National Defence Committee on March 23rd, 2026

[The Chair, Liberal, Charles Sousa]

I call this meeting to order.

Welcome to meeting number 28 of the House of Commons Standing Committee on National Defence.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, September 16, 2025, the committee is meeting to resume its study of the nexus between national defence, national security and Canada's critical minerals sector.

Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person and remotely using the Zoom application. Before we continue, I ask participants to consult the guidelines on the table. These measures are there to help prevent audio and feedback incidents to protect the health and safety of our interpreters.

I'd like to remind witnesses and members to please wait until you're recognized by name before speaking. If you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can.

For interpretation, you can use your earpiece and select the appropriate channel. As always, all comments should be addressed through the chair.

I'd like to welcome our witnesses.

We have Wendy Hadwen, assistant deputy minister, policy-industry, Department of National Defence, and from the Department of Natural Resources, we have Isabella Chan, senior assistant deputy minister, lands and minerals sector.

I would like to proceed with the witnesses' opening statements of five minutes each.

Wendy, why don't you start us off?

[Wendy Hadwen, Assistant Deputy Minister, Policy-Industry, Department of National Defence]

Thank you so much, Mr. Chair.

Mr. Chair and members of the committee, thank you for inviting me to take part in this very important parliamentary study.

I would like to make three points in my opening presentation.

First, Canada's critical mineral assets represent an economic and industrial advantage for Canada, recognized in the defence industrial strategy; second, our critical minerals can play an important part in our own defence industrial supply chain; and third, we are also working at NATO to establish mechanisms for Canada's critical minerals to be part of an allied supply chain.

Starting with the economic advantage, every country is grappling with how to ensure strategic independence for their supply chains, and Canada is no exception. You may have seen that the defence industrial strategy's pillar four is focused on exactly this topic—supply chain security. What sets Canada apart, though, is that we are the supply chain in many ways. We don't have to find raw materials; we have them right here. We need to access and process our materials and make it easier for them to get to market, all of which we have started thanks to Isabella and her department's help, and we intend to do more of this. Specifically, the defence industrial strategy focuses on localizing production and strengthening domestic manufacturing.

Canada's defence industrial strategy commits Canada to taking the necessary steps to secure a domestic supply of key raw materials, particularly steel, aluminum and critical minerals. The defence investment agency will play an important role in procurement processes, and in negotiating stockpiling agreements and in long-term purchases.

This brings me to my second point.

Canada's defence sector, as you know, is an important contributor to the economy, with close to 600 firms supporting over 61,000 jobs and contributing $7.4 billion to GDP in 2022 across the defence value chain.

The defence sector in Canada is one of the most research-intensive industries in the country, with companies investing heavily in innovation. In 2022, the sector spent $440 million on research and development, which is more than three times the intensity of Canadian manufacturing overall. It also employs a disproportionately high share of science, technology, engineering and mathematics talent, giving Canada a strong advantage in developing and securing its defence supply chains.

Canada's defence industrial strategy defines 10 sovereign capabilities and 32 subcategories that together make up Canada's defence demand signal. These are areas in which Canada has business requirements and, more importantly, real industrial potential. In all of these areas, we can leverage our critical minerals advantage in keeping with the strategy's guiding principle of build, partner and buy.

There are two specific examples I wish to mention.

First, emerging quantum classical chips increasingly rely on materials like germanium, which can become superconducting when small amounts of gallium are added. This enables superconducting and semiconducting components to operate on a single chip, complementing silicon in next-generation quantum systems, which are outlined as a sovereign capability in the DIS.

Another example is space launch. As the government announced last week with investments of $183 million for sovereign space launch, we are set up with a lease agreement in collaboration with three innovative companies to deliver light-lift payloads to outer space within two years. There is materials science in the manufacture of rocketry and satellites, the opportunity being to reduce weight and increase flexibility but also to manage the transfer of heat and the resilience of these materials, all of which can be enabled by Canada's critical minerals advantage.

Through the defence industrial strategy, Canada can apply its programs, policies and scientific strengths to support the industries that create a military advantage and, at the same time, strengthen Canada's broader economic position.

I'll close on our participation in the allied supply chain. We are advancing critical minerals in defence with our allies through a high visibility project at NATO, the North Atlantic Treaty Organization, specifically on stockpiling critical minerals for defence. This was launched in June 2025 and will help facilitate access to a sufficient supply of critical raw materials for defence, such as lithium, titanium and rare earth elements. It will help make NATO less vulnerable to supply shocks and will reduce reliance on external providers.

Canada is taking a leading role in negotiations on an MOU to establish a coordinated allied framework, which we hope will be agreed to this year. Twelve allies are supporting us in this work.

Speaking of allies, I just came back from France, the U.K. and Belgium. All of our allies have consistently highlighted that access to critical minerals in defence is now a requirement for the activities of their armed forces.

Our allies have highlighted the urgent demand for secure, scalable and diversified supply of critical minerals for defence needs. They are eager to partner with us. They are already seeking secure supply chains and Canadian projects. Our allies and partners—not just in NATO but also Japan, Korea and Ukraine—expect Canada not only to have potential but also to deliver scaled, reliable production that strengthens our collective resilience.

This is precisely what the Department of National Defence, the Department of Industry, the Department of Natural Resources, and, more personally, Ms. Chan and I will be focusing on in the coming months. We welcome the role that the committee's study will play in helping us meet that challenge.

[The Chair, Liberal, Charles Sousa]

Thank you very much, Ms. Hadwen.

Ms. Chan, I pass the floor over to you.

[Isabella Chan, Senior Assistant Deputy Minister, Lands and Minerals Sector, Department of Natural Resources]

Thank you, Mr. Chair.

Thank you to the committee members for the invitation.

Thank you for the opportunity to contribute to your study on the nexus between critical minerals, national defence and national security.

Critical minerals have moved from being an industrial input to a global priority as concentrated supply chains, surging demands from the energy transition, and the focus on defence spending and military readiness converge to heighten their strategic importance in economic and national security. This is particularly salient in today's geopolitical context. The disruption in the flow of goods and materials in the Middle East impacts not only oil but also critical mineral supply chains.

Public reporting has noted that aluminum prices recently reached their highest level in nearly four years amid concerns of supply disruption through the Strait of Hormuz.

Modern munitions rely heavily on critical minerals, including antimony, arsenic, copper, nickel and tungsten, which are under growing supply pressures. Many of these critical minerals for defence are concentrated at the upstream and midstream of the supply chains, sometimes dominated by a single country.

Canada is in a unique and fortunate position in defence industry value chains.

For example, Canada is a current producer of the 12 minerals that have been identified as critical by NATO, or there is the potential to produce all 12. In addition to our significant upstream resource base, Canada also has the potential to expand midstream and downstream capacity, which I understand other witnesses have noted as essential to reducing allied dependence on non-market economies, as resource endowment alone does not guarantee supply security.

The Government of Canada recognizes that secure supply chains for critical minerals are a core element of defence capability, as they are integral components for a wide range of capabilities used by the Canadian Armed Forces, such as fighter jets and naval vessels, as well as for dual-use technologies, including communication systems, satellites and batteries.

We are taking concrete steps to strengthen the critical minerals supply chain, which will support our defence capability, operational readiness and national resilience. Canada intends to extract, process, manufacture and recycle critical minerals by building up every part of the supply chain at home, maximizing economic growth and employment.

First, through the Canadian critical minerals strategy, the government is accelerating exploration, project development and workforce capacity to increase supply of minerals essential to defence and defence technologies. In addition to the close to $4 billion announced in 2022 to support the strategy, budget 2025 also provided $1.5 billion under the first and last mile fund. That will be complemented by the $2-billion critical minerals sovereign fund, moving projects to final investment decisions faster, increasing domestic production, diversifying supply chains and strengthening national security.

The strategy also recognizes that timeliness is critical. Efforts are under way to improve regulatory efficiency and to advance projects responsibly with indigenous partners.

Second, Canada is making targeted investments to strengthen domestic processing and refining capacity to support the defence industrial value chains, including through the defence industrial strategy, which invests $443 million to develop innovative processing technologies and to support joint investments with allies.

Third, Canada is leveraging the Defence Production Act to stockpile critical minerals essential to defence applications and reduce supply risk.

Last October, the government announced it was entering into two offtake agreements. One is with Rio Tinto for scandium, which is one of the 17 rare earth elements and a key input into high-performance aluminum alloys for drones, missiles and other advanced applications. The other agreement is with Nouveau Monde Graphite for graphite, which is a key input in marine hulls and other structural components to enhance stealth capabilities.

Fourth, Canada is also working with allied countries to support the development of secure, non-concentrated critical mineral supply chains.

Canada and its allies understand that we cannot rely on non-market economies when they dominate global production and in turn wield these commodities as leverage for geopolitical purposes.

At the G7 leaders' summit in 2025, under Canada's presidency, leaders welcomed the critical minerals production alliance to address vulnerabilities. Since last October, Minister Hodgson has announced 56 new investments, partnerships and measures under the production alliance, including the two offtake arrangements I mentioned.

While pursuing domestic stockpiling, Canada is supporting a defence mineral stockpiling initiative with NATO partners and building its bilateral relations to secure these supply chains.

In closing, when it comes to addressing supply chain vulnerabilities, there is no one-size-fits-all solution. Let's go back to the examples of aluminum and scandium. Aluminum had an estimated global supply of around 73 million tonnes in 2025. It was only 80 tonnes for scandium, which is a niche mineral market with few producers and little price transparency. As such, it is more vulnerable to market manipulation.

At Natural Resources Canada, we're working closely with our colleagues at National Defence as well as Innovation, Science and Economic Development to make sure we understand the needs of the Canadian Armed Forces and the original equipment manufacturers that support them.

Thank you for your attention.

I would be pleased to answer any questions the members may have.

[The Chair, Liberal, Charles Sousa]

Thank you to you both.

We'll go to our first round of questions, at six minutes each.

We'll start off with Mr. Anderson.

[Scott Anderson, Conservative, Vernon—Lake Country—Monashee, BC]

Thank you very much.

When Conservatives under Stephen Harper looked to the north, we saw opportunities for jobs, for indigenous partnerships and for Canada's long-term prosperity. We took concrete steps to unlock this potential by opening exploration in the Beaufort Sea, investing in critical infrastructure like the Inuvik Tuktoyaktuk Highway and giving northerners more control over their resources through devolution.

In contrast, the current government shut the door on Arctic energy with a sweeping offshore drilling moratorium in 2015. It layered more red tape on to mineral exploration and drove away investment through artificially created uncertainty. The result was lost opportunities, fewer jobs and a north that is no closer today to reaching its full economic potential, when we are in an economic and strategic emergency.

Now we are starting from a standing start, when we should have been a decade ahead. We have been on a strange, postnational flight of fancy for the past decade, and now we have to face reality. This point is important for Canadians to understand.

Ms. Chan, you mentioned leverage. I notice that Pierre Poilievre has been talking about using our natural resources for leverage for some time now. I think this is the first time I've heard it coming from the government.

How do you plan to use the materials for leverage?

[Isabella Chan]

In my opening remarks, I noted the importance of working with our allies under the critical minerals production alliance. To that very point, we have already announced a number of initiatives, with offtake agreements with our allied countries. For instance, there's the recent stockpile on the Nouveau Monde Graphite project—

[Scott Anderson, Conservative, Vernon—Lake Country—Monashee, BC]

With respect, how are we using it for leverage in these negotiations?

[Isabella Chan]

Do you mean with our allied countries under G7?

[Scott Anderson, Conservative, Vernon—Lake Country—Monashee, BC]

Yes.

[Isabella Chan]

We are positioning ourselves as a trusted supplier. From this standpoint, we are accelerating a number of our projects to ensure that we are a supplier of some of the dominated critical minerals. For instance, we are one of the few producers outside China that produces scandium. We have one of the few projects in North America that produces natural graphite.

From this perspective, we're positioning ourselves as a trusted supplier. We're also working with allies to understand their demands, and to Wendy's earlier point, we're working with NATO to understand its demands and match them up with the supply chain we're trying to diversify.

[Scott Anderson, Conservative, Vernon—Lake Country—Monashee, BC]

In other words, we're going to get something for this, but we're not quite sure how yet.

[Isabella Chan]

I would look at it from two perspectives.

Number one is that the delay in some of our projects is the investment needed to get to a final investment decision. From this perspective, with some of our allies able to put forward some of the offtakes, it supports the acceleration of projects coming online.

Another perspective is that in order for us to diversify the supply chain, which is what we've done under the G7 critical minerals action plan, we can work with our allies to look at and understand what some of the niche critical minerals markets are.

In some of these markets, the volume is so low, it's not that a number of projects need to come online. It's that the right near-term projects need to come online to secure the supply chain and diversify.

[Scott Anderson, Conservative, Vernon—Lake Country—Monashee, BC]

Ms. Hadwen, based on your experience, what immediate actions should the federal government take to restore confidence among mining investors who currently view Canada as closed for business?

[Wendy Hadwen]

On March 12, the Prime Minister announced $32 billion of investments in the Arctic. That included some infrastructure for airfields, hangars, ammunition and fuel facilities, buildings, equipment, warehousing, IT, general support and roads.

[Scott Anderson, Conservative, Vernon—Lake Country—Monashee, BC]

This is infrastructure, and that's great, but how are we going to restore confidence among investors who look at the legal and the environmental red tape that's tangling up these investments? How are we going to attract them and let them know there's certainty in what they're doing?

[Wendy Hadwen]

One step is that the defence industrial strategy publicly commits Canada to moving in this space. It specifies specific critical minerals and then commits us more broadly to the whole suite of them. Also, our work at NATO is public. In this way, we're signalling that the defence and the entire government ecosystem is orienting toward getting our products to market and putting the infrastructure in place to facilitate this. There is, of course, more to do.

Isabella, you might wish to add to that.

[Isabella Chan]

I would approach this question with a number of elements. First and foremost, investors are looking for regulatory certainty and acceleration.

From this perspective, we are working with our provincial and territorial partners to look at “one project, one review”. I would note that, to date, three provinces have already finalized co-operation agreements with us: B.C., Ontario and New Brunswick. We are also working on a number of draft agreements with Manitoba, P.E.I., Nova Scotia and Alberta. Regulatory certainty and acceleration are aspects that are attracting foreign investment, as well as private investment domestically.

Another one is the creation of the MPO, the Major Projects Office. Its intent is to accelerate projects to make a final investment decision.

Third, I would look at it from the perspective of federal investments into the mining sector. We have announced the first and last mile fund, which builds on the success of the critical minerals infrastructure fund. There have been a number of investments made to ensure not only that projects get the support they need when it comes to infrastructure but that they're also able to take the investment and get to a final investment decision faster.

I would note that the first and last mile fund and the critical minerals sovereign fund are additional tools that have been announced. We can use them to support coinvestments either with other sovereign countries or with our private investments.

[The Chair, Liberal, Charles Sousa]

Thank you, Ms. Chan.

Ms. Romanado, you have up to six minutes.

[Sherry Romanado, Liberal, Longueuil—Charles-LeMoyne, QC]

Thank you, Chair.

Through you, I'd like to thank the witnesses for being here this morning.

I'll start with Ms. Hadwen.

Ms. Chan mentioned the current conflict in the Middle East, so I'm going to focus a bit on that. In light of the current conflict and the disruption to global energy flows, what does this moment tell the Department of National Defence about the importance of resilient domestic supply chains for both energy inputs and dual-use minerals when planning for Canadian Armed Forces' readiness and allied commitments?

[Wendy Hadwen]

The current situation underlines all the more that the government's direction to diversify our trade relationships and to invest in rebuilding and rearming the Canadian Armed Forces is on the right path. The opportunity is for us to go a little faster.

[Sherry Romanado, Liberal, Longueuil—Charles-LeMoyne, QC]

In terms of this, you mentioned in your opening remarks—I want to make sure I say it correctly—that not only are we part of the supply chain, we are the supply chain, because we have these critical minerals and the capacity to produce and to export.

NATO has published a list of 12 critical raw materials for defence from the defence industrial planning perspective; how is the Department of National Defence thinking about which of those materials matter most to Canada's own capability needs, and where can Canada make the strongest contribution to allied supply chains?

[Wendy Hadwen]

We are looking at exactly this.

First of all, I would like to say that, when we prepared this defence industrial strategy together with all our partners inside government, we began by benchmarking against 17 other defence industrial strategies around the world to see what it looks like. This is Canada's first-ever document of such a type. We read 17, and we found that everybody has something about supply chains, but we were the only country in a position to go so far as to say that we are identifying these particular minerals of advantage and that we are going to invest in getting them produced, processed and to market. This puts us in a really unique leadership role that we've translated into our leadership at NATO. The projects Isabella referred to, scandium and graphite, are two immediate ways in which we've moved to translate it into action.

When it comes to how the Canadian Armed Forces will integrate our own supply of raw materials, process and so on into our equipment, this is some work in which we're starting to identify right away, first of all, which capabilities will benefit from a domestic supply chain. In this respect, I would say that the defence industrial strategy highlights a build-partner-buy methodology.

When we are building in Canada, we have the chance to incorporate Canadian metals and minerals in the supply chain. We will be making every effort to get this to happen quickly where we have the product, aluminum and steel, which are obvious places to start. I mentioned quantum and space launch because we see opportunities there as well down the line.

[Sherry Romanado, Liberal, Longueuil—Charles-LeMoyne, QC]

On that note, last week I was visiting Reaction Dynamics, which is in Longueuil. It's one of the companies that received some of the funding. It's a great company.

My next question will be for Ms. Chan.

We often focus on primary extraction, but resilience also means redundancy. How important is reprocessing and recovery from by-products and waste streams, especially for rare earths and other defence-related minerals, to Canada's long-term security and competitiveness?

[Isabella Chan]

Thank you for the question.

I would say that this is a very important part of building out the whole supply chain. If you can imagine, to get a greenfield mining project online, it takes, according to S&P Global, 20 years from exploration to the actual mining development and to be in production. From this perspective, we are looking at multiple parts of the value chain.

Number one is looking at some of these by-products. I note that, for instance, the by-products of zinc processing would be germanium, gallium and antimony, which are all used in defence applications and in dual use.

We're also looking at recycling. For instance, we now have Cyclic Materials, which is recycling rare earth elements. That way, we're not waiting for greenfield mining projects. We're looking at the recycling capability as well. That way, we can get some of these projects online faster to supply the supply chain in a shorter timeline.