International Trade Committee on May 7th, 2021

[Trent Mell]

Thank you. That was an excellent summary, by the way, of the industry I'm in. I can't disagree with anything you said. I've had the pleasure of going to the White House a couple of times to discuss some of these very issues on cobalt and national security.

What I find fascinating here by way of an opportunity is that we have an auto industry, we have a mining industry, but it's this mid-section we're talking about, the chemical processing. It's not just the chemical processing that we're in; it's then the beneficiation of those chemicals into a precursor, and into a cathode, before it gets into the cell. These billion-dollar investments—$2.5 billion for SK in Georgia, $2.3 billion with GM and LG in Tennessee—are still at the assembly level. They're building cells. They're building battery packs. The window is still there for us.

I think your approach, sir, of collaboration is an important one. I think it's going to take some big players. I think we need to open our doors to foreign investors. The players like us that are coming in and starting the train, if you will, do need some bigger shoes to help us out, to try to connect that work. That's where I would start.

In terms of the permitting process—and I did it in B.C. with the Kemess mine, and now I'm doing it with the refinery—this idea of a one-window where, as an industry person, my team gets to interface with a point person, is really helpful, because we can't navigate very well.

Thank you for the question.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go on to Mr. Savard-Tremblay for two and a half minutes, please.

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

Thank you, Madam Chair.

Mr. Wayland, you mentioned that we are missing the boat on the energy shift that seems to be happening in the world right now, or at least needs to happen.

Why are we seeing these fears? How might we take advantage of the opportunities out there?

[Matt Wayland]

Thank you for the question. I'm going to pass it over to my colleague, Mr. Galbraith.

[Ross Galbraith]

Thank you.

I think an important thing is to be first to market with a lot of these technologies. My expertise is in the area of nuclear. I represent folks at a nuclear power plant. I think about when Canada was successful in days past at exporting CANDU technology to several countries around the world. There are other competing technologies. I think that right now, with the development of small modular reactors, those countries that can first develop some of this technology, demonstrate it, and put it in use and sell it will become the standard.

I think there are opportunities for two, three, four or five different designs for different purposes. One might be on-grid electrification; and one might be for remote use, for example, in the Canadian Arctic or in other areas of the world. I think we are perfectly positioned, because the Canadian Nuclear Safety Commission has already developed the regulatory regime that allows this type of development. We have sites in Canada, in New Brunswick and Ontario, and the Chalk River Canadian Nuclear Laboratories are prepared to demonstrate this technology. I think that when we build the first of the kinds, Canada's reputation in the nuclear industry will allow us to sell this.

The whole idea of these small modular reactors is that they will be part of a fleet. You won't just build a single reactor. The idea is that you manufacture them here, and you'll be able to sell 40, 50 or 100 of them. That's what really makes the economics work.

I think that for the people who can get to the market first, demonstrate it and sell it, it is an enormous opportunity. If Russia or other countries around the world get there first and their technology becomes the prevalent one, we will lose that opportunity.

Thank you.

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

Thank you for your answer.

[The Chair, Liberal, Judy Sgro]

We go to Mr. Blaikie for two and a half minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Mr. Mell, I want to follow up with you. We talked a little bit about what industrial planning might look like. For your industry, I'm wondering what you think.... If there's going to be a plan for the manufacture of EV batteries in Canada, we want to make sure that we're not just doing the mining here, but that we're doing value-added work in Canada.

What are some of the things you'd like to see as pillars of a strategy that would be mindful of workers in the industry, indigenous communities that may be the site for some of the mining, as well as companies like your own that are leaders in the field? What do you think government ought to be doing to bring all of those people together, and what are some of the pillars for a real plan that Canada can unfold over the next decade and more?

[Trent Mell]

Thank you for that excellent question, Mr. Blaikie. It's an excellent question.

For our refinery work, we're taking cobalt.... In fact, cobalt is not even produced in North America yet. That will come. We're taking cobalt from abroad, bringing it into Canada and creating the first supply of cobalt in North America. Then we have to put it in a battery. That chemical process doesn't yet exist, by and large, in North America. In year one, when we start producing, we hope that we will be maybe a year ahead of a bigger supply chain, and we hope that supply chain develops on this side of the border. In year one, we may be shipping a lot of our product to Europe. Some of it may go to Korea or Japan, where the install capacity is for the chemical process, the cathode-active material process.

There's a lot of discussion going on. I know at the federal and provincial level there is a lot of hope that we'll get the battery makers here in Canada. To me, from the policy side—and I think this is being done by your staff—it's important to try to connect those dots from where it's mined to where we sell our vehicle and to see where those gaps are.

I think that with the new administration in the U.S., we have maybe a little more competition than we did a year ago. I'd suggest that maybe we just have to move swiftly and bring all of together. We can have those discussions.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

So that table—

[The Chair, Liberal, Judy Sgro]

You have 30 seconds, Mr. Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

—hasn't been convened so far in Canada.

[Trent Mell]

NRCAN has done a really good job at doing that.

The auto supply chain that I'm talking with, the battery makers and the OEMs, are really focused on it. COVID really underlined the dangers of a global supply chain interruption and what that could mean. Onshoring is real. It's not just government, but industry as well that wants to see that.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

So there is a moment of opportunity here to get people at the table and figure out a plan.

[Trent Mell]

I believe so, yes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Blaikie.

Mr. Lobb, you have five minutes, please.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thank you, Madam Chair.

It's great to be here today. Welcome to all the guests.

Mr. Mell, I'm trying to get my head wrapped around something here about the entire EV sector. Let's use the example of LG, who'll be dealing with GM. Do they have a system—they'd be tier one to GM—where they would go to your facility and do an A to Z assessment of your facility to get an idea of emissions, etc., or your footprint, so that when they present it to GM and the public, they can say, okay, we've gone right up to northern Ontario, we're in Tennessee now, and here's what it is?

Does that discussion happen, or will it happen?

[Trent Mell]

That's an excellent question. I would say in many respects it does happen. I haven't talked about this yet for lack of time, but one of our really important competitive advantages in Canada is our energy grid. Our stated mandate is to produce the cleanest source of cobalt in the world and the most sustainable. That's the supply chain as well as our footprint. Our global greenhouse gas emissions for production will be half that of our Chinese peers. That matters to GM and that matters to LG Chem. We're all producing these sustainability reports for ESG investors showing that the zero-emission vehicle also has a low footprint to get to market.

So yes, that's part of it. With ESG I think Canada knocks it out of the park. The second part is qualifying the product. Yes, there would ultimately be a plant visit. Initially it's just a request to send your specs and send your product so that we can test it in our battery. It's not like just selling copper or gold into the international market.

[Ben Lobb, Conservative, Huron—Bruce, ON]

I know it's been covered already, but it appears that cobalt is not the favourite mineral amongst manufacturers. Is this something we're looking at, that within 10 years you won't find cobalt in an EV battery for a car?

[Trent Mell]

We're going to see less of it. The prevalent cathode is the nickel-cobalt manganese cathode. Where at one time, going back five years, about a third of the material was cobalt, now we're down to a point where we're somewhere closer to 10%. Tesla would be down to 5%. You might see that go to 3% or 4%. It's hard to take it out, because nickel gives you range and gives you energy density, but you need the cobalt to preserve the battery integrity to keep it from overheating and catching fire and also to preserve that battery so that you get your 10-year life.

With the people I'm talking to, when you hear executives talk about a cobalt-free battery, they're not cobalt-free. They're low cobalt. It just sounds good to say no cobalt.

[Ben Lobb, Conservative, Huron—Bruce, ON]

This study has to do with exports and the opportunities there. I can see the opportunities, but I look at it and say we know what we have with diesel engines and we know what we have with gasoline engines. But with this refinery that you built, the amount of fresh water used, for example.... I think 100 million litres a month would be used for this process.

How do companies like Tesla and GM, who want to be good corporate citizens, look at this fresh water that will be circulated through Temiscaming? How does that work?

[Trent Mell]

We did a life-cycle assessment of our environment. On water consumption, in fact we return more to the environment than we take. Obviously, we're meeting provincial guidelines. There are no tailings. We're not capturing this water anywhere. We're using it in our process. We're returning it back to nature—in a cleaner state, frankly, than when it comes into our pipe.

Water stress is something that you care about when you're in the Chicama desert and other parts of the world. In Canada we're blessed with a lot of water. You're able to use that process water to lower impacts in other ways. It is part of an assessment of what we call your emissions and your life-cycle impact, but I think the real focus for us, as a chemical process, is emissions. We don't have a big stack. We don't have almost any exhaust going out into the environment. From a holistic perspective, ours is one of the cleanest refineries—it might be the cleanest—in the world on the cobalt side.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Mr. Doucet, what's the biggest opportunity you folks have in your export markets? I hear different reports on CNBC where cardboard makers are having record years for production for online shopping and shipping and so forth. I guess some of your products would likely work their way in there. What is the biggest opportunity abroad that you see for your company?

[The Chair, Liberal, Judy Sgro]

Please give a brief answer, if possible, Mr. Doucet.