Chair and honourable members of the committee, thank you for the invitation to appear today.
I would like to make three points regarding the defence industrial strategy and critical mineral supply chains. First, Canada has made meaningful progress on critical mineral security in the past year, particularly through the work of Natural Resources Canada and through allied coordination initiatives such as the G7's critical minerals production alliance. Second, we need a much more sophisticated understanding of supply chain vulnerabilities that goes beyond mining itself. Third, the defence industrial strategy's commitment to developing a strategy by this quarter to expand the production, processing, stockpiling and procurement of defence critical minerals requires that we think very strategically about what market-shaping mechanisms government should use to support resilient supply chains.
Canada is in a relatively strong position globally. We are a major producer of many strategic commodities. We possess significant untapped reserves and are viewed internationally as a stable and trusted supplier. That reliability matters more today than it did five years ago. What has changed is not simply demand for minerals but also the geopolitical environment around them. Critical minerals are no longer just commodities. They are instruments of industrial strategy, national security and geopolitical leverage.
Over the past several years, advanced democracies have become increasingly aware of how concentrated many of these supply chains are, especially in processing and refining. In some cases, allied countries may possess mineral reserves but remain heavily dependent on strategic competitors for the midstream stages of production that transform those minerals into usable industrial inputs. That means supply chain resilience cannot be measured simply by counting mines.
Vulnerabilities often exist further downstream, with refining, separation, precursor materials, processing technologies, logistics, transportation corridors and advanced manufacturing capacity. As a result, the challenge facing western countries is not primarily one of geology. In many cases, the resources exist. As the DIS acknowledges, Canada itself is a producer and has ample reserves of steel, aluminum and 10 of the 12 NATO critical minerals. The challenge is whether market-oriented producers can survive long enough to build alternative supply chains in sectors where competitors have spent decades using industrial policy, state financing and subsidized processing capacity to establish dominance.
This brings me to the defence industrial strategy and its commitment to developing a stockpiling strategy by the second quarter of 2026. I think this is an extremely important initiative, but I would encourage the committee to think about strategic reserves in broader and more modern terms than traditional Cold War stockpiles.
Strategic stockpiles today are not simply emergency inventories. They can also function as market-stabilization mechanisms that help sustain allied production during periods of price suppression or geopolitical disruption. They are being discussed across the west in ways that seem prone to heavy-handedness and inelegant structures that unnecessarily distort commercial markets. We will not beat our adversaries by copying their playbooks, but rather by taking advantage of our own strengths. It is important that we maintain industry-led and government-enabled approaches, rather than the other way around.
One important principle is the idea of a cost-based floor price. If governments are serious about maintaining domestic or allied production capacity for strategically important materials, there may be circumstances where governments establish a minimum purchase price based on the cost of sustaining production. The purpose is not to eliminate market discipline. It is to prevent strategically important industries from collapsing during periods of artificial oversupply, predatory pricing or geopolitical market distortions.
I recommend that the government act as a buyer of last resort, not first resort. Producers should continue prioritizing commercial customers whenever possible. However, when demand temporarily disappears or prices fall below sustainable levels, governments can provide strategic support through offtake agreements, contracts for difference, tax credits or reserve purchases that stabilize investment conditions. This matters because mining and processing investments are long-term decisions. Companies will not build multi-billion-dollar processing facilities if they believe prices can be strategically collapsed before projects reach profitability.
The key point is that these tools should be targeted and disciplined. Not every mineral requires the same policy response. Some materials may justify strategic stockpiles because they are low-volume but essential for defence technologies. Others may require support for processing infrastructure, permitting reform or coordinated allied procurement. Some markets may benefit from pricing transparency initiatives or pooled financing mechanisms with allies. In other words, these minerals should not be treated as a single market or policy category.
I expect and hope that NATO or the G7 has a working group that's looking at a series of minerals and their production and processing choke points and that's assigning responsibility to fill those gaps with the most appropriate market stabilization mechanism. For obvious reasons, this work wouldn't and shouldn't be made public, but I would think the committee would want to make sure that such work is being done.
The final point I'll emphasize is the importance of allied coordination. Canada should not attempt to replicate every stage of every supply chain domestically. That would be prohibitively expensive and inefficient. Instead, we should think in terms of resilient interdependence among trusted allies. That means coordinating stockpiles, aligning our processing strategies, sharing market intelligence and reducing duplication across allied economies. I'll have some more recommendations in a paper on June 4 on how we could do this with our allies in Australia.
I think my time is probably close to being up, so I'll end there.
Thanks. I look forward to your questions.