International Trade Committee on Feb. 25th, 2020

[The Chair, Liberal, Judy Sgro]

You have one minute left.

[Brian Topp]

I'm just about done.

The question then is the commodity exports aren't good enough. We're going to the world of electric vehicles. We're going to the world where services matter more.

My point is you have to work relentlessly to build them outside the United States or you're going to pay the price we almost did here.

[Chandra Arya, Liberal, Nepean, ON]

Sorry to cut you off.

[The Chair, Liberal, Judy Sgro]

You have 40 seconds remaining.

[Chandra Arya, Liberal, Nepean, ON]

Okay. I may not be able to ask questions. Maybe I just have to correct something. I said almost everybody who came here was just talking the survival game. The only positive note I heard was from the Chemistry Industry Association that forecast a possible $25-billion industry.

As you know, the chemistry industry is mostly adding value to the raw materials we have. I was quite surprised that they are even—I thought the basic polymer industry, the petrochemical industry, have no more here, but they are increasing capacity there.

Madam Chair, I know I am out of time, so thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Savard-Tremblay.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

My thanks to all the witnesses.

My question goes to Mr. Pearson and Mr. Gilbert, from local 1937 of the Syndicat national des employés de l'aluminium d'Arvida Unifor.

From what I understand, you are establishing a link between the provisions of the agreement and the sword of Damocles that may well be threatening a truly successful expansion of the aluminum plants. You are linking the two, if I understand correctly.

[Éric Gilbert]

Yes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

When Mr. Simard was here with us, he denied that there was a link. He said that actually one of the issues was the price of the metal. I recall asking him at the time whether it would not be preferable to copy the provisions on steel exactly into the provisions on aluminum. He was in agreement.

I feel that everyone recognizes that the provisions are not the same. However, when we debated this issue, we often heard that there is a protection in the form of the requirement that 70% of the materials used be from a North American source. Given that you deal with this every day, I feel that you fully understand the difference between parts and smelted and cast aluminum. We have been told, however, that there was nothing at all in NAFTA.

How do you react to that argument?

[Donat Pearson]

It would be difficult to say that there are no repercussions. Mr. Simard represents all the producers. So he represents the bosses. As Rio Tinto is a conglomerate, aluminum is not its only product. It has others elsewhere in the world. Aluminum represents only a tiny part of its global trade. If that conglomerate doesn’t make a profit in one area, they make one in others. Steel or aluminum doesn’t matter; they handle both.

We believe that there is a correlation. In NAFTA, it was described more or less like it is currently. The present conditions are helpful, but we need protection against Chinese or Russian dumping caused when products come in after secondary processing in Mexico. That is what is hurting us at the moment.

I represent one of the plants; it’s called Petits Lingots Saguenay. We produce small, 25-kg ingots for the automotive market, and used for light alloy products. Our plants are directly affected by the dumping in Mexico. Often, our production goes down because the dumping has a direct impact on us. Some minimal protection allowing us to prevent those imports would certainly help us.

I am not defending Rio Tinto, but I would say that we have no choice but to comply with the rules established between Canada and the United States. However, as the other party is not complying with those rules, it is difficult to be completely satisfied with how the current agreement is working at the moment.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

You also talked about the environmental value of your aluminum, which is moving towards carbon neutrality. Has that already happened or is it in the process of happening?

[Éric Gilbert]

The current phase is happening in Arvida at the Complexe Jonquière plant. Prototypes are presently being installed. A pilot project already has pots in operation. Of course, establishing a product like that at industrial scale is going to take a number of years. We are moving towards that at the moment. The aluminum produced by hydroelectric energy is certainly green aluminum. But if I use anodes as an example, which are manufactured carbon neutrally, that aluminum is the greenest you can get.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

By comparison, Chinese aluminum is produced in conditions that are not at all acceptable environmentally. It is said that it may be produced using coal.

Have you heard those rumours?

[Éric Gilbert]

Yes.

There are studies on it, but I could not confirm it. We produce two tons of CO₂ for each ton of aluminum we produce, whereas in China, it’s 18 tons of CO₂ per ton of aluminum. So that is eight or nine times more than we produce.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That’s not the same quality at all.

[Éric Gilbert]

No.

These are not publicly traded companies that produce aluminum in China or Russia; these companies are subsidized by the government. The goal is to make people work.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

In a period of climate change, I imagine that there will be a trend towards cars with lighter and lighter parts.

[Éric Gilbert]

That's right.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

So we can say that the aluminum produced in your area could eventually become a big industry that could develop its reach.

[Éric Gilbert]

Yes.

In addition, 85% or 90% of the aluminum we produce is value-added. Alloys are already integrated into the manufacturing process. For example, an aluminum door frame does not have the same alloy as a car door support. It's all relative in terms of the ingredients that are included. These are special and secret recipes. What is special about our region is the production of value-added aluminum.

[The Chair, Liberal, Judy Sgro]

Thank you very much Mr. Savard-Tremblay.

Mr. Boulerice, go ahead for six minutes.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Madam Chair.

Thank you to our guests for being here with us today.

Mr. Pearson and Mr. Gilbert, we were talking about more robust traceability rules that are included in the processes used in your plants.

What do you think the federal government could do to improve traceability measures for China and Mexico starting today?

We say we want to, but is it realistic to negotiate this on a piecemeal basis?

[Éric Gilbert]

We're a long way from the Mexican border, so it's difficult for us to monitor that. Basically, we have to go through the United States, and it's up to them to accommodate us. Otherwise, we could jointly set up an audit system and use auditors.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Are you asking the federal government to begin discussions with our American neighbours on this issue?

[Éric Gilbert]

I hope they've already started.