Evidence of meeting #13 for Natural Resources in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was lithium.
A recording is available from Parliament.
Conservative
Greg McLean Conservative Calgary Centre, AB
Do you see there being a choke point at some point in the near future?
Managing Director, Benchmark Mineral Intelligence
Yes, we're hitting the wall very soon. Lithium's price is going up and cobalt's price is going up. As we speak, this year, I think we're 18 months away, maximum, from hitting the wall of demand growing as we see the automakers.... There's no investment in the raw materials, or if they put the money in the ground now, you'll probably see it in four years' time, so we're about to hit that wall.
You will see the headlines of the next 18 months, and that's just the start.
Conservative
Greg McLean Conservative Calgary Centre, AB
I have another question for you, and I'll have to move quickly here.
You talk about energy security, because of the relation to other countries and their ability to store and provide battery materials here with the supply chains. You know that China has 80% of the actual processing of the materials, even though they only produce some of it.
Can you talk about where those mines are around the world that are actually fuelling China's appetite for this to control this market in the future?
Managing Director, Benchmark Mineral Intelligence
Yes, the mines are in places like Canada and places like the DRC, and different countries in Africa and South America.
The way China does it is that it goes in and either owns part of the mine or takes over a company, or it does long-term contracts in supplier states. The one thing China does do is it goes to other countries and puts money into the ground and therefore it guarantees the raw materials for its own economy. That's the state of play at the moment.
Conservative
Greg McLean Conservative Calgary Centre, AB
Thank you.
I have a question for Mr. Deith at Eagle Graphite.
You talked about the inner transition and the importance of graphite, which is fundamental. If you think about where the supply of power is in Canada right now, all kinds of power, how do you see the actual power being used to get into battery vehicles and other areas in the next decade, when we have to replace about two-thirds of Canada's power if we're going to decarbonize the way you've indicated here?
Chief Executive Officer, Eagle Graphite Corporation
I'll do my best to answer coherently here.
If you're referring to power for the mine sites, graphite, in particular, is no more intensive than any other mining; in fact, it's usually less intensive. Some purification methods require power.
I know in the analysis for our own mine site it's not really considered a barrier to expansion. In fact, I would characterize our constraint as a—
Conservative
Greg McLean Conservative Calgary Centre, AB
Mr. Deith, I'm sorry to interrupt.
I'm asking about where the power will come from to be stored in the batteries that you're producing.
Chief Executive Officer, Eagle Graphite Corporation
Do you mean for actually charging up the electric vehicles?
Chief Executive Officer, Eagle Graphite Corporation
Most analysis I've seen would suggest that the incremental demand to charge vehicles is not going to be an undue strain on the electrical system. The fact of the matter is, the incremental demand will occur over a very long period of time and is a relatively small fraction of the base-level demand that already exists.
I personally don't think it's going to be a limiting factor in the rollout of electric vehicles.
Liberal
The Chair Liberal James Maloney
Thank you, Mr. Deith.
Thank you, Mr. McLean.
Mr. May, you are next, for six minutes.
Liberal
Bryan May Liberal Cambridge, ON
Thank you very much, Mr. Chair.
First of all, thank you to all of our witnesses for taking the time to join us here today to help us with this study.
They say that timing is everything. I had a meeting this morning with a number of key stakeholders in the automotive industry. It was remarkable how much of that conversation crosses over to this one. They're managing some very interesting challenges right now. As you may know, COVID-19 has had a major impact on auto sales. They're down about 19% from 2020, which is the largest decrease in auto sales since 1984. They're ramping up and things are moving in the right direction now.
The challenge is that because of that downward slope, the producers of batteries and the producers of components like semiconductors shifted hard to things like cellphone technology, gaming systems and things like that. There is now a very significant shortage in the auto industry of some of these pieces.
I was very pleased to hear some of the conversation in the opening statements about that issue in terms of not just taking it out of the ground, but adding value and controlling that supply chain piece.
My first question is for Ms. Lappin.
In terms of the issue of controlling that supply chain, what advantages do you think Canada has that we aren't taking advantage of right now that could help create this? Really, we don't have this supply chain right now. How would you suggest we leverage some of our advantages to help move us in that direction?
President, Battery Metals Association of Canada
Thank you.
One of our biggest advantages, of course, is our abundance of natural resources, our track record in ESG performance and being able to do that responsibly in meeting the needs of the folks above the ground with the minerals below.
In that way, I think it makes sense for us to look at attracting that value-added manufacturing to the locations where those resources are, while of course taking into consideration things like infrastructure.
Speaking from the Alberta perspective, this opportunity has been identified with the critical minerals like lithium, which we do have, and looking at going all the way to battery-grade materials and then potentially that next step into the components and the cells. That just makes sense.
I think we have to prioritize the development of that part of the supply chain domestically, over the export. I think that major lever is in the policy rollout.
Liberal
Bryan May Liberal Cambridge, ON
Given that much of that policy is going to be provincially driven, what specifically, from a federal perspective, should we be looking at?
President, Battery Metals Association of Canada
One thing I mentioned in my opening statement was buying local and incentivizing those connections along the supply chain between Canadian companies. I am wondering if there are potential tax incentives or advantages that could be rolled out that would encourage that type of economic activity at the domestic level.
Liberal
Bryan May Liberal Cambridge, ON
In your opinion, do you think Canada has what is necessary to create that homegrown supply chain system, or do you think maybe a wider approach—maybe a North American solution including the United States and Mexico—would make more sense for us?
President, Battery Metals Association of Canada
I think it's a combination. We have the new trade agreement, the USMCA. There are potentially side agreements that could be made there that essentially protect Canada from being simply that raw materials producer. I would like to see Canada take advantage of our very strong performance in trade and our access to a wide market, and to also try to import some of the expertise that we don't have. I think it's clear that if we had all that expertise we'd be doing that already.
We do need a bit of help there. Strategic partnerships can support that, but we need to do it in a way that builds capacity in Canada.
Liberal
Bryan May Liberal Cambridge, ON
Mr. Moores, you've been nodding vigorously throughout Ms. Lappin's comments. Do you want to add to anything there?
Managing Director, Benchmark Mineral Intelligence
I completely agree. This electric vehicle battery supply chain is going to evolve in two ways. You're going to have a base load from a global supply chain that we already have, but then you're going to have a severe competition in three regions: domestically in China, domestically in the EU and North America. You need to have countrywide solutions within those regions to bring together the best of what your continent has, because the challenge is that big: it's scale; it's low cost.
I think the biggest advantage Canada has is.... Where is the value generation in the whole EV supply chain? The biggest leaps in value in terms of percentages are from the mine through to the cathodes and the anodes. It's not really making batteries at scale. It's not at making those EVs yet. That's a different skill set, and that is where in my eyes Canada has a really strong opportunity to then link up with Detroit, where the big automakers are making all the electric vehicles. It's just an idea.
Liberal
The Chair Liberal James Maloney
I see Mr. Bubar had his hand up too, which is unfortunate. Maybe we can get to that a little later.
Mr. Simard, we'll move over to you, sir, for six minutes.
Bloc
Mario Simard Bloc Jonquière, QC
Thank you very much, Mr. Chair.
I hope Ms. Lappin can hear me properly and that the interpretation is working. I see that it is.
In your presentation and that of Mr. Moores, I have the impression that you came to similar conclusions, that Europe and Asia are ahead of us when it comes to the valuation of critical metals. In your presentation, you said that development was slow in Canada and that this may be due to the very high initial investment costs.
I know that a strategy has been developed by the Quebec government to support the critical metals sector, but there is currently no such strategy in Canada. Should this Canadian strategy, which will have to be created, include a program to access cash to help develop this sector?