International Trade Committee on Feb. 25th, 2020

[Brian Topp]

Not only are they our only border, but with regard to our commodity exports, all our infrastructure is built to go there. We would be wise to diversity our infrastructure so that we can get to foreign markets, especially the Pacific one.

You know, a couple of weekends ago I was in Texas. I popped down to Austin to check it out. I was in the Government of Alberta for a while, and we took a close look at what happened in Texas. They were pretty smart there. After the 1986 oil shock, they told themselves essentially what I'm saying here, which is that we need to diversify and we need more markets. What's that about? It's about the federal government and provinces and industry, perhaps led by banks, deciding that we're going to systematically exploit both commodity and value-added markets in Asia-Pacific and in Europe, in a circumstance in which this negotiation has taught us how dangerously dependent we are on that market, and how little leverage and consequence we have. It's the second point that's really my point.

This trade relationship is governed by this agreement. Hopefully it's going to continue to be governed for some time, and we have precious little leverage here, because we really don't have any other significant markets to rely on. We must remedy that.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Topp.

Mr. Lauzon.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

I thank each of you for being present and for giving us such relevant information.

My next question is for Mr. Pearson and Mr. Gilbert.

Do you know what the approximate current production capacity of the Rio Tinto plant is?

[Éric Gilbert]

The old Arvida plant produces about 175,000 tonnes. When I talk about the old plant, I'm talking about the old potrooms.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

What is its capacity?

[Éric Gilbert]

That is its maximum capacity.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

So you're running at full capacity.

[Éric Gilbert]

As far as the old potrooms go, yes.

The 38-tank AP-60 pilot plant produces approximately 65,000 tonnes per year. If we ever have a phase 2 and a phase 3, it will have a capacity of over 500,000 tonnes.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

Let's just stick to the current phase. Regardless of the other projects, you're operating at full capacity right now, aren't you?

[Éric Gilbert]

Yes.

[Donat Pearson]

This is the Arvida factory. The Laterrière plant produces 260,000 tonnes per year, the Grande-Baie plant produces 235,000 tonnes per year, and the Alma plant produces 450,000 tonnes per year. This gives a total production of nearly 1.3 million tonnes per year in the Saguenay-Lac-Saint-Jean region.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

So your facilities are running at full capacity right now. Is that correct?

[Donat Pearson]

Yes. All the plants are running at full capacity.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

They are running at full capacity, shutdowns are made, repairs are made and production is resumed at full capacity.

[Éric Gilbert]

I don't want to interrupt you, but let's not forget that we're past the shelf life of the old prebake potrooms.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

Yes. We've discussed the equipment with your employer. You know that there are budgets for transformation, especially since you have made a green shift. There are already funds that are earmarked to help the industry. In addition, for a number of years, you have had assistance to maintain your business. The government has injected a lot of money into your company for maintenance.

[Éric Gilbert]

That's right, Mr. Lauzon.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

I've been wondering about something.

You said that for 10 years, in the last few years, the plant has been operating at full capacity. Now you're telling me that Rio Tinto is still at risk of losing jobs as a result of this agreement, and not developing further.

Those are two things you said, that ratification of this agreement will result in job losses and a drop in development.

Is that right?

[Éric Gilbert]

If we lose orders, it will have to come to that.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

If there hasn't been any ratification of an agreement like the CUSMA requiring 70% secondary processing of auto parts for 10 years, and if it was going well even though China was in the market—China was experiencing full growth about 10 years ago, and it peaked six years ago—how can you now expect to lose market share when the plants are operating at full capacity? In fact, your employer says that expansion is not being hindered at this time by the signing of the agreement, but rather that globalization and world market prices are changing the market. He made that clear to the committee.

How can you predict job losses and that things will go wrong when you are operating at full capacity?

[Donat Pearson]

You know that Rio Tinto is a very big company, managing billions of dollars. On our side, we see that the equipment is aging. We are very attentive and we follow very closely what is happening on the order side. There are certain technologies that are aging and there are frequent breakdowns.

When we are unable to supply our customers, what do they do? They look elsewhere for what they need. We lose customers over time anyway. Rio Tinto still manages to gain market share by diversifying. We're not against that.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

I understand what you're telling me, but the customers are there. In a company, it's normal to lose customers and it's normal to gain new ones.

What I'm saying is that the plants are currently operating at full capacity. It can't get any better, except that there's no investment. The owners told us flat out that it was globalization that was causing the investments not to be made.

I want to get back to the quality of your product.

[Donat Pearson]

Yes.

[The Chair, Liberal, Judy Sgro]

Monsieur Lauzon, you have 30 seconds.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

I'm a metallurgist by trade. I worked in the field of metallurgy for 21 years and I can tell you that the company that employs you has always been recognized. The person who taught in my department came directly from you.

The alloys you make stand out. It's the strength of your business. The company will always stand out.