Industry Committee on Feb. 15th, 2022

[The Chair, Liberal, Joël Lightbound]

I welcome you all to this meeting of the House of Commons Standing Committee on Industry and Technology. I call the meeting to order.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Wednesday, January 26, 2022, the committee is meeting to study the sourcing and processing of critical minerals.

Today's meeting is taking place in a hybrid format, pursuant to the House order of Thursday, November 25, 2021. Members are attending in person, or remotely using the Zoom application. I urge all our colleagues attending in person in Ottawa to observe the health regulations in effect.

On behalf of the committee, I want to thank the witnesses who are with us today. I know that some of you answered our call at the very last minute, and we are grateful that you did so.

With us today is David Billedeau, Senior Director, Natural Resources, Environment and Sustainability at the Canadian Chamber of Commerce. We also welcome Patrick Gervais, Vice-President, Marketing and Communications at Lion Electric, and Martin Ferron, Mayor of the Town of Malartic and Prefect of the Regional County of La Vallée-de-l'Or.

We are grateful to you for joining us. Without further delay, let me invite you to give your presentations. You each have five minutes, starting with Mr. Billedeau.

[David Billedeau, Senior Director, Natural Resources, Environment and Sustainability, Canadian Chamber of Commerce]

Mr. Chair and honourable Members, thank you for the opportunity to attend today's discussion on critical minerals in Canada. As noted during the introduction, my name is David Billedeau. I serve as the senior director of natural resources, environment and sustainability at the Canadian Chamber of Commerce.

The Canadian Chamber of Commerce recently launched its Critical Minerals Council, which is co-chaired by Teck Resources and Toyota Canada and brings together 20 members from upstream and downstream corporations, academic institutions, industry, and indigenous associations. Together council members are focused on enhancing touchpoints between domestic mining and manufacturing companies, economic and environmental ambitions, and indigenous and industry stakeholders. In so doing, we hope to encourage the sustainable development of critical mineral supply chains in Canada and provide markets with the resources required to transition to a low-carbon future.

According to the International Energy Agency, the average electric vehicle can require six times the amount of minerals a conventional car does, as well as materials like nickel, cobalt, and lithium, which a conventional vehicle typically doesn't require. As another example, a wind plant needs up to nine times more mineral resources than does a gas-fired plant. In other words, the transition to a net-zero future hinges on the availability of critical minerals. Similarly, critical minerals are essential for food security, as the continued production and supply of minerals like potash are vital for crop production and quality. With this increasing demand in mind, the Canadian Chamber believes that an effective critical minerals strategy will unlock significant opportunities for Canada, which I would like to briefly highlight for you today.

First, growing domestic supply chains will reduce Canadian dependence on imports. According to the Centre for Strategic and International Studies, China provides more than 85% of the world's rare earths and is a primary global supplier of minerals that are essential for digital and green energy infrastructure. Our economic and environmental ambitions should not hinge on importing critical minerals from any one country, particularly when we have abundant reserves here at home. We must develop our supply chains, work with allies to advance shared interests and resiliency, and create domestic strategic mineral stockpiles.

Second, Canada has growing international market opportunities. To match domestic critical minerals production with increasing global demand, it's important to focus attention on facilitating resource development here in Canada, where it takes an average of over 15 years to move mining projects from discovery to first production. This lead time will impact Canada's decarbonization efforts while limiting international market opportunities. Accordingly, we must work with a spectrum of stakeholders to determine how to responsibly expedite development, including by securing venture capital for early-stage projects.

Third, our critical minerals strategy can create transformative economic opportunities that facilitate indigenous partnerships, reconciliation and self-government. Moreover, through collaboration with indigenous communities, universities and industry, the Government of Canada has an opportunity to de-risk investments that will address the social and physical infrastructure deficits in remote communities. With these opportunities in mind, we encourage the Government of Canada to deploy a critical minerals strategy that creates a cost-competitive business environment with regulatory certainty; develops domestic processing capabilities by facilitating new investments, refurbishing existing infrastructure and partnering with local communities; and provides an accurate critical minerals inventory and forecast for demand over the next 15 years.

Executing an effective critical minerals strategy is key to reinforcing Canada's global brand as a secure and sustainable supplier as well as supporting domestic and international low-carbon transitions and food security.

Thanks again for your time and consideration. I look forward to the discussion today.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Billedeau.

I'll now move to Mr. Gervais, from Lion Électrique.

The floor is yours.

[Patrick Gervais, Vice-President, Marketing and Communications, Lion Electric]

Mr. Chair, honourable committee members, thank you for inviting me here today.

Lion Electric manufactures all-electric heavy-duty vehicles. We are particularly known for our school buses, but we also manufacture minibuses for use as shuttles and specialized transit, as well as heavy vehicles, meaning trucks from class 5 to class 8 for different purposes, such as bucket trucks and refuse trucks.

Lion Electric contributes to the battery ecosystem in a number of ways. The batteries we use are the heart of our vehicles. Last year, we announced our intention to build a battery manufacturing facility at Mirabel, which will begin operations in the second half of 2022. The plant will have an annual production of 5 gigawatt-hours, making it possible to power around 14,000 heavy vehicles for use in Canada and the United States. The plant will be highly automated.

As you know, Lion Electric batteries have three major components: the first is the cell, the second is the module, and the third is the battery pack. We will be manufacturing modules and battery packs, but we will have to acquire the cells.

Our objective is to advance the development of the battery ecosystem in Canada. We have a number of advantages in the country, such as our natural resources and our production of green energy. We also have unmatched business intelligence. We are leaders in North America, if not the world, in terms of development, particularly because of all our natural resources. It is quite extraordinary.

However, cells are our weak link. We at Lion Electric want that capability to be developed here, in Quebec and Canada, so that we become a world leader in that respect. To do so, and to be in a position to exploit all our critical minerals, we need a supplier of cells. At the moment, we have to turn to foreign companies, mostly located in Asia and Europe. If it were possible for us to have us a cell manufacturer here, we would likely be one of the largest purchasers of cells in Canada, perhaps even in North America. It is important for us to strengthen this part of the supply chain, particularly with respect to the critical minerals, so that we can be masters in our own house.

The electrification industry is currently booming. It is a race. It is expanding in all countries and the competition is fierce.

The ability to have local sources goes hand-in-hand with our mission, which is to reduce greenhouse gases, GHGs. Clearly, it would also help us to become less dependent on imports and to avoid possible problems in the supply chain.

In our view, it is critical to keep our expertise here. To do so, we must develop all our skills. I feel that we are in a position to expand our strategic capabilities. Our country is strong in innovation. Of course, the demand for expertise in the local Canadian market is actually not huge. That is why, with the help of innovators and business strategists, we will be able to create new ways of doing things that will set us apart on the international stage.

At the moment, we at Lion Electric are working with more than 500 suppliers. Most of the components in our vehicles come from Canadian suppliers. For us, this is extremely important, especially in terms of our growth in North America and on international markets.

Our challenge is to navigate the links in the supply chain so that we can be sure that we always have all the components that are critical for our vehicles. We are still seeing price fluctuations, which will certainly continue in 2022. That is why it is important to strengthen our supply chain so that we can have local suppliers and, above all, so that we can advance the development of the battery ecosystem.

We need regulations and incentives that will not only encourage foreign companies to come and set up here, but will also provide a stimulus for our companies here to develop new products and to innovate. Going for the lowest bidder kills innovation, in our opinion. We definitely want industries to develop and innovate, but we also want regulations that will encourage the development of products here in Canada.

[The Chair, Liberal, Joël Lightbound]

Mr. Gervais, could I ask you to wrap up? We have already gone beyond the allotted time.

[Patrick Gervais]

My apologies.

The really important factor for us is the ecosystem. The field of batteries is critical if we want to become independent and have all the products vertically integrated in terms of the development and electrification of medium-duty to heavy-duty transportation in Canada.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Gervais.

The floor now goes to Mr. Ferron for five minutes.

[Martin Ferron, Mayor and Prefect, La Vallée-de-l'Or Regional County, Town of Malartic]

Thank you, Mr. Chair.

Thank you for allowing me to share with you the realities of a mining community, my town of Malartic, in Abitibi‑Témiscamingue.

Natural resources form part of our country's great wealth. Here in Malartic, we have a number of different natural resources. We may be known for our gold mines in Abitibi‑Témiscamingue, but that is not all we have. We also have multi-metal mines, and mines for rare earths and lithium. Recently, the Australian company Sayona Mining Limited acquired a second lithium deposit.

In Abitibi‑Témiscamingue, what concerns the community greatly is not just that foreign companies are buying our companies, it's also that they are buying innovating companies in what we call la filière minière, the mining industry. These innovating companies have developed expertise in various areas, such as the treatment of mine effluents, mining waste that has to be treated and cleaned, and the development and processing of certain products. They have developed expertise and knowledge that is well-known around the world in a number of respects, and we are fortunate to have them at home. These are critical companies that allow the mining industry to develop at top speed and to acquire new processes in terms of developing smart mines.

Technology is also making its way into the mines. It's no longer about men and women working with picks and shovels. Not at all; technology is everywhere and it was created here in our regions, either in Abitibi‑Témiscamingue, in our case, or in the Nord‑du‑Québec. Those companies merit specific attention in terms of developing strategic metals and the mining industry that will be created around them.

It is also important to recognize the vitality of communities as this sector is developed. Those who occupy and live in the territory must be considered. The industry must not be centralized in major centres; it must also develop around these companies and these mines. They will bring the wealth and they will also allow economic diversification through secondary and tertiary processing of the products. This has become an indispensable tool in the development and the vitality of the so-called remote regions, which may be far from the major centres but which are so important. It is essential in preventing those regions from losing their vitality.

Today, it is also critical to include the First Nations in issues such as strategic metals and opening mines. They live all over Canada and certainly here in Abitibi‑Témiscamingue and the Nord‑du‑Québec. They have to be included even before that, at the consultation stage. In the past, unfortunately, First Nations were often overlooked. Today, they are highly aware, and rightfully so. They are also asking to be partners and to be consulted. They also want the opportunity for development because of the natural riches. Those riches certainly make the companies a lot of money but they can also provide the First Nations with opportunities for development, for employment and for training. Mining companies have already come to a number of excellent agreements with the Algonquin First Nations here and the Cree in the Nord‑du‑Québec. Communication between First Nations and the mining companies that want to look for natural resources on their ancestral lands is an indispensable tool in their development.

The same goes for the host communities, such as we are in Malartic. A cohabitation agreement has been established with one of the biggest mining operations in Canada, located just on the border of the municipality. It allows dialogue with the municipality on principles of sustainable development and social acceptability. That should be done in advance, not after a mine opens, as was the case with us. We had the experience of living with a mine downtown.

Ways have to be found of acknowledging the community and helping it to develop. That will create wealth all around. The community that is going to be built around the battery industry in the coming years, must be helped, including all the expertise that will flow from it. For example, the Université du Québec en Abitibi‑Témiscamingue has research chairs that specialize in mining. They are specifically focusing on treating waste, which is a major environmental issue. Mines can be extremely polluting, as we have seen in the past. Today, modern strategies and techniques have been designed to reduce their impact on the environment to a great extent or to make up for them. There is always innovation along those lines.

The country and its regions develop because of new technologies, not just by occupying and developing the land. Companies that wish to come and set up here should first take steps to work with the host communities, the First Nations, and the mining industry that is already established here. It has extraordinary expertise that will help them to develop in the future.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Ferron.

We have enough time today for two rounds of questions, and we will start with Mr. Généreux for six minutes.

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

Thank you, Mr. Chair, and thanks also to the witnesses for joining us today.

Mr. Ferron, does the critical mineral sector where you are have any particular requests for the federal government and the Quebec government? Are you already receiving assistance from them?

[Martin Ferron]

It depends on the company but the mining sector does receive grants. Some of the companies that have developed a lot of expertise in very specific areas, like exports, receive export assistance in order to share their knowledge in other countries.

Some small companies are very specialized, in the treatment of mining waste and contaminants, for example, or in really advanced multimedia strategies for managing mining operations and cutting-edge technologies. It is a concern to see that these small companies, which are jewels in our crown, can be quickly bought up by foreign companies that take over control of them or move them away. That is somewhat of a concern for development in our regions.

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

How did the community perceive the purchase of one of your companies by an Australian company, a few months ago or last year?

[Martin Ferron]

You are referring to Sayona. I don't feel that the fact that it's Australian is a problem. However, I am concerned that perhaps they may not be familiar with our realities or with the First Nations in our region. Are they going to know the proper approach to take with the municipalities that their activities are going to impact, in terms of the economy, the environment and the human resources? When a mine opens in a region, it “strips” a number of local companies and businesses. They are already suffering from a shortage of labour, and it will only get worse.

So there are a number of challenges of which foreign companies should be aware. However, I feel that people can have more confidence in a company from Australia, which is part of the Commonwealth, than in a company from another country that could be more of a problem.

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

You have China in mind, I believe. Thank you, Mr. Ferron.

Mr. Gervais, you talked about cells, which are components of batteries. If I understood correctly, the plant that you are going to open soon in Mirabel will assemble the batteries, not manufacture their components. Is that correct?

[Patrick Gervais]

We will assemble two of the three components, but we will buy the third, the cell, which is the critical component. At the moment, we buy them from companies in Asia or Europe, but we are in talks with some companies that intend to set up here in Canada. If that becomes a reality, Lion Electric will clearly be one of its major customers.

At the moment, they are lithium-ion batteries. We use the 16850 cells but we are going to be using the 21700s, which are more or less the same as Tesla uses and which look like AAA batteries. In addition, solid-state batteries may well be arriving soon.

Technologies are evolving very quickly. Fortunately, we are independent of that. We can adapt, no matter what the technology.

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

Mr. Gervais, if I understood what you said correctly, we have everything you need in Canada to be able to create an entire battery.

At some time in the future, do you see Canada being in a position to develop the cells as well, the one thing we are missing in order to build an entire battery?

Do you have an idea of what might be possible?

[Patrick Gervais]

I think so.

Companies like StromVolt or Britishvolt, that are intending to come and set up here, could produce cells in Canada. Either or both of them could provide us with everything we need.

I am also the Chair of Accélérer, an organization established to speed up the development of the supply chain for electrification, not just for road transportation but for all transportation.

As I see it, having an organization with the ability to process all critical minerals into cells is clearly the only missing link that prevents Canada from becoming a pioneer and a leader.

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

Some mines may not be in Canada, such as the Neo Lithium mine in Argentina that was recently sold. That mine produces a type of lithium that could be processed in Canada, I believe.

What do you think about the fact that Canada does not oppose the sale of Canadian assets? Even though the mine is not in Canada, we need it for the transformation to electricity.

[Patrick Gervais]

We advocate for the development of Canadian companies. We want Canadian companies to stay here. We want companies to become Canadian-owned, but we also want to develop the supply chain here, locally, in Canada.

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

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Généreux.

Mr. Fillmore has the floor for six minutes.

[Andy Fillmore, Liberal, Halifax, NS]

Thank you, Chair. Should the connection drop, I apologize. My Internet connection has just become unstable in the last couple of moments here, so if I should disappear, another member will step in and use the time.

I think I have six minutes. I'd like to divide it equally, if I could, between two of our witnesses today, whom I thank very much for their time: Mr. Billedeau and Mr. Gervais. I'll start with Mr. Billedeau.

Mr. Billedeau, as you've said, critical minerals are an absolutely key component of the green transition around the world. The government is eager to position Canada and Canadian businesses such that we can make the most of this massive opportunity. It's a global competition. The race is on.

From your position at the Chamber of Commerce, what's the raw news that you hear from your members about what is needed to ensure that Canada remains competitive with regard to critical minerals?

[David Billedeau]

I think that's quite the loaded question, and I thank you for it.

A number of issues have been well documented over the years within the Canadian mining sector. Primarily, the industry faces three key issues that need to be resolved for Canada to really advance its critical mineral strategy.

First, it's both very difficult and very costly to identify critical mineral deposits, which are often located in remote regions, so Canada's natural resources industry remains relatively underdeveloped, as there is limited exploratory work being conducted.

Second, while southern parts of Canada have been mined for a number of years, the real opportunity for Canada to become a major critical mineral supplier globally requires development of these remote northern regions of the country, where there is a considerable lack of supporting infrastructure.

Last, underscoring all of these issues, the mining sector of course faces economic challenges: The immense capital cost of extraction, coupled with volatility of resource prices, creates significant challenges for creating conditions conducive to investment.

I think we have to think strategically. We have to couple a lot of Canada's strategic plans, including coupling our critical minerals strategy with our net-zero strategy to deploy decarbonizing green technologies across Canada, particularly in northern Canada, to become a global player on the world stage.

[Andy Fillmore, Liberal, Halifax, NS]

Thank you for that.

I want to shift to environment for a moment. When demand for natural resources surges, we have to keep sustainability front of mind. It's important in that rush to capitalize on the opportunity that we keep a grip on the environmental impact of the extraction and processing.

What role do you think Canada can play in making sure that sustainability is front of mind while also remaining competitive? What role can we play, and what are you hearing from your members on that front?

[David Billedeau]

It's important to note that sustainability and economic competitiveness are tethered: you can't compete without a strong sustainability program in this sector. Looking through a global lens, it's clear that the Canadian mining industry practises the highest environmental standards and harbours a meaningful commitment to sustainable development and production. I hope that addresses part of your question.

I'll maybe just build on my prior comment. To further improve the environmental performance in the sector, the chamber believes that connecting the critical minerals strategy and net-zero strategy unlocks a lot of potential. In particular, the chamber and our members would like to see the deployment of different decarbonizing technologies, inclusive of small modular reactors, hydrogen, and renewables such as solar and wind, as these technologies are vital not only for Canada's transition to net zero, but they're also vital to powering the sustainable operations of critical mineral supply chains. An effective coupling of these two strategies will not only reduce the environmental impact of mining, it also holds the potential for reducing operating costs, which in turn would support continued investment in the space.