Natural Resources Committee on Sept. 29th, 2016

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Yes, Highlands East in my riding used to be a huge mining town. The town of Cardiff was actually a mining town, and housing and community centres were built, and the resources have been depleted and moved out. I understand what you're saying.

Also, this is just a comment of mine. I was hoping to get a chance to question Mr. Beaty on comments about imposing new taxes on Canadian operations. Meanwhile, he doesn't have an operation in Canada at all, which I thought was pretty rich. I'm sure his operations in Mexico, Peru, Bolivia, and Argentina have very stringent environmental and labour codes.

Maybe you could share about how government could help you work your operation.

[Gregory Bowes]

One of the things I didn't do, and deliberately, was mention the taxation issue, because I don't think that is the major barrier or the major issue. Sure, every business wants lower taxes, and maybe there are tweaks here and there, but generally, I'm fine with that. For the most part, there are no problems with the environmental legislation or first nations.

The main point I was getting across is a lot of times it's not about legislation. It's about implementation, and it's about changing attitudes, and starting at the bottom and working your way up to make sure that those people in the field are delivering something that is consistent with the message that is being delivered at the top. Again, we need just a more streamlined, common-sense, practical approach to doing things.

I'll give you an example. If a mining company or any company comes along and proposes a project, you don't start by saying that it's bad, prove that it's not. You take a very balanced approach and say that we need the best result for governments, for the environment, for the local people, and for the company and its shareholders. If there are problems, let's identify them, let's work together on how we make it work. Unfortunately, we don't see enough of that type of approach.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I think your comments are very similar to what Mr. Austin said about how government over-regulation and bureaucracy forced a project of his, those capital dollars and those jobs that would go with the project, right out of the country. Those are very similar comments.

[Gregory Bowes]

Absolutely. I mean, his comment was, “We're going to hold you accountable for future regulations even though we don't even know what they are yet.”

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Exactly.

[Gregory Bowes]

Again, in our case, it was actually somewhat worse than that. They came along and said that we had to do a class D environmental assessment, and it's a class B project. They said okay, they would let us do a class C. Well, it's a class B. They said, “Sorry, we want a class C.”

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

How does that instill confidence in the industry?

[Gregory Bowes]

Why do you have these rules of what's a class B, a class C, and a class D if you're going to unilaterally decide?

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

That's right, and how does that instill confidence in the industry if people want to invest here, relocate here, and create those jobs and that wealth if they don't have that consistency in the government regulation and bureaucracy?

[Gregory Bowes]

The wetlands management thing was another example. There's no legislation that requires it, but we were told to do it.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I'll quickly ask you about the mineral exploration tax credit, if I could. Did your company benefit from this tax credit, or do you currently? Maybe you could talk about that.

[Gregory Bowes]

Very little. Again, I'll go back to what I said at the start. The whole taxation system—the flow through, and the tax credit—is pretty good. I think we have a pretty good environment that way for mining in Canada. Ours is a more advanced stage project, so most of the work we did was engineering feasibility and less on the exploration front. That was less important to us.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I appreciate your comments. I agree with a lot of what you said. I'm seeing it in my riding. It takes 10 years just to build a Walmart because of government bureaucracy, so I'm seeing it there.

We want to grow the private sector, and that's the best way to create wealth and jobs and growth, and sometimes government can be an impediment to that, so I do appreciate your comments.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Cannings.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Mr. Bowes, I want to pick up on something that Mr. Serré said, to clarify it in my own mind. What is your experience with the provincial environmental assessment regulatory system and the federal one? You talked a lot about environmental assessment and the difficulties there. How have you interacted with both of those?

[Gregory Bowes]

Well, the last project I was involved in was in Burkina Faso, West Africa, and this one is a provincial project in Ontario, so I really don't feel qualified to compare the provincial and the federal side of things.

A lot of the steps that the federal government has taken to streamline the process are obviously very helpful. There are some federal ministries that we do interact with, and the one place the federal rules did affect us, and it was a positive change, was that previously graphite mines, which is an industrial mineral, would have come under federal jurisdiction, but the rules were changed and they are no longer required to go through the federal approval process.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'll pick up on something you said about the frustration you're having with accessing funds around incentivizing green energy projects, the battery, upgrading your product. Could you expand on that and suggest ways that you would like to see the government do that, so we can move in that direction in Canada?

[Gregory Bowes]

Yes. For most of this year I've been visiting with various ministries, various departments, and various agencies, both at the provincial and the federal levels, to determine what kind of support there is for a project such as this. As I said, I kind of thought we would be in the sweet spot, if you will, with a project that's producing a mineral that's critical to the green-tech industries and the value-added technologies, and I really have gotten nowhere.

Most departments and agencies that we've talked to tend to have a fairly narrow mandate and basically say, “It sounds very interesting, but we don't have any programs to help you. Try such-and-such a department.” You go around and end up back where you started, and nothing happens.

In our case, we made one application for a grant—that was all we found—and that application was declined, the main reason being that there was no environmental benefit to Canada, which is true, because all of the manufacturing of battery anode material takes place in China. There's a large net benefit to the world by using our technology, but no net benefit to Canada because we don't manufacture the stuff now. In our particular case, we were not able to identify any potential sources of financial assistance.

In terms of what we could do, I think the province of Quebec has an extremely good model. There are many organizations in Quebec, from the Caisse de dépôt down. Part of their mandate is to invest in Quebec, job creation in Quebec, and venture capital in Quebec. The Caisse de dépôt, Ressources Québec, FTQ, and Sodémex are some of the many organizations that invest directly in resource and technology companies, and they often show up investing in junior companies like Northern Graphite.

The Caisse de dépôt is not gambling pensioners' money on junior resource stocks. It is making what it thinks is a good investment, along with private industry, and it's creating jobs and economic development in the province of Quebec. I can compare Quebec and Ontario, because many of our shareholders have remarked that the biggest problem with the Bissett Creek project is that it's 20 kilometres too far to the west. It's on the wrong side of the river.

I think those types of programs, professionally managed funds.... We don't need to build a big infrastructure within government to do it, but a professionally managed resource fund that invested directly in Canadian projects, partly to earn a financial return but also to create jobs and increase their competitiveness worldwide, I think would be a fabulous idea. Other countries have it and, in fact, they're investing in Canada, so we should have one of our own.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

To follow up on that, how big a fund do you think would be necessary in Canada to help projects across the country, and would that money come from the federal government?

[Gregory Bowes]

Yes, it would come from the federal government. I haven't done the math, but if you add up the green-tech announcements that I read off at the end there, that's got to be $1 billion-plus just for green tech. Put that in a fund and have a professional money manager who is experienced with venture capital, vetting investments, and negotiating investments. That's a far more efficient and quick solution than creating a government department to do it. Ultimately, it would be a couple of billion dollars.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Again, just to clarify, what you want to do in Canada is upgrade your product, and then it would incorporated, and the real batteries and all that would be done elsewhere.

[Gregory Bowes]

We can just sell it as a commodity and be a raw material producer and ship it to China and Japan, but obviously, we want to do the value-added manufacturing here.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Harvey, over to you.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Good morning, Mr. Bowes. It's great to have you with us here today.

I'm going to follow on the line of questioning of my honourable colleague, Mr. Schmale, which I think is going down a road that we don't explore enough. I do a lot of stakeholder engagement in my riding. I'm a small-business owner myself, and traditionally have been entrepreneurial. I come from a family of small-business owners. What I hear from business owners a lot in my riding is if we want them to be successful, if we want them to grow robust businesses and contribute to the Canadian economy, government should just do less. That's what I hear constantly from business.

I often question them on that and ask what they mean. What they mean is they totally agree that we need to get the balance right between environment and financial certainty. At the same time, though, there should be a robust process allowing businesses to be accountable for their decisions, but ultimately to make those decisions. We, as government, have a role to play in guaranteeing that the process is open, transparent, and ultimately accountable, but at the same time we allow those businesses the latitude to make decisions that are going to impact their bottom line and allow us to grow a world economy.

I want to get a bit of a sense from you how government can best assist small business in heading in that direction, in providing a framework, but ultimately allowing businesses to make those decisions on their own, and how you think that process could look.

[Gregory Bowes]

The Economist magazine published an article a little while ago, and it was basically talking about the barriers to job creation and economic development. The number one barrier was not taxation, and it was not regulation. It was bureaucracy and red tape. I think most business owners would agree with that. It's an issue of spending way too much time dealing with issues the government believes are important, but doesn't make your business any better in terms of reducing your costs or increasing your revenues. It's distracting you, and it's taking you away from that.

The simple message would be that the process needs to be simplified, and the process needs to be streamlined. I think the departments need to understand that every time they ask for something, they are creating a burden, which again takes away from running the business and doing what's necessary to make it successful. Yes, we have to do some of that, but there needs to be a balance. I think most business owners would say it's too far over toward one side of the spectrum.

If you're a big company and you have lots of money and you have a whole department to do whatever paperwork is required, that's fine, but if you're a plumber with four employees, or a carpenter, or a small manufacturer, it's a big burden.