Industry Committee on Feb. 11th, 2022

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

Where in this strategic mineral supply chain do you see Canada being the weakest right now?

[Dr. Charles Burton]

That's not really a question I have the expertise to answer. There are a lot of people here who have more.

Obviously, we should be pulling the stuff out of the ground ourselves and processing it here. Experts may have a better take on that than me, but that just strikes me as a no-brainer in terms of maintaining the integrity of our ability to avoid being subject to coercion by autocratic states. They might have things we need for our development, and they would be prepared to withdraw them—as they did with Japan in 2010, as I said—to coerce us into giving concessions in other areas.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Burton.

Madame Gray, that is all the time you have.

We'll now move to Madame Lapointe for six minutes.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

My first question is for the members from PDAC.

I'd like to ask about domestic supply chains. Is Canada ready to not only mine the critical minerals and metals needed to shift to a zero-emissions economy, but also develop the raw materials into the products needed for electric vehicle batteries and other things? I'm looking at this from an A to Z perspective—from mined production to infrastructure and technology, along that domestic supply chain. Where are we in Canada on that front?

[Jeff Killeen]

I would start by suggesting that the Canadian mining and mineral exploration industry is almost unparalleled in terms of its quality, its capabilities and the best practices that this industry brings to its operations, both in Canada and abroad. When we think about Canada's capability to discover more minerals and metals within our own borders and bring those metals to market, it's almost unequalled compared to any other country. Our ecosystem is very robust, from the exploration end of things all the way through to mineral processing.

When we think of where the shortfalls are.... At PDAC, we think of our members as largely being the junior exploration and developers within Canada, and we think about what can be pulled out of the ground, as you pointed to. Our recommendations are centred around the concept that we need to build up a larger inventory of known resources and reserves within Canada. It would be in our best interest to understand where those are located, so quality infrastructure decisions can be made, so we can understand what our energy balance will be in the future, and so we can ensure that we can actually access those prospective lands with a social licence to operate well in mind.

That's really where our minds are focused at this point—to build up that resource capacity within Canada. With that in mind, the lion's share of what we have seen over many years with respect to exploration in Canada has been focused on precious metals and more traditional base metals. The amount of attention devoted to—as this committee has considered before—lithium or different types of lithium species, or graphite, cobalt or other metals, has been relatively immaterial in Canada's history.

What I can say is that we are the second-largest country on earth in terms of geography. We have every geological terrain and potential for discovery—in virtually every region in this country—for rare earths, lithium, cobalt and the things this committee is talking about and considering. I would say there's unparalleled exploration upside and vast exploration potential here in Canada that we need to maximize to ensure that all of those downstream issues that we're considering are put in focus, as opposed to the upstream portions that are maybe lacking right now.

[Viviane LaPointe, Liberal, Sudbury, ON]

Between the different levels of government and the private sector, what needs to be implemented or changed to ensure that we are expanding and maintaining that supply chain?

[Jeff Killeen]

It's a great question.

I'll come back to our recommendations, and for good reason. Knowledge is key, and what we've seen in recent mandate letters around reliance on science and evidence-based decision-making is the right way to go. With that in mind, there is information we still need to have in hand to be able to make quality decisions that are thinking 10 and 20 years down the road, as has been indicated by some of the other panellists here today.

Public geoscience is very important in terms of its value to the Canadian public. We also see the government starting to take steps, like forming a pan-Canadian geoscience strategy. These are the types of interactions between the federal and provincial governments, all the way down to municipal governments, that need to be taken into consideration, so that when we think about access to land, energy demands and the impacts on potential local communities, these are thought out well in advance. That way, we don't have to make decisions in the short term that will put us behind our competitors with respect to participating in these opportunities.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Killeen.

Dr. Zaghib, given your 36 years of experience, I would like to ask you a question about research and development in the process of transition to the electrification of transportation and the needs for rechargeable batteries.

Can something be done everywhere in Canada?

Are there any region-specific challenges that might relate to, for example, infrastructure or weather conditions, which would mean that electric vehicles could not be used everywhere?

[Dr. Karim Zaghib]

I'll be very quick.

Canada has the necessary technology to develop the mine, to do the first transformation of the active materials, from the battery cell to the battery module and then to the battery pack. Since the 1970s, Hydro-Québec, the company Moli Energy and the Jeff Dahn laboratory have been developing this technology.

Let’s take the Tesla car as an example. The nickel-manganese-cobalt lithium technology, or NMC, developed by the Jeff Dahn laboratory was used. As for the lithium iron phosphate, or LFP, technology, it was developed by Hydro-Québec and its partners.

The technology was born in Canada and we have the human capital. If the car can’t run at low temperatures, we can find solutions using our human capital, our very good Canadian universities, our institutions and the Canadian ecosystem.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Ms. Lapointe and Dr. Zaghib.

Mr. Lemire, you now have the floor for six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

First of all, I would like to say to Ms. McDonald and Mr. Killeen that I did attend the last two Prospectors and Developers Association of Canada, or PDAC, meetings, and that I'm looking forward to attending the one in June if I can't attend the one in March.

My question is for Mr. Breton.

Mr. Breton, I would like to hear your comments on the urgency of legislating now in order to keep pace with future development and to support the industry by offering it more predictability.

Should we recommend that Environment and Climate Change Canada step up to the plate and introduce a zero-emission vehicle bill this spring in order to meet electric vehicle sales targets?

When a state legislates to improve a citizen's access to electric vehicles, does this have an impact on the market and on the number of vehicles available?

[Daniel Breton]

If you look at the way things are unfolding around the world, the main markets for electric vehicle sales are regulated markets.

Canada is unregulated, and in the third quarter of 2021, the percentage of sales of fully electric or plug-in hybrid vehicles was 5.4%.

Let's look at the sales of electric vehicles in November or December in Europe and China. In China, the percentage was about 20%, in Germany it was over 30% and in Norway, it was 90%.

A federal zero-emission vehicle law will certainly accelerate the sale of electric vehicles. For now, manufacturers are prioritizing electric vehicles in markets that are better regulated and that give incentives for infrastructure installation or electric vehicle production, that offer purchase rebates, or that run awareness campaigns.

Ms. Lapointe asked if it was possible to travel by electric vehicle in certain regions of Canada. Last week, I left the countryside in Quebec and drove to Toronto in an electric vehicle with four people on board. Everything went well. The temperature was 20 degrees Celsius below zero. People often think that an electric vehicle in a country like Canada can be problematic. It's not really a problem.

In fact, Norway leads the world in the purchase of electric vehicles, yet it is not a tropical country. There are opportunities to develop the electrification of transportation in all regions of Canada. In the northern regions where electricity generation is off grid, it is more complicated. We are working on energy storage with people like Dr. Karim Zaghib.

I can tell you that it is quite possible to travel by electric vehicle anywhere in Canada, whether it is a light or heavy vehicle. It's getting better and better.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I can attest to this, as I myself own an electric vehicle. I must admit that, in Abitibi-Témiscamingue, we still need to improve the supply of charging stations, especially for crossing the La Vérendrye wildlife reserve. In fact, we had the opportunity to discuss this a few times in the committee.

Mr. Breton, from 2017 to today, there have been several meetings between the United States and Canada to discuss, among other things, critical minerals and oil sands. In addition, the United States is leading a battle against Canada regarding the protectionist Build Back Better Act. In defence of the electric vehicle industry, particularly in Ontario, and all that we have to build in this sector, Ministers Ng and Freeland have sent a letter to Washington. However, this process seems to be very long and tedious, and relations with the Americans remain strained. What are your fears in this regard?

[Daniel Breton]

As far as the Build Back Better Act is concerned, there is certainly a concern for the Canadian auto industry. After all, the reason we’re here discussing critical minerals is to ensure that the electric vehicle industry—cars, trucks, buses and even snowmobiles—can develop in Canada, but it’s also to make sure that the transition happens without job losses. We want to fight climate change and air pollution, while creating jobs. Right now, the concern we have with the Build Back Better Act is that the tax credit that will be offered to consumers who purchase an electric vehicle manufactured in the United States will jeopardize the manufacturing of light, medium, and heavy-duty vehicles in Canada.

In an integrated market, such as the one between Canada and the United States, this goes against the so-called collaboration between Canada and the United States. As I mentioned earlier, we have heard and read that in February 2021, President Biden and Prime Minister Trudeau signed an agreement to collaborate on batteries and critical minerals. It would really be a loss and a mistake to send raw materials to the United States to have value-added products and vehicles manufactured there. We would be replicating the model that we have too often followed in the past, with our oil, our wood, our aluminum, our electricity. We want to create quality jobs in Canada, from mining to mobility.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I think all the witnesses agree that there are problems with the supply of raw materials.

Do you think the committee should invite the Deputy Minister of Natural Resources to testify in order to better understand the leadership and timeline of the Critical Minerals Working Group, which aims to advance collaboration between the United States and Canada?

[Daniel Breton]

I think it would be worthwhile, because we have talked about it, and several people here are talking about it.

In terms of critical minerals, it is said that Canada is behind the rest of the world. In fact, it's not that Canada is behind, it's that most of the western world has fallen behind China. We need to catch up for economic reasons, but also for geopolitical reasons, as Mr. Burton rightly mentioned.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

In closing, I would like to know if you have any concerns about federal-provincial relations in this dynamic between Quebec, Ontario and the federal government. Is there a favourable context for acting now? What would be the right time? How can this be done while respecting the provinces?

[Daniel Breton]

We shouldn’t wait, because Europe has really woken up. Since 2017, Europe has been developing a battery manufacturing ecosystem for electric vehicles. For this reason, we cannot discuss this issue for five or ten years, because other countries will have taken an insurmountable lead, and Canada will lose a historic opportunity.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you very much.

[Daniel Breton]

It was a pleasure.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Lemire and Mr. Breton.

I will give the floor to Mr. Masse for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you. Mr. Chair, I can't help but feel that I'm part of the fiddling that's going on as Rome is burning. Right now, about two kilometres away from me, we actually have a blockage at the Ambassador Bridge that is the lifeline for the auto industry in this country. There are MPs I'm working with who have been encouraging some of this activity.

At the same time, we're discussing how we could rescue investment for electric vehicles. The Stellantis plant in Windsor, which produces the Chrysler Pacifica, an electric vehicle, is currently shut down right now because of that activity. I still can't get any help, including from the Minister of Transport, who claims that it's a municipal issue to connect the roadway to the international crossing 17 kilometres away, to the 401 system.

The mayor is bringing an injunction right now, as I speak, to deal with this. We have right now the only electric vehicle production in our country shut down because of this. Even if we create more battery plants and more investment in this industry—even if we take, as Mr. Breton has proposed, some of these really good ideas about how we use transferable technology to other types of industries—it's all for naught. Just yesterday, the president and CEO of Stellantis was in Windsor to help decide about the new future, because the Pacifica needs a new product in the area later on. That's probably the most successful manufacturing plant since the Second World War. It has run until just recently on three shifts.

I have Ford right now actually airlifting products and pieces to its engine plants here in desperation, and those workers are done. I'm sorry I'm going on, but I'm using my opportunity as an MP to emphasize this. Down on the border, where these people have come, most of them aren't from the neighbourhood. Adjacent to it, Mr. Chair, is one of the most impoverished areas in Canada. It's called Sandwich Town, and that area right now is not only losing its quality of life but on top of that already has people who are unemployed, as well as students and others who have been disenfranchised. Ironically, they're the full victims of what's taking place.

I guess, Mr. Chair, I'm hoping that we can take advantage of this. I will propose at least a question to Mr. Breton, really quickly, though my time is evaporating through my obvious frustration with what's taking place here. I still see hope and opportunity for this, and I would ask him this. With our universities and with our assets, outside of the current problems we're facing right now, can we turn this around and also use, as he's noted, snowmobiles and other types of electric vehicles, so it's not just the car industry, as a wedge for us to be different and prosperous in our future?

Thank you, Mr. Chair. I thank the indulgence of the members on this meeting.

[Daniel Breton]

Yes, we absolutely can. The time is pressing. I don't know if you remember back in 2009, when we had a financial crisis, there was an opportunity there to develop EV research and development, like the U.S. did. We did not do that in 2009.

Now it's our second and last chance. We have amazing companies in Canada developing electric cars, electric buses, school buses, electric trucks and electric snowmobiles. I've mentioned to you in the past Lion Electric, based in Saint-Jérôme, which has 300 suppliers in Canada only.

Companies like that can be spearheading the transition towards electric mobility. If we don't do that now, if we don't accelerate the transition, what will happen is a few years from now all we will do is import technologies, batteries and vehicles from abroad. That's why it is pressing and we have to act on it now.

[Brian Masse, NDP, Windsor West, ON]

Again, aside from my current situation, it's actually really exciting.

Mr. Burton, you mentioned a rules-based order with regard to the United States, and obviously that's ironic with what's taking place now in my constituency, but I am hopeful. Can we work within our current trade agreement's context to smooth out some of these things, to have a North America trading bloc that's effective among Mexico, Canada and the United States, that's beneficial in enabling us to push back against some of the eastern imports that we are getting, not just from Europe but also from Asia.

Can you comment on that, please?