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.