National Defence Committee on March 23rd, 2026

[Wendy Hadwen]

I'll begin and then hand it over to Ms. Chan.

Public Services and Procurement Canada is the department responsible for the Defence Production Act. In addition, according to Canada's defence industrial strategy, the government would like to come back with a bill that should be tabled in Parliament soon.

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

Would you like to add anything, Ms. Chan?

[Isabella Chan]

In November, we already started using the production act almost like a proof of concept. We're able to use the legislation the way it's presented for us to start the stockpiling regime. Working with our colleagues at PSPC as well as National Defence, we're doing the fine tuning necessary in order for us to accelerate the stockpiling regime as needed.

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

Does Canada currently have sufficient stockpiles to support a prolonged military effort, such as if it had to participate in NATO operations?

My question is more for the official from the Department of National Defence, but I also encourage the official from the Department of Natural Resources to answer if she wants to add anything.

[Wendy Hadwen]

As to some of Canada's advantages in industry, such as in vehicle production or the aerospace sector, we have already integrated a lot into the supply chain. Nonetheless, the circumstances surrounding the operational requirement for the Canadian Armed Forces prevent me from determining exactly what we'll need.

That said, we are preparing for the future, when we will need the chips that Ms. Chan just mentioned, or space launches. That's why we're focusing on the sovereign capabilities set out in the document.

[The Chair, Liberal, Charles Sousa]

Mr. Bezan, you have five minutes, sir.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Thank you, Mr. Chair.

I want to thank our witnesses for joining us today.

Ms. Chan, you had talked about the 12 critical minerals. Some of them we produce, and some we do not. Which ones are we not currently mining?

[Isabella Chan]

Beryllium, tungsten and manganese are the three that we are not currently mining. That being said, we have the potential and advanced projects that could come online. For instance, I use tungsten as an example. We have two advanced projects domestically.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

We have significant deposits that would be worth pursuing, the mining and development of those resources, and then using them for leverage, as you mentioned before.

Out of the remaining nine, how many of those do we produce in significant quantities, including the downstream refining and manufacturing? How many do we require our allies and/or competitors to develop?

[Isabella Chan]

I'll answer the question in a reverse way, from your last point.

When you look at many of these critical minerals, they have over 50% coming from one single country. There is a general recognition that we need to diversify the critical mineral supply chain from that perspective because we have seen export controls, export bans, for some of them, which resulted in a disruption in the manufacturing in some of the EV batteries at one point, for instance. From this perspective, not just Canada but our allies as well are looking to build up every part of the supply chain, from the upstream—where it comes from either byproducts or the mining—all the way to the processed product.

The other challenge we're seeing is a lack of technology. For rare earth elements, for instance, or even lithium processing, outside China there are not a lot of capabilities when it comes to rare earth separation or converting lithium into lithium hydroxide. There's also an imposition of export control at one point from China.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

We talked about direct foreign investment. That also includes from non-market states, like the People's Republic of China.

As Mr. Kibble pointed out, there is a mine that's been shuttered in Newfoundland. That is one of the critical minerals identified by NATO. That one is called China Minmetals.

In Manitoba, we also have Sinomine, which had held major resource licences in the Ring of Fire. They still own a mine in Manitoba, called Tanco; it produces tantalum, which is on the critical minerals list, along with cesium and lithium. All that is being shipped to China in the raw form. I know that cesium is not on the list, but 75% of the world's cesium comes out of the mine north of Lac du Bonnet.

Should we be talking about making sure that Canadian companies, or at least our allied nations, are making those direct foreign investments rather than our competitors, such as China?

[Isabella Chan]

I would note that the Investment Canada Act allows us to look at investments in Canada. It is under the Minister of Industry's purview, so I won't comment too deeply, but I recognize that they have the ability to look at investments in Canada.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Ms. Hadwen, as we look at getting these critical minerals produced and getting ownership of them, we know the Department of War in the United States is making direct investments in mining and refining operations in allied nations, including in Canada.

Will we be making use of our own Defence Production Act to make those direct investments? How do we feel about other allies having ownership stakes in those mines and refining processes in Canada?

[Wendy Hadwen]

Thank you for the question. I'll make a start, but Isabella will be more specific.

The defence industrial strategy sends a very strong policy signal about our intention to build in Canada and our commitment to making the most of our supply chain. Some projects are more mature than others. This document is just over a month old. We will be prioritizing as we roll out the implementation. As Isabella mentioned, scandium and graphite are already good news stories. She has helped the government move very quickly.

I'll let her provide some more detail on equity stakes.

[Isabella Chan]

For the two transactions related to the Rio Tinto scandium project, the Canada Growth Fund came in and invested in the project through an artificial equity coupled with the offtake agreement to go into our stockpile.

Similarly, the graphite project was an equity stake for the Canada Growth Fund, with the defence stockpile as the offtake.

With the announcement of the critical minerals sovereign fund, we expect we will look into more investments to ensure the best value for the investments we make, not just in upstream but also in midstream processing.

[The Chair, Liberal, Charles Sousa]

Thank you, Ms. Chan.

Mr. Malette, you have five minutes, sir.

[Chris Malette, Liberal, Bay of Quinte, ON]

Thank you, Chair.

Let's have a little clarification on some of the points raised.

I would note that the 2009 sale of the Beaver Brook mine—which has come under a bit of discussion today—was, in fact, under the leadership—or prime ministership—of Prime Minister Harper. I might also note that Inco and Falconbridge were both sold to foreign interests under Prime Minister Mulroney. These historic sales are nothing new.

I would like to direct my first question to Ms. Chan.

We heard a statement presupposing that there is no international interest in investing here. Could you clarify this? Do we in fact have international investment and, if so, where and pertaining to what particular areas?

[Isabella Chan]

To give you an illustration or example of foreign interest in Canadian critical minerals projects, I would refer you to the now 56 in total announcements made under the critical minerals production alliance that include offtakes from a Belgian firm, from Japanese companies and from a number of EU member states.

As in my earlier point, there is recognition of the need to diversify the supply chain and ensure that trusted allies who are suppliers can bring their projects online.

[Chris Malette, Liberal, Bay of Quinte, ON]

My next question is for both Ms. Hadwen and Ms. Chan.

Canada is strong in extraction but still developing its processing capacities. What concrete steps would you say are being taken to build refining capacity domestically?

[Wendy Hadwen]

From a strategic point of view, the defence industrial strategy positions us to support this with a defence partnership, which could be everything from funding to collaborating and deploying—where it makes sense—all the resources we might need to take advantage of the supply chain opportunity we have in Canada.

This is new for us, of course. What you have is the beginning—the outlining of this policy interest on the part of all ministers related to the defence industrial strategy.

Isabella...?

[Isabella Chan]

One example I could give is this: Earlier in my remarks, I noted the $443 million that was announced under the defence industrial strategy specifically for minerals processing. One investment we've already announced is for the gallium out of the aluminum site of Rio Tinto. Gallium could be produced as a by-product of aluminum processing. We are not only building up the processing but also now adding to our capability when it comes to gallium production.

[Chris Malette, Liberal, Bay of Quinte, ON]

I believe I have time for one more question. I guess it would be for Ms. Chan, and Ms. Hadwen can choose to comment as well.

This is further to your comments on the last round of questioning. Rare earth elements remain a particularly sensitive file, given the concentration of global supply and the continued uncertainty created by Chinese export controls and licensing. What are the most practical steps for Canada to strengthen its position in rare earth extraction, processing and recycling? Parts of this have been touched on here and there, but could you distill that?

[Isabella Chan]

I would say that we're putting efforts into every part of the value chain from mines to magnets, I'll call it. Number one is a number of greenfield mining projects that we have invested in. I'll note that Torngat and Defense Metals are being tracked, and for instance, Defense Metals is also being tracked by the B.C. government.

When it comes to separation and processing, we have invested in the Saskatchewan Research Council, as well as in what I noted earlier in terms of Ucore, which has separation capability. With regard to the recycling, I mentioned the capabilities of Cyclic Materials, which have the recycling capabilities that we have invested in. We're trying to build out every part of the value chain when it comes to rare earth, recognizing that it is a vulnerability.

[The Chair, Liberal, Charles Sousa]

Thank you, Mr. Malette.

Thank you to the witnesses.

We're going to—

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

I have a point of order, Mr. Chair.

This is the last time we're going to have government witnesses in front of us, and I think we had some comments around strategic stockpiles. It's important for us, in order to do our work, to know what those strategic stockpiles look like. How much of each critical mineral do we have, and how do they make that determination? Is it what Canada needs? Is it what our NATO allies need?

We can ask them to submit it in writing since this will most likely be our last meeting on this. We need information on how they determine those stockpiles.