National Defence Committee on Feb. 9th, 2026

[Dr. Michael Byers]

From a broader sovereignty and security perspective, it doesn't really matter much whether the rare earth elements or other critical minerals are located in southern Ontario or in Nunavut. In a lot of this conversation, we are talking about foreign governments or foreign companies gaining equity interests and the ability, in some cases, to decide whether to ship those resources abroad, even in the circumstance that they're needed in Canada for security reasons.

That issue of control over the products of a mine is a nationwide issue, and that's what we've been talking about so far. In terms of the Arctic, we have undisputed 100% control over all of the land territory in the Canadian Arctic. Our only dispute, concerning tiny Hans Island, was resolved in a very friendly way with Denmark three years ago. There's no question of sovereignty over land, and there's no country that disputes that sovereignty. There is, of course, a current president in the United States who has expressed a desire to make all of Canada the 51st state of the U.S.A., but that is a somewhat different issue.

We do have a couple of maritime boundary disputes, one of which is in the Beaufort Sea. There were negotiations on that between Canada and the United States during the Biden administration. It should be relatively easy to resolve. In terms of resources, it mostly concerns hydrocarbons that could be in the continental shelf. Access would be very expensive and is not feasible at the current world price for oil.

We also have, not a boundary dispute, but a dispute over the legal status of the Northwest Passage. The United States has long held that it's an international strait that foreign vessels can use without Canadian permission. Canada takes the view that it is Canadian internal waters and that our consent is required. We've agreed to disagree with the United States on this issue since 1988, in a moment of brilliant Canadian diplomacy by then prime minister Brian Mulroney in partnering with U.S. president Ronald Reagan.

In terms of sovereignty and critical minerals, my concern isn't about anyone gaining sovereignty over Canadian territory; my concern comes back to the issue of whether we would be able to say no in the event that a foreign-owned mining company were to choose to ship that resource out of Canada, even if it were needed here if, let's say, we needed access to some rare earth elements for the production of a fleet of fighter jets in Canada and saw that resource shipped off to China or the United States. That's a critical issue for me.

I'm very uncomfortable with the fact that the U.S. Department of Defense is acquiring an equity interest in some of these mines in Canada. That strikes me as a problem in our current situation, and I hope that we look at that during the renegotiation of CUSMA.

[Viviane LaPointe, Liberal, Sudbury, ON]

Dr. Byers, as the interest in Arctic resources grows, what kind of behaviour could we expect from foreign interests in testing Canada's boundaries, in your opinion?

[Dr. Michael Byers]

Again, I don't see any threat to our sovereignty over land.

Let me just say that Russia is the largest country in the world. It already owns half of the Arctic, unquestionably, without dispute, and it is seriously bogged down in Ukraine. China certainly has a very large appetite for resources of all kinds, including critical minerals and rare earth elements, but has found itself able to access what it needs through foreign investment and trade around the world.

We are in a deep trading relationship with China. When I look outside of my office window at the University of British Columbia, I can see dozens of cargo ships waiting to load Canadian natural resources to take to China. It's not so much, again, the fact that China is investing in Canadian resources and is purchasing Canadian resources; it's whether we have sovereign control over particular minerals that we need for our defence purposes.

As long as we have the ability to say no, which we do have under the Investment Canada Act, I don't actually see a problem, provided the government is vigilant. There was a period in the first couple of years of the Trudeau government when that vigilance shifted away. It slipped, and we saw a couple of high-tech companies, relatively small companies, that were purchased by Chinese companies when they really should have been subject to a national security review.

I think we got past that—

[Viviane LaPointe, Liberal, Sudbury, ON]

Dr. Byers, thank you, but I want to get a question to Monsieur Hernandez-Roy.

I want to ask you how U.S. policy-makers view partners like Canada in an effort to reliably secure defence-relevant mineral supply chains.

[Christopher Hernandez-Roy]

This administration in particular, but going back to the previous one as well, probably recognized the importance of critical minerals for defence sooner than anybody else in the western world. This administration in particular has been laser-focused on finding critical minerals that it deems necessary for U.S. national security, and the focus seems particularly to be repeatedly on rare earths.

You've seen the interest in Ukraine, the interest in Greenland, partnerships with Australia, interest in Canadian minerals and interest in minerals from places further afield, particularly in South America and Africa, although I don't know much about the critical minerals landscape in Africa. It's a strategy to find alternative sources of critical minerals that don't go through China, basically, and wherever those are, the United States is interested in finding them.

[The Chair, Liberal, Charles Sousa]

Thank you.

Monsieur Savard-Tremblay, you have six minutes.

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

Thank you, Mr. Chair.

I'd like to thank all the witnesses for being here and for their presentations.

My question isn't for anyone in particular, so anyone who feels they have something to add can jump in.

First of all, could we get an update on the agreement that was reached fairly quickly after President Biden took office? At the time, there was an agreement with Prime Minister Trudeau that gave companies in Canada and the United States access to the critical minerals of both countries. Could we briefly revisit this agreement so that we clearly understand what it involved?

[Dr. Elizabeth Steyn]

Thank you very much for the question. I apologize for responding in English, but I'm trying to save your ears from my horrible accent here.

The minerals security partnership that was entered into by Canada and the United States is more or less dead in the water at the moment. It exists in name still, but nothing is happening with it.

Its successor is twofold. There is the G7 alliance that is spearheaded by Canada, and then there is the recent endeavour by the Trump White House, which convened multiple other nations.

Nothing very much has come of that. There were a few investments made by both countries together, but I want to use this occasion to give you one very concrete example of a U.S. investment that can be detrimental to Canada. It is a Department of Defense investment in a Montreal company by the name of 5N. They manufacture germanium wafers.

Germanium is used for things like night vision goggles, which are military equipment. Germanium is in very short supply. China controls up to 97% of the world's germanium. We therefore want to make very sure that the U.S. doesn't control Canadian access to germanium. It's a Montreal company.

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

We'll come back to the United States later.

We know that attempts have been made in recent years to exclude China from the critical minerals file. Have they been sufficient?

[Dr. Elizabeth Steyn]

Well, it's excluded China in that, but we've also excluded ourselves. This has been only to the benefit of the United States, in the example I'm giving you at the moment. What I'm saying is that this has not been to the benefit of Canada.

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

Wasn't it still necessary to regain the confidence of the Americans by showing them that, for such strategic areas, China remains a concerning power?

[Dr. Elizabeth Steyn]

Certainly, although we have seen that in many of the critical minerals domains where we have previously been a supplier of choice to the United States, they've selected in the meantime to enter into contracts with Australia rather than Canada.

My submission to you, through the chair, is that we have not really succeeded in gaining their confidence.

[The Chair, Liberal, Charles Sousa]

Mr. Byers had his hand up as well.

[Dr. Michael Byers]

I agree with everything that Professor Steyn is saying, and I'm grateful for her expertise.

I just wanted to raise a related issue. It's not just about preventing, let's say, the Chinese government from acquiring control over a Canadian mine; it's also a question of stimulating investment in Canadian mining of rare earth elements and other critical minerals.

One of the problems at the moment is that investors are wary of investing in a Canadian deposit because of the possibility that China could then start dumping that same product and therefore undermine the profitability of the enterprise.

One response to that is for governments to acquire equity interests in the mine, because governments don't need to make a profit, but there is an alternative approach. This was the subject of a Globe and Mail editorial. The editorial board of The Globe and Mail suggested a while ago that having a government-provided price floor would accomplish much of the same thing. In other words, the Canadian government would guarantee to a mining company and its investors that when they started to ship product, they would receive at least a minimum price, and investors could make long-term investment decisions based upon that certainty.

I want to put that on the table. It's not necessarily just a question of excluding bad actors; it's also a question protecting investors in Canada from the possibility of dumping by bad actors that might want to discourage a rare earth element mining industry in this country.

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

The last point, about what could be put in place to attract investment, was very interesting. Now, we also have to ask ourselves how to distinguish an investment from a potentially harmful strategic acquisition, one that could ultimately draw a red line that shouldn't be crossed.

In fact, I'll go even further: Is the Investment Canada Act currently sufficient?

[Dr. Michael Byers]

I will have a try at that.

Under the Investment Canada Act and under international law on foreign investment, Canada can stop a foreign investment and could also stop the export of a product during a time of crisis. The national security exception internationally is very broad. As we saw in 2008, when there was no explicit national security exception in the Investment Canada Act, Jim Prentice still managed to read one in, so it's more a question of political will than anything else.

As I said in my introduction, I understand the government is currently developing regulations that will give greater specificity and therefore greater certainty to investors. Rest assured that if we were in a situation of geopolitical crisis, Canada could step in.

However, again, I worry that we could end up in a dispute, for instance, with the department of war in the United States saying, “No, no, no. We bought an equity interest, and under our contract, we have 100% right to use that product.” All of a sudden, you're into a dispute over that with the United States.

We need to do better. This has to be part of the CUSMA negotiations, and it should not be done bilaterally now.

[The Chair, Liberal, Charles Sousa]

Thank you.

Ms. Gallant, you have five minutes.

[Cheryl Gallant, Conservative, Algonquin—Renfrew—Pembroke, ON]

Mr. Hernandez-Roy, was it your understanding that the safeguards to protect sensitive sectors that were announced in the Prime Minister's strategic partnership with China would apply to critical minerals?

[Christopher Hernandez-Roy]

Unfortunately, I'm not sufficiently familiar with that to answer your question.

[Cheryl Gallant, Conservative, Algonquin—Renfrew—Pembroke, ON]

Dr. Steyn, would you comment?

[Dr. Elizabeth Steyn]

It was not my understanding.

[Cheryl Gallant, Conservative, Algonquin—Renfrew—Pembroke, ON]

Should the government extend these safeguards to include the critical minerals?

[Dr. Elizabeth Steyn]

I believe it should.

[Cheryl Gallant, Conservative, Algonquin—Renfrew—Pembroke, ON]

What kinds of critical minerals is China going after around the world? In particular, which minerals does Canada have that China has its eyes on?

[Dr. Elizabeth Steyn]

We do have large reserves of rare earths. We've been talking about rare earths, but China already has a lot of rare earths available to it.

What we do have recently is a lot of gallium and germanium. We have large stocks of nickel. Nickel is interesting, because nickel is one of the few things that China does not control. It's Indonesia that controls nickel in the world.

Also, our nickel is green, because we manufacture it with low-carbon renewable energy, which makes our nickel highly desirable.

Nickel, as I'm sure you all know, is the ultimate war material, going back to the Second World War, because of its use in the manufacture of various types of equipment. That is one that we should definitely look at, but we should also look at things like cadmium, which is not even on our critical minerals list as it is defined at the moment.