Mr. Chair, members of the committee, and fellow witnesses, I am Pierre Gratton, President and CEO of the Mining Association of Canada (MAC). I’m accompanied by Brendan Marshall, Vice President of Economic and Northern Affairs.
Thank you for the opportunity to discuss the important matter of critical minerals with you today.
Increasing geopolitical uncertainty has focused attention on the precariousness of existing supply sources for many primary materials, including critical minerals classified by Canada's allies as the primary materials on which their economies and national security depend.
An increasingly uncomfortable reliance upon China for many of these commodities has led Europe, the U.S., Canada, Australia and other allies to come together to develop strategies and policy instruments to lessen this dependence.
Within Canada, there is a growing desire to source and procure locally, where possible, especially when doing so achieves better environmental and health outcomes. Recent polling data finds that almost 90% of those surveyed liked the idea of Canada being a preferred global source of critical minerals and would like to see government take a number of steps to support this approach.
The environmental, social and corporate governance leadership of mining companies operating in Canada, boosted by MAC's unique and increasingly globally recognized “Towards sustainable mining” initiative, reinforces confidence that when it comes to world-leading sustainable mining practices, Canadian mining is a leader.
The government has recognized that a resilient Canadian mining and metal manufacturing sector is essential to the 2030 climate plan's goal of establishing a domestic battery electric vehicle manufacturing supply chain. If a prosperous transition economy in Canada is contingent on the establishment of a domestic BEV supply chain, then strategic critical mineral investments are essential.
How do we make it happen? We propose two types of investments: first, programs that de-risk investments currently subject to China's market dominance, thus enabling current gaps in critical and BEV supply chains to be filled domestically in Canada; and second, investments that strengthen and enhance Canada's current levels of critical and BEV mineral and metal production.
For decades, China has held monopoly-like control over critical minerals production and distribution, rendering the rest of the world reliant on procurement and creating a level of risk that deters investors from entering these markets.
For example, who would invest in a rare earth mine with no access to a downstream facility to create value-added rare earth products? Who would invest in a value-added manufacturing facility when there is no upstream mine to source from? What advanced manufacturer would set up shop where they didn't have access to the materials they need to produce their end products—BEVs, high tech, medical or otherwise? The answer is no one, at least not without strategic government support that prioritizes economic security and autonomy enough to enable companies that play by the rules to thrive.
To address these challenges, we propose the establishment of a five-year, $250-million program to de-risk projects across the critical minerals supply chain using a two-tier approach: first, advancing pilot and demonstration projects; and second, scaling the successful ones to a level where operational independence is achieved.
Beyond plugging current supply chain gaps, government must also not compromise existing supply, with the impact of carbon pricing on remote mines being the top concern. Off-grid remote mines are virtually exclusively reliant on diesel fuel for power and haul-fleet operations for the time being. With very limited and currently uneconomic options to displace diesel, the competitiveness and longevity of these operations under the proposed clean fuel regulations and the projected $170 per tonne carbon price will erode.
Why does it matter, in the context of critical minerals? In 2018, for which we have data, 52% of nickel and 62% of cobalt shipped in Canada came from off-grid mines. Today, most EV batteries use cathodes with 60% nickel and 20% cobalt. Unless we get climate policy right, a Canadian critical minerals value chain will not materialize. Even if we plug rare earth supply chain gaps, we cannot compromise our ability to produce the materials that make up 80% of the input into batteries.
To this end, we seek your support for an industrial off-grid clean electrification fund.
COVID-19 has put into sharp focus what happens when we let industries slip away, leaving us at the mercy of global supply chains that, in times of crisis, can fail. Let's seize the tremendous opportunities before us to expand and strengthen our economic future.
Thank you very much.