Natural Resources Committee on Feb. 22nd, 2021

[Liz Lappin]

Sure.

The volatility of price is something that Simon referenced earlier. Speaking with my E3 Metals hat on, weathering those changes has been a challenge over the last five years. That speaks directly to access to capital. We're developing a critical minerals project in a jurisdiction in Canada that is competing for capital against areas like South America and Australia. We have to make sure that our projects are just as good as those. Then we have to instill confidence that we will actually be able to get our project over the line. I think that other critical minerals developers are probably facing similar challenges with those things.

In terms of the solutions, I think what this comes down to is attracting that capital to Canada for good Canadian projects that have been validated and providing incentives or advantages, essentially—either through tax policy or through any other kind of carrot—that would attract that capital into Canada for Canadian projects.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you for that, Ms. Lappin.

A bit earlier, my colleague Mr. Lefebvre touched on what other countries are doing. Mr. Moores, you spoke about the abundance of resources here in Canada. What other countries would you say have vast supplies of critical minerals? What do you think we, here in Canada, can learn from these countries?

[Simon Moores]

In the battery EV supply chain, Argentina, Chile and Australia would be the ones to look at.

Australia, for example, has been, in the past, purely raw material, shipping spodumene concentrate—which is lithium—to China, and then China value-adds it, but they're building the ecosystem now. I think Australia is a good place to start to see what they're doing—certainly in WA.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you for that.

Mr. Bubar, I really appreciate your positive outlook, by the way, especially going back to extracting valuable critical minerals from waste left behind. Going back to the question from my colleague on liability, I'm hoping you can elaborate. I think the time did run out earlier.

[Donald Bubar]

Often there are closure plans in place on these closed mine sites that have financial assurance bonding requirements that often can be pretty intimidating to try to take control of if you're a small-cap entrepreneurial company.

That's the circumstance we've been trying to deal with here lately, which is to find a way to find some support to put behind it. In many cases, they're treating everything on the site as a liability, when in many cases it's infrastructure. If the tailings are full of valuable minerals, it's an asset, not a liability. It's a bit silly how these numbers are actually structured at the end of the day.

It needs a fresh look in this context to apply more realistic numbers in terms of the closure plan financial assurance bonding requirements.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you for that, Mr. Bubar.

Talking about our supply chains, I'm wondering if you're able to speak to the risk associated with not securing our supply chains for these commodities that we're talking about today.

[Donald Bubar]

We have to get moving, because there are other countries out there that have similar aspirations. We could miss the boat if we don't get going here quickly.

I'll speak to one question that I think Mr. Deith partially answered earlier. One thing the federal government could do is something similar to what the United States did. It could create a stockpile of critical minerals that could then be used as a way to provide offtake commitments to aspiring new Canadian producers to buy their product. That gives them better access to the capital they need to build the next stage in the downstream in their project development.

By accumulating a stockpile of these critical materials, you then have a way to attract some of the other manufacturing businesses to Canada to take advantage of the availability of the critical materials.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Sidhu.

Mr. Patzer, over to you for five minutes.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you very much. Thank you, everybody, for being here.

I'm going to start with the Battery Metals Association of Canada, Ms. Lappin, if you don't mind. I'm just wondering about the materials needed to build a lithium battery. What percentage of everything that is needed is currently available in Canada?

[Liz Lappin]

That's a great question. I wish some of our colleagues from NRCan were on the call. They could probably answer more accurately than me, but I believe we have 80% to 90%, or even 100%. We have almost everything.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Percentage-wise, we do have all the materials present here in Canada. How many of them are being extracted and are at the point where we can start producing batteries?

[Liz Lappin]

I would probably defer to some of my other colleagues on the call. I'll just say what I know and then pass the baton.

Lithium isn't currently being extracted. I know that we have some nickel and cobalt refining in Alberta. We obviously have some graphite production.

I'll pass it over to my other colleagues to expand on that to provide you a fuller answer.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Sure. If anybody else wants to expand on that, that would be great.

[Simon Moores]

I'm happy to quickly jump in on that.

The materials that go into a battery—if you were a battery maker, the things you would buy—are zero. Canada doesn't produce any of it because they're specialty chemicals. Canada has the raw materials. It doesn't have the materials to go into batteries, and that's the midstream opportunity that is there for Canada.

[Donald Bubar]

In terms of raw materials, we have them all in the ground in abundance.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Mr. Deith, did you have something you wanted to add to that?

[Jamie Deith]

I was going to say zero, so Simon and I are definitely in tune on this question.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

I have a question in regard to the CUSMA deal. In some of the research I'm doing.... I'll admit I'm not an expert on the deal per se either, but I want to ask this anyway: “indicates that “lithium batteries are an 'essential' component for the domestic industry, and determines that countries have a 3-year grace period to ensure that 75% of their lithium is sourced regionally in order to avoid paying tariffs.”

I'm just wondering if anybody has any comments on that, and within that three-year timeline, whether we are positioned to get going so that we can hit that 75% target and not be in a position where we have to pay tariffs.

[Liz Lappin]

I can't directly answer your question, unfortunately, Mr. Patzer, but what I would say is that I think the industry would benefit from additional clarity on the various trade agreements and how they can benefit and potentially put certain projects at risk in the industry.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Does anybody else have anything they want to add on that point?

[Samson Hartland]

Mr. Chair, this is not a direct answer, but a quick answer to put things into perspective. We have an abundance of materials, as noted earlier, but if you were to go through the environmental assessment process to permit one of these mines to meet those demands, you're looking at anywhere from three to 10 years.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Wow. Basically, the timelines to get an approval.... Let's say tomorrow I wanted to start a project to get some of these materials. To be able to get that assessment done and to get the approvals, it might actually go beyond that three-year window.

[Samson Hartland]

In fact, I would put money on it and guarantee that it will go beyond that three-year window, here.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Wow. Okay.

Do you have any suggestions, from your experience, about what it would take for us to speed up the process and put our country in a position that is not so far behind everybody else who's already producing?

[Jamie Deith]

At the risk of harping on the same point, I believe there's a significant advantage for a raw materials supplier [Technical difficulty—Editor] to sell to. As a Canadian producer, logistically there's a big advantage to selling our graphite to someone in Canada or the United States. That's a better proposition for us than shipping material to China to be processed—or to any other overseas destination, for that matter.

There is an importance to having those additional, value-added steps. Either we're doing them or there's an ecosystem built to do them. From my point of view, that is probably the main driver behind getting things going.

In terms of permitting, it's very much project-dependent. Our own example would be one where it's fairly easy to permit, just because of the specific environmental circumstances of our operation. It will depend, but I do think the estimate of three to 10 years is fairly accurate for projects in general.