Industry Committee on Feb. 11th, 2022

[Dr. Charles Burton]

We certainly want to have our own capacity to be independent of other nations, including the United States. What's most important is that the supply chains be implemented among like-minded countries that respect the rules and the spirit of the WTO and the international rules-based order. They will not arbitrarily cancel contracts when there's a political dispute, or try to menace Canada if we started to crack down on Chinese state espionage or the harassment of people in Canada on some sort of flimsy pretext, and not allow us to get things that we desperately need because China's the only viable source for those components.

We should tighten up with our allies and be conscious that we need to have reliable supply chains that will not be subject to disruption and interference from countries that have geostrategic and political reasons for doing that.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Masse and Mr. Burton.

Mr. Généreux, you have five minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Merci, monsieur le président.

Je remercie tous les témoins.

Monsieur Burton, à mon sens, la vente de Neo Lithium au gouvernement chinois était une erreur. Quelle était l'importance de cette erreur pour le gouvernement?

[Dr. Charles Burton]

In general, when we have.... For example, when there was a reversal of a cabinet decision with regard to the sale of technologies from a Montreal company that was applicable to directed energy weaponry, or when we decided to allow China to acquire a large satellite company that had satellites that were used by the Pentagon and the Government of Taiwan, I really wonder who has been convincing our government that these things are a good idea.

When the matter of Neo Lithium came up, I just saw it as one of a sequence of decisions made at the most senior levels of government that mystify me, because they don't seem to be serving the Canadian interest and seem to be allowing China to consolidate greater and greater control over geostrategic matters and military matters, which could, in years to come, come back to haunt us very badly.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you.

Mr. Breton, I imagine that the sale of Neo Lithium troubled you, given that all of its products are necessary for the production of batteries.

When you see Canadian companies selling their mines, wherever they are in the world, I can't imagine that it makes you happy.

[Daniel Breton]

As I said earlier, I think most western countries did not see the speed at which the transition to renewable energy and electrification of transportation would occur, nor the scale of the need for critical minerals.

For geostrategic and military reasons, we need critical minerals and rare earths for these products. A few years ago, the Pentagon pointed this out and it is important to say so.

In my opinion, Canada has not acted quickly enough, and neither has the United States. In the last few years, some countries have let China buy up mines around the world. We closed down mines that were exploiting these critical minerals, because we said that the market was not there and we were looking at things from a too short-term perspective. Now we are starting to see the long-term implications.

China is really ahead of the rest of the world. Everyone is waking up right now and it's a rude awakening, but we need to wake up because it's urgent.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Breton.

Mr. Zaghib, you mentioned the possible establishment of three centres of excellence in Canada.

Do you already have an idea of the nature and location of these centres of excellence? What do you think the timeframe should be for the establishment of these centres?

[Dr. Karim Zaghib]

These engineering industrialization centres, as I call them, could manufacture graphite. For the furnaces, the processing with the machines is done in Japan or China. For graphite solidification, the machine is made in Korea, Japan or China. For the purification of all these materials and all the industrialization, we let our industries go.

It is very important to go back to the silicon industry. We need these centres to build a machine for the mines. There are many centres, but the ones being considered are specialized. We need to work with the industries so that these centres are built, for example, in Quebec, in central Canada and at one end of the country.

We need to work together, in collaboration with the universities. It is very important for industrialization that our mines are in Canada and that the machines, anodes, cathodes, cells and batteries are made in Canada.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you.

Mr. Fortier, you were talking earlier about a threat, because 6% of our GDP comes from the automotive sector. When you talk about opportunities—and I understand that we have them in Canada—what is the timeframe for setting up all the centres that Dr. Zaghib and Mr. Breton are talking about?

[The Chair, Liberal, Joël Lightbound]

Mr. Fortier, please give a short answer.

[Matthew Fortier]

Thank you.

As Mr. Breton said, other countries are far ahead of Canada. So it's going to take some time. Our friends at the Prospectors and Developers Association of Canada, or PDAC, have told us that it will take five, seven, or ten years to open mines.

Of course, it will take time, but we also have many advantages. In Canada, we have an automotive industry, human resources, and natural resources. There will be opportunities for Canada, but it will take some time.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Fortier and Mr. Généreux.

Mr. Gaheer, you have the floor.

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

Thank you, Chair.

My questions are for Mr. Fortier. We've heard testimony that may suggest that Canada's perhaps falling behind in the critical minerals race. I'd like to ask how far along Canada is, as compared with other western nations specifically.

[Matthew Fortier]

That's a great question.

We've talked about that a little already today. China, obviously, was well ahead of the rest of the world, and a lot of Asia has been able to catch up to China. I think the rest of the world, including Canada, is playing catch-up.

The good news for Canada is that we have these critical minerals. We're one of the very few countries in the western hemisphere that has most of these minerals, and, as we've heard today too, we have one of the best mining sectors in the world.

This is a possibility for Canada. Can we get these things out of the ground and get them into the products that the world needs? Absolutely, we can. There's a lot of work to do. We also need to process these things. We need to have a processing industry that can ensure that the minerals and metals that are mined are processed and then put into batteries and other important products for the transition that's to come.

We are playing catch-up, but the rest of the world is playing catch-up too. It's a reality, and I think one of my counterparts on this panel has said Europe has been really focused on this. Australia's been focused on this as well. They both have terrific battery strategies, and the U.S., as we all know, is playing offence now as well.

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

That partly answers my next question as well, but are there other western nations that have the right mix to get this right, in terms of the critical mineral resources, the R and D and the skilled workforce? Who are our competitors?

[Matthew Fortier]

The EU has developed a really interesting battery strategy, as has Australia. Here's the really interesting thing for me. Canada has the opportunity to have a battery strategy. We have an opportunity to have a zero-emissions vehicle strategy, because we have an auto sector here that is decades old and we have thousands of people who know how to put these things together and design really advanced auto parts. We've got an AI and technology sector in Canada. We're one of the very few jurisdictions in the world that can do all of this.

The question is, are we willing to do it? Are we willing to make the investments to do it? Are we willing to put political capital into this as well? I think we can and we should. This is part of Canada's industrial future, so it's not just minerals and batteries. It's heavy industry. It's advanced manufacturing. It's battery recycling. We are world leaders in a lot of this, so let's put it together. I think, frankly, Canada has a great opportunity to do that.

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

For lithium in particular, what are the critical next steps that we need to take to get the supply chain right? Is it the mines? Is it the roads to the mines? Is it the facilities to turn the lithium into something else? What's the next step?

[Matthew Fortier]

It's all of that. It is infrastructure. It is the mines. It's the processing and the R and D as well. I know there are others on this panel who have deeper expertise in the actual mining part of this, but you've identified the key components that need to be invested in. The reality that we are experiencing is that it needs to be invested in [Technical difficulty—Editor]

[The Chair, Liberal, Joël Lightbound]

The image seems frozen.

Mr. Gaheer, move to another witness because we've lost him.

[Matthew Fortier]

My Internet was unstable. I'm back though. I'm sorry I couldn't finish the last question.

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

We just missed the end of your answer.

[Matthew Fortier]

I was just saying that it's everything you've highlighted. It is the infrastructure. It is development of new mines and new technologies as well. You look at Alberta and there's a lot of interest in looking at oil wells and working with the brines to extract lithium. There's an opportunity not just for traditional mining here. The interesting thing for me is that there's an opportunity across Canada. The auto sector doesn't have to just be southern Ontario. That's an incredibly important part of the future of our auto sector, but it can be British Columbia, it can be Alberta, it can be Saskatchewan, Quebec obviously, and the Maritimes.

It's an exciting time, but we need to knit this stuff together.

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

What are the trade obligations with CUSMA? I wonder how that plays into this.

[Matthew Fortier]

Is that in terms of just auto parts in general?

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

Yes.