Evidence of meeting #13 for Natural Resources in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
A recording is available from Parliament.
Senior Vice-President, Minerals Services, SGS Canada, As an Individual
You asked about supporting and avoiding. I agree with Ms. Moreno's comments about policy and the confidence that would come from statements of interest and statements of importance. There is always an opportunity to look for funding, but I will confess that at this point it's not obvious what that funding would look like or how it would look. That goes back to Mr. Gravel's question, where we're still really trying to work on models that would be effective, that we could propose to government to engage industry.
The only avoids that I could offer at these early stages would be to try to facilitate without taking over the industry. I think the industry needs to continue to be led by the industry partners and by the drivers that are going to have to own the production and own the facilities. The risk is that we might get too aggressive in government involvement. That would be the only caution that I would offer at this point.
Thank you.
Liberal
Geoff Regan Liberal Halifax West, NS
Professor Papangelakis, in terms of the byproducts and wastes that are involved in mining and processing rare earth elements, my understanding is that thorium, which normally is produced in that process, is radioactive. Although it has a considerably shorter half-life than, say, uranium, it's still a challenge and an issue.
How much of a problem is it for the development of processing facilities here in Canada, and what research and development is being done to address this challenge?
Professor, University of Toronto, Chemical Engineering and Applied Chemistry, As an Individual
Thank you, Mr. Chair.
First of all, thorium is not an issue for all Canadian development. Thorium is not an element that shows up necessarily with every single rare earth mineral deposit. It occurs with some, not with others.
I am personally not aware of any systematic research that has been done to address the thorium stability issue in tailings. This is something that definitely has to be part of the research priorities.
But in Canada, we have a lot of experience from the uranium mining in Saskatchewan, and dealing with the radioactive tailings. Again, I am not an expert in this area, but I would say in Saskatchewan the management of the uranium tailings should meet the environmental requirement.
Liberal
Geoff Regan Liberal Halifax West, NS
Professor, you talked about the materials research institute in the U.S. I have forgotten the exact name of it—
Professor, University of Toronto, Chemical Engineering and Applied Chemistry, As an Individual
Critical Materials Institute.
Liberal
Geoff Regan Liberal Halifax West, NS
Thank you.
As well as the European Union investing in research.... Obviously, those are two entities that are much larger than Canada, much larger economies and populations. If Canada's government were to invest in this area, does it make sense to focus on a particular aspect, or does it make sense to try to arrange some cooperation with either the American institute or the European? To what degree should we be doing this entirely on our own?
Professor, University of Toronto, Chemical Engineering and Applied Chemistry, As an Individual
First of all, cooperation already exists in the form of the exchange of technological ideas and each party being aware, more or less, of what the other party is doing. What is missing, in my mind, is an investment that will enable Canada to develop its own in-house technology that is adapted to the types of minerals we have here in Canada because every location has different needs. For example, in the United States, Mountain Pass in California is the major source of rare earth production, although this mine has low grades in heavy rare earth elements.
In the European Union, on the other hand, the main focus is on recycling because it's a huge population and there is a lot of electronic scrap moving around and they are looking at recovery by recycling.
In Canada we have unique deposits. We need to be able to develop technology that is well adapted and suited to these types of deposits.
The way funding for industry-focused and oriented research works here in Canada is NSERC, which is the major funding agency for research in engineering in Canada and is leveraging, for every dollar the industry contributes, about one and a half dollars as a contribution toward research. Given the nature of these companies being in their infancy and not being in production, and therefore not having the cash—compared to other companies that are at the production level—to support research, it makes it a little bit difficult.
This is where the government may allocate or define some priority areas within NSERC, for example, and there are precedents. It has happened in biomedical technologies. It has happened in the past that priority funding has been allocated so that leveraging is not $1.50 to $1 but perhaps $2.50 or $3.50 for a short period of time until we move the technology to a level that will enable the industry to develop and flourish on its own.
Conservative
The Chair Conservative Leon Benoit
Thank you.
Thank you, Mr. Regan.
We go now to the five-minute round, starting with Ms. Block, Ms. Crockatt, and then Mr. Julian.
Go ahead, please, Ms. Block.
Conservative
Kelly Block Conservative Saskatoon—Rosetown—Biggar, SK
Thank you very much, Mr. Chair.
I want to thank our witnesses for being here today.
This is an incredibly interesting study that we have embarked on, and even though it's going to be a short one, I know that we will be left with much to contemplate and consider going forward.
I just want to highlight a few things I heard, and then ask for clarification on two things that I understand about this industry. The first is that we have many potential producers but not actual producers. The second is that every company is dealing with unique or different mineral deposits, and also that these are islands of complexity and that there is a willingness to build the supply chain.
Tying all those things together, it's my understanding—and this is where I need clarification—that there really needs to be a high level of certainty at the front end of the supply chain for a mining company that the deposits they are preparing to drill for actually will yield what they are hoping will be yielded.
The second is that the rare earth elements industry is actually one industry where the complete supply chain, including the value-added pieces, needs to be in place for economic benefits to be realized. It's not that a company can just focus on mining the mineral itself but that we need to see that whole supply chain and value-added piece in place.
I'll throw that out to anyone who would like to answer that or clarify that for me.
Senior Vice-President, Minerals Services, SGS Canada, As an Individual
Maybe I can start. I think your understanding is good. The four points that you brought up have identified the issues and tell me you appreciate what the challenges are. The conversation about knowing that you can sell your product is a common one throughout the mining industry. Whether that product is a concentrate, a partially refined concentrate, or a finished metal, there is always a requirement in the legislation, in fact, at this point to be able to go forward with a reserve or with a resource calculation, to be able to know that you have an off-take opportunity.
There is certainly more risk around that off-take at the moment in the rare earth industry because there aren't obvious candidates for intermediate products. There aren't refiners in North America who could take something easily and turn it into something that they could market.
Some of the end users are developing their own refining stages, and they're engaged in the early conversations with CREEN to help the producers understand where that trade-off is. There is always a need to be sure that you've defined where you're going to stop and where the additional value comes.
There is great value in getting to where you have a rare earth oxide concentrate. We believe there is greater value in going to those next truly value-added stages in this industry because they don't exist in other places. It's not a commodity business yet, like it is in many of the other metals.
Conservative
Kelly Block Conservative Saskatoon—Rosetown—Biggar, SK
Then I will follow up on the question that my colleague opposite asked in terms of what the Canadian government has done and on your response that you haven't actually formulated an ask, that this industry is still trying to come together to bring those islands of complexity together and to figure out what in fact you might want or need from the Canadian government. I know you've flagged an overarching statement that this is important.
I just want to hear a little bit more about where you're at in terms of being able to communicate something to the Canadian government.
Senior Vice-President, Minerals Services, SGS Canada, As an Individual
We have had a couple of preliminary conversations with the minister and with some of the minister's aides around this. The challenge, as Dr. Papangelakis identified, in some cases is to find a model that is effective for industry and effective for government. Where NSERC has been very effective in our traditional base metal well-established areas, it is not clear that it will be as effective in this emerging technology space.
We're fairly close to being ready to come back with an additional conversation. We had enough of a preliminary discussion with the minister that we were watching the budget carefully just to see if anything showed up. I would say that within months we would be in a place where we could be back with a more structured request.
Conservative
The Chair Conservative Leon Benoit
Thank you, Ms. Block.
Ms. Crockatt, for up to five minutes. Go ahead, please.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Thank you very much.
Thank you very much for coming. It's always fascinating to hear the different perspectives that our witnesses bring in today. This has been great.
I'm just wondering if I can go back to some basics. How many players are there in Canada? How many different companies are working on rare earths, significantly?
Senior Vice-President, Minerals Services, SGS Canada, As an Individual
It's not a big number, six or eight.
There are a number of smaller places, people who are looking and doing things, but in the major deposits, major opportunities, call it 19 projects spread out among fewer than a dozen.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
That's fine. It's not that you need to come in with a big number.
Senior Vice-President, Minerals Services, SGS Canada, As an Individual
Yes.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
I'm just trying to get a little bit of a handle on this.
Maybe I could ask Ms. Moreno....
Is it Ms. or is it Doctor?
Senior Research Analyst, Euro Pacific Canada, As an Individual
Doctor.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Why haven't we seen more interest from the capital markets if Canada has 50% of the supply of rare earths?
Senior Research Analyst, Euro Pacific Canada, As an Individual
I think the capital markets have realized that it is complex to extract some of these elements. Over the years some of these companies have delayed their feasibility studies, and the results have perhaps not been as expected, particularly as some capital costs have been higher than originally anticipated, and costs as well. But I think stocks are significantly down, because as I alluded to earlier, there has been a significant slowdown in the commodity space. I'm sure you have experienced that as well. That has affected many of the asset management funds. Some have closed down, others have consolidated. As well, there is less funding available for a sector that in the stock market has performed poorly.