast-growing markets, including those for electric vehicles and the energy transition.

We are genuinely seeing a regionalization of Asian, European and North American supply chains, and, thanks to our continental North American position, we can definitely be a strategic partner and consolidate a strategic advantage.

Canada today has an immeasurable economic opportunity, possibly the greatest in its history. It is an economic opportunity that we very much need as we begin the economic transition that will culminate in carbon neutrality in 2050. We will have to transit from a hydrocarbon-based economy to other economic models and should absolutely seize the economic opportunity lying here at our door. This is truly a unique opportunity to rebuild our economy on a new foundation, a much more promising one for the future, and once again to play an absolutely key role on a continental North American scale.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you for your testimony, Ms. Houde.

We will now begin the first round of questions.

Ms. Gray, go ahead for six minutes.

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

Thank you, Mr. Chair.

Thank you very much to all the witnesses for being here.

My first questions are for Dr. Lilly.

We have heard concerns raised now from a U.S. congressman on the Neo Lithium purchase. You referenced this purchase in your testimony today. There was an article today where Congressman Mike Waltz raised questions about whether Canada had even informed the Biden administration about the sale.

Can you touch on the importance of Canada needing to communicate and collaborate with our allies when it comes to critical minerals and company acquisitions around that?

[Dr. Meredith Lilly]

I didn't see today's news, but it is certainly very important for Canada to consult with allies on major purchases. The United States is our closest trading partner and our historic ally.

With the United States in particular, when it comes to critical minerals, there are a few essential issues. One is that the United States takes a very broad view of what national security is or isn't, and it takes the position that threats to domestic industry represent national security threats. For that reason, it is very important for Canada to ensure that any sales or major transactions that we're engaged in with other partners aren't in any way going to jeopardize that relationship.

The other piece that's really important in this case is around the rule of origin in autos, because we have an integrated auto supply chain. The United States, in particular, has interests in how that supply chain is developing as electric vehicle batteries are developed.

It is really important that Canada consult with the United States on these issues. We don't know the extent to which that did or didn't occur in the case of this particular sale.

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

The next question is.... We're the only country in the Five Eyes group that has not restricted Huawei, and we heard that there was not an Investment Canada Act extra 45-day security review. I recall the former U.S. trade representative putting forward trade challenges against Canada, while calling Canada a “national security threat”.

If Canada does not collaborate with our allies on national security concerns like critical minerals, are you concerned about any potential repercussions?

[Dr. Meredith Lilly]

I am concerned. The issue I tried to touch on previously was that the United States, using section 301, takes a much broader view of national security than many countries do, and this is the reason for which Canada came under national security tariffs under the previous administration; it was ruled that the domestic steel and aluminum industries in the United States were vital to the national security of the United States.

This issue is not something that we can litigate at the WTO or elsewhere. It is part of American law, and we can't challenge it. For that reason, it is quite vital.... We can and should challenge the country, but the United States' use of these measures is not something that we can effectively challenge using major multilateral forums. For that reason, it is quite critical that we constantly remain in touch with the Americans on these issues and try to work together when we can.

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

I want to ask you about access to critical minerals, their geopolitical effects and how China presently has a commanding position in critical minerals.

What risks do you foresee for Canada if one country has such a dominant control of supply chains on critical minerals?

[Dr. Meredith Lilly]

It's never in Canada's interests for any country to have a dominant role in any supply chain, including in this area. Particularly because the sector is changing so much right now, there is lots of movement and many countries want a piece of this. There are a number of potential risks.

With the case of China in particular, we've seen in the past that it has willingly used its control over certain parts of the critical mineral supply chain to restrict access to global partners. In the past, that has been challenged at the WTO successfully. China did comply with the ruling and prices were stabilized again. However, as we've seen, China does not always observe the rule of law, and there are certain areas of international law in which we have lots of examples to demonstrate that.

We need to be constantly aware of the dangers of one country having control of the supply chain, and even more so when it's China.

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

Thank you.

To tag on to that, do you think Canada should be strengthening its measures through things such as the Investment Canada Act, or are there other measures that you see to ensure that the IP and the know-how we have right now in critical minerals are not lost to foreign state-owned enterprises?

[Dr. Meredith Lilly]

Yes, I think we should be using the Investment Canada Act more broadly. I was surprised that the recent transaction was not subject to national security review, for the very reason that this was an extremely large transaction in a critical sector with a state-owned enterprise. I think that decision should have been revisited.

I would say that, yes, it's essential that we use that and that we also work with allies on a much broader view around issues like intellectual property in international trade.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Madame Gray and Professor Lilly.

I'll now turn the floor to MP Dong for six minutes.

[Han Dong, Liberal, Don Valley North, ON]

Thank you, Chair.

I want to welcome all witnesses and thank them for coming to the committee today to answer some very important questions.

My first question is for Professor Dahn.

You're one of Canada's top researchers, and you're working with Tesla Motors to improve the energy density, increase the safety, decrease the cost and improve the cycle and calendar life of the batteries. In your view, what direction is this technology going globally?