Natural Resources Committee on Nov. 25th, 2013

[Christiane Villemure]

Mr. Chairman, the recycling of rare earth is extremely difficult. It's a process that has not been completely worked out. There are industries, especially in Japan and European countries, that are looking at it. There are perhaps some small amounts of rare earths being recycled at the present time, but it's a process that still needs to be worked on and still requires significant research.

In Canada, there is some recycling, such as the recycling of batteries and scrap metal, for example. The recycling of rare earth is very difficult because of the minute amounts of rare earths that are found in most practices and applications and that could be recycled.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Leef.

In our next group of questioners we have Mr. Trost, Mr. Julian, and Mr. Regan.

Go ahead, please, Mr. Trost, for up to five minutes.

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

Thank you, Mr. Chair.

You may not know all of this, but historically, the United States has had stockpiles of certain rare earth because of the applications and the need for it in their defence industries.

Could you comment on both the United States' stockpiles, historic and present, as much as you know, and also on other countries that may have something similar? I don't know if the European Union or Japan has stockpiles of it.

How does that play into future markets and possibly the future development of the industry in Canada?

[Christiane Villemure]

Mr. Chairman, we are aware that the United States, and probably Japan, are stockpiling rare earth. Specific purposes are not divulged, external to those countries, possibly to feed certain critical industries. You mentioned the defence industry, and that's highly possible. That aspect is not necessarily shared with other countries, and we have very limited information on that.

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

Following up on that, on your slide on page 7, with the critical rare earth elements, you have demand outstripping supply. In 2015, you estimate a supply of 41,900 tonnes and a demand of 47,385 tonnes per year. At what point will the rough estimates of that supply and demand meet again? Again, I understand this is guesswork, but what's been making up for the difference between demand and supply over the last few years?

[Christiane Villemure]

Mr. Chairman, this graph on page 7 focuses only on the critical, not the total, rare earth. These are the materials forecast to be in supply shortage. The situation has been like that—a small shortage has led to an increase in market prices.

What Canada and other countries want to avoid is the demand continuing to increase and the supply decreasing, with the predictions of shortages, anticipated out of China, for example. Many countries are looking at ways to make sure that the supply also goes up and, hopefully, reaches the demand. This is projecting the future, which is very difficult to do. We do know that a supply shortage is anticipated around 2018, 2019, and many countries are looking at filling the gap.

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

One of the other things noted when I was doing research on this—and this might be for all rare earth minerals, not just the critical ones—is that even though the Chinese government attempts to control their export, some very entrepreneurial people in China have their own way of doing exports and don't always report it, in the neighbourhood of 10,000 to 20,000 tonnes. Looking at those numbers, I anticipate some would have been the critical and some the non-critical.

Is there a potential for non-governmental Chinese exports to rise to handle some of this gap over the next few years?

[Christiane Villemure]

Mr. Chairman, there is very little information on that aspect. Experts and analysts suspect that some material is leaked out of China. When we look at supply, demand, and production reported by various countries, some experts suspect that some rare earth are being exported illegally in certain quantities. The exact quantity is very difficult to say, but this situation probably exists right now.

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

But the black market is not likely to impact any of our ongoing projects. It would be too small to have anything substantive.

[Christiane Villemure]

Absolutely, yes.

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

Is my time up, Mr. Chair?

[The Chair, Conservative, Leon Benoit]

Yes, it's almost up.

You have time for one more question, if you like.

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

I'll pass, then.

I'm through with my questions.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

We go now to Mr. Julian, followed by Mr. Regan.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thanks very much, Mr. Chair.

I'd like to come back to the Avalon and Quest properties.

Do we have any idea of the total investments made thus far to develop those two properties? What will the eventual investment be before the mines are brought on line?

[Christiane Villemure]

I have some information with me, Mr. Chairman, but I'm not sure it will specifically address the member's question.

What I have here is that construction costs for Avalon are in the order of $1.5 billion. For Quest, this information is not available; it's information that has not been published.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

The Avalon site is the Nechalacho site north of Yellowknife.

Would the cost of $1.5 billion—you may not be aware, but if you could provide information back to us, I think it would be helpful—include infrastructure to actually get to the site itself? I assume it does, at $1.5 billion.

Would you have any of the details around the site itself and what kind of infrastructure is being put into place?

[Christiane Villemure]

Mr. Chairman, I believe this number would not include infrastructure. I'm not sure that Avalon requires specific infrastructure. Its location is fairly close to Yellowknife, and they have access to winter roads.

It is information that I can validate and bring back to the committee.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

That would be great.

The $1.5 billion is the projected total cost. Would you have any sense of how much has been invested so far?

[Christiane Villemure]

Unfortunately, Mr. Chairman, I don't have that particular answer for the member, but I can find out.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Okay.

Similarly, then, if we don't have the Quest site, do you have projected costs of any of the other sites? I'm not thinking of the 200 exploratory sites, but the dozen or so that are featured in your deck, where the development is obviously more advanced than it is at other sites.

Would you have any sense of the projected costs and projected revenues of any of the other sites?

[Christiane Villemure]

Mr. Chairman, I have projected costs, and that would be in the order of about half a billion dollars, at the current level of knowledge.

In terms of revenues—

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Sorry, is that an average, or is that...?

[Christiane Villemure]

Yes. That's a rough order of magnitude per project.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Okay.

Sorry, I interrupted you. Were you to speak to the projected revenues or production levels?