Natural Resources Committee on May 7th, 2013

[Jeff Hryhoriw]

Okay.

It should also be noted, in addition to India and China, that recently the one with United Arab Emirates was another one that was concluded, as well as one with Russia. The significance of one like the United Arab Emirates is that it highlights another area of future expansion; the next frontier for nuclear energy might be some Middle Eastern nations. We've had a nuclear cooperation agreement with Jordan for some time now, and with the United Arab Emirates.

These are countries that have readily pumped their oil out of the ground and burned it to produce electricity, which is probably not the greatest for the environment. They've realized that it's not the greatest for their economy either. They can pull it out of the ground at a cost of $7 or $8 a barrel, and instead of selling it on the world market for $90, they're consuming it. They're starting to look at nuclear as a way to replace oil, not only from an environmental and a greenhouse gas perspective, but also from an economic perspective. The Middle Eastern nations, those that are credible and legitimate democracies, are the ones where the Canadian government is looking to now, and certainly the nuclear industry is peeking at them as well.

Beyond that, I mentioned there is an expansion going on with existing countries that have nuclear power. Those that are engaging in it and looking at it for the first time, which includes a number of South American nations for a number of reasons, are the areas the federal government has looked toward. The big emphasis obviously for the industry was getting the agreements concluded with China and India.

Now that they are concluded, I think there is some administration that goes along with actually making the transaction. First of all, we have to have a contract in place. Second, there is an involvement between the regulatory agencies from the respective countries, import and export permit rules, and so forth. The administration of the actual sales will now take over from the negotiation of nuclear cooperation agreements on the ground for us.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Let me get this straight, then. You're looking at South America, and some of the more stable Arab states perhaps. With these countries, is it the federal government that initiates this, or do you go to the federal government and say that you have a market there and would the government help you out?

How do you expand your markets? Where is the federal government involved? Again, this is not quite the free-flowing market that oil is or seems to be.

[Jeff Hryhoriw]

It's a bit of both, actually. In some cases the federal government has initiated discussions with various countries. The United Arab Emirates was one; South Africa was another.

I don't believe anyone in the Canadian industry actually approached the federal government about initiating these, but the government saw an opportunity and took it, to its credit. In other cases, as with China and India, I think it was an approach from industry to reinforce how important these growth markets are for us and wondering whether there was a way we could do it.

It's worth noting, when it comes to nuclear cooperation agreements, that these things take many, many years to negotiate.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

So should we start now?

[Jeff Hryhoriw]

Sure, start yesterday, if you have the opportunity.

Notably, the one with China was in place in 1994, but it did not cover uranium concentrates, which is what the Chinese are now buying. What was actually done in recent months and years was a protocol agreement which is almost like an attachment or an amendment to the existing NCA that has been in place for some time. You look at it and see that the NCA was first put in place in 1993 or 1994, I believe it was. It took this long to get to the point where we're comfortable with the arrangements that we're able to glean from China as far as sending uranium concentrates—

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

With respect to product diversification in your industry, are there regulations holding it back? What are the things that you're looking to do for product diversification? I assume you're looking to figure out more ways to get value from the raw uranium. You mentioned a few things the company is involved in. Are there things that can be done that are being currently held back because of Canada's lack of competitiveness in certain areas?

[Jeff Hryhoriw]

Yes, it's certainly Cameco's intention to be vertically integrated as a nuclear energy company. We are active in other value-added aspects of the fuel chain. The majority of our focus, the majority of our business happens to be uranium mining and so forth.

I don't think you'd hear a whole lot different from any of the witnesses you have before you today. I think the importance of labour market and workforce development can't be stressed enough when it comes to our industry's advancing and succeeding. Entry level positions are not that huge an issue for us, but when you get to some of the more highly technical, highly skilled positions—in Saskatchewan we have quite an economic boom going on ourselves—it seems the same resource companies are competing with one another for the same set of jobs over and over again, be it mine engineers, geologists, or environmental experts who help out on the regulatory front to ensure that our operations are as pristine as they can be. Those are jobs that every company is looking to fill. When you ask if there is anything that's potentially holding us back, I'd say it's workforce development.

I mentioned that Cameco's workforce has quite a component of first nations and Métis. We work very closely with those communities, as do governments. I think there's a role for all of us to do more on that front and ensure that we have an engaged workforce, a capable workforce, a well-educated workforce, because it's been a competitive advantage for our company. I think it can be even more so for us and for other companies that maybe aren't as deeply involved with aboriginal communities as we have been.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Mr. Trost.

We go now to Mr. Nicholls for up to seven minutes.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair, and my thanks to our witnesses.

Mr. Chair, I'm going to touch upon the role of investment, both public and private, and diversification markets, and then touch upon the role of collaboration in market diversification. If you get lost, just stick with me; we're on topic. I think we're all here with the idea of growing the economy in a balanced and sustainable manner, smart growth rather than blind growth.

The bulk of my questions are going to be for you, Ms. Drohan.

I'd like to ask a few questions on private investment in the energy sector. Although the government says that it doesn't pick winners and losers in the market, we've seen that the fossil fuel industry in particular has been subsidized to the tune of $1.3 billion. Yet in the private investment community, we have about 30% of GDP locked up in dead money. My question is about trying to stimulate value added, extracting value, and building value in our energy sector.

How can the government send a market signal to private investors to start putting their money into extracting value and adding value to our resource sector?

[Madelaine Drohan]

Are you asking me that question?

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Yes, I am.

[Madelaine Drohan]

Could you clarify something?

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Sure.

[Madelaine Drohan]

When you were talking about money being dead money, I wasn't sure what you were referring to.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

It's what's been called the cash hoard of private investors that have not invested. They're not taking the risk of investing in what are perceived to be riskier areas of the energy sector.

[Madelaine Drohan]

I'm thinking about that in terms of monetary policy.

I think that the message I heard from a lot of people is that the government should definitely stay away from trying to pick winners and losers, so it really shouldn't be trying to encourage a particular industry, whether that's a value-added industry or building on it.

What was also crucial and came across in these various countries is that the government has to continue to invest in things such as basic research. That was really stressed in all the countries I went to and back here in Canada. That, in fact, is the foundation on which other research is then based. That was one of the most important points.

In terms of other value added, it was interesting trying to get to the bottom of why some countries do more value added than we do. There wasn't a model that we could import here. For example, in Finland, they were talking about—this is both collaboration and value added—having to pay war reparations to the Soviet Union after the Second World War. In order to pay those war reparations, all the industries had to get together and figure out the most value they could get out of their resources. That is actually what led to their culture both of collaboration and of adding the most value to resources.

I'm wandering a bit, but the basic thing for government is to make the investments in basic research, infrastructure, and things that would benefit every industry, and then let them get on with their own value added.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

In terms of the collaboration, we know that the University of Alberta has just lost an important collaborator that was part of the Helmholtz-Alberta initiative. Part of the reason for the pullout was that the research wasn't diversified enough. Also, in talking with people responsible for running the program, they said there was no money for the logistics of collaboration. They didn't have the financial support from the different levels of government to actually run these collaborative things.

Did you see examples of public or private investment in the logistics of collaboration in these other countries?

[Madelaine Drohan]

Yes. In all of the ones I mentioned before about mass collaboration, Australia, Finland, and Sweden, it was initially started with a rather large government investment. Governments are pulling back a bit from their investment in it and letting the private sector take over there, but it was the government that started it to begin with.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

It's interesting. I've been looking at the example of Norway quite a bit. In terms of collaboration, the state there takes a collaborative approach to dealing with groups that may be perceived as oppositional, whereas this government seems to be taking a more adversarial approach. Are there things we could learn from Norway's approach to bringing in these groups perceived as oppositional, trying to work with them rather than taking an adversarial approach?

[Madelaine Drohan]

Certainly, and it goes back to my point again about the lack of collaborative spirit in Canada. We fancy ourselves as being quite collaborative, yet many of the differences are exaggerated. For example, lots of times when I was talking to people about this in Canada, they would say, “We can't do this because of federal-provincial relations.” I realize we're not Norway, but a country like Australia has more of a collegial mindset about pulling all the various players together so that everybody advances at once.

I said I couldn't find a satisfactory explanation. The only one that's been offered to me generally is that we have more of a North American individualistic approach here. The only way I can see getting over that is having leadership from the top to actually pull people together.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

The New Democratic Party believes in social collaboration, in collaborating as a society and not focusing so much on the individual. I personally might be biased, but I believe we can provide that leadership you're talking about.

I'd like to ask you a question about the idea of a metric of technology exchange for extracting value. I believe that was mentioned in your report, the idea of not just being happy with a raw material but actually extracting the value from it and coming up with sophisticated products. Are we particularly good at that in Canada, and how can we get better at having these sophisticated products from our raw materials?

[The Chair, Conservative, Leon Benoit]

Ms. Drohan, could you give a short answer, please. Mr. Nicholls' time is up.

[Madelaine Drohan]

It will be very short.

Yes, you're right. There's actually quite a good chart in the report that comes from the Conference Board which shows that we trail all the other resource producers on the technology and knowledge exchange. So yes, we should be doing a better job. I would say that going back to collaborative research is one way to encourage that idea of extracting more value, building more value.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Mr. Nicholls.

Mr. Garneau, go ahead, for up to seven minutes.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you, Mr. Chair.

Thank you all for being here. Please forgive me if I rush you along because I have lots of questions.

Mr. Hryhoriw, you talked about uranium concentrates. I don't know much about the products that you export. Do you add value in this country to basic uranium ore, among the products that you export?