Natural Resources Committee on Feb. 22nd, 2021

[Liz Lappin]

Yes, absolutely. I think in many ways some of the funding that's currently available overlaps with this initiative as well, because a lot of the innovation funding available is centred on clean tech, and that's exactly what this is. This is all about a decarbonization plan for Canada. I think that cash should be made available strategically to folks who have been evaluated and who can essentially have the highest chance of getting to that finish line.

In many ways, because this industry is relatively new for Canada, it's not just a matter of making the raw material, as some of the other witnesses have mentioned. It's actually making something that's a specialty chemical that requires specific expertise. We do need a little extra cash for technology development as well.

[Mario Simard, Bloc, Jonquière, QC]

In an earlier response, you said that there was a lack of expertise in Canada. Should this expertise be sought abroad or could it be developed here through research and innovation?

[Liz Lappin]

In my opinion, it's a combination. An abundance of work is going on in our academic institutions in Canada. I think we need to be reaching in there. We need to be looking at the National Research Council, but then we also need to be importing expertise from the leaders in the space through strategic partnerships globally.

[Mario Simard, Bloc, Jonquière, QC]

I have a question for Mr. Moores.

You mentioned that China and Europe will have 67% of the market by 2030, which is still huge. I'm answering my question by asking you, but I'm asking it anyway. Do you think Canada is significantly behind in critical minerals? How do you think we can close that gap? What are the best ways to do that?

[Simon Moores]

Thank you for your question.

The best solutions for me are building active capacity in the midstream of the supply chain and encouraging new minds to then tap into the supply chain. I mean specialty chemical operations, cathodes and anodes operations, and then of course you have the option to sell to the growing lithium-ion battery capacity, either in the U.S. or building your own battery plants in Canada. Then you're developing an ecosystem.

I think what's missing is linking every piece of the supply chain and also bringing in all the university R and D work, which Canada is world-leading on, especially on battery technologies. At the moment, nothing is bringing all this together.

[Mario Simard, Bloc, Jonquière, QC]

Mr. Bubar, you raised your hand. Do you have something to add?

[Donald Bubar]

Yes, I would, actually. I'll just add to what Simon and Liz were just saying.

This has been one of the key reasons that these supply chains have not yet been established in Canada. There's a lack of downstream processing facilities needed to, first of all, do the piloting work to establish an efficient flow sheet that can make the product that's needed in the market. In most cases, you have to be able to produce trial quantities of the product, show them to your customers and get them to verify that it will meet their required specifications. If it doesn't, it's worth nothing, so you can't just guess at that. You have to basically prove it, and there's been a lack of capacity for doing exactly that in Canada.

Fortunately, it's starting now. Thanks to the Saskatchewan Research Council, we are starting to develop more of that capacity, particularly on the rare earth side, but I think there's still a role the federal government could play here in creating some more of these demonstration-scale pilot facilities for aspiring new producers to get access to in order to be able to prove their processes.

[The Chair, Liberal, James Maloney]

You have about 25 seconds, Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

Several people suggest that the technology used to produce batteries is also polluting. Is there enough technical knowledge today to recover end-of-life batteries?

[The Chair, Liberal, James Maloney]

I think maybe they can keep it in mind for the coming session.

We will have to move to Mr. Cannings for six minutes.

Thank you, Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

Okay.

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

Thank you, again, to all the witnesses here today. It's been a very interesting conversation so far.

I'm going to start with Mr. Deith, because I've actually been to the Eagle Graphite mine in the beautiful Slocan Valley. I have a little bag of graphite in my workshop downstairs, which I use to smooth things out when needed.

I appreciate your testimony here. I got the sense that you had a lot more to say in terms of what we need to do, the things that Canada could and should be doing. In particular, I think you mentioned that China dominates the market with 100% of.... It's not really the refining of the graphite, because you would supply pure graphite. Is it in the making of the anodes? Is that what China dominates right now?

[Jamie Deith]

I'm glad to add you to the list of customers who have qualified our product.

With regard to the processing, there are multiple stages that China dominates. In some particular stages, in the case of graphite for battery anodes, the spheronization and purifying of the graphite prior to its being introduced into anode formulation is 100% dominated by China for all commercial purposes.

This is not a particularly difficult thing to do technically. There are always things you have to overcome with these technical things. Really, China has obtained this by actively boosting its industry. It has done this intentionally. I would suggest that a good first step is to make sure that when we produce the graphite, we do have the capability to do things.

One of the advantages that China has over the rest of us is that it gets to play by a different set of rules. Sometimes those rules are environmental rules and sometimes they have to do with labour and safety. It would be best, in my view, if we and our allies could ensure that there's some level of accountability for those actions, so basically levelling the playing field so that China doesn't translate a lax regulatory structure into a cost advantage at the expense of our own industries. I hope that answers your question.

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

Yes, I think so.

You indicated at the end of your presentation that you had a number of things you could add to this. I just want to give you that extra time if you want to add any other steps that you think Canada should be taking that would benefit not just you and your company but all other companies in that whole value chain for batteries or the other green technologies that we're talking about here today.

[Jamie Deith]

Thank you for that.

My thought overall is that there isn't necessarily one winning recipe, and in many cases, we can take existing programs and probably adapt them to give them a bit more focus and perhaps some more emphasis on critical mineral supply chains. It's going to take a lot of legwork to work this out, and it's obviously not going to be solved in this one session.

However, I think everything has to be incentive-driven. Those incentives can take the form of tax incentives. They can take the form of research subsidies. Sometimes it's just a case of coordinating existing subsidies and wrapping them up into a package that makes them more accessible to companies that need to do it. I believe most of the tools are already there in the tool box, but there has to be effort put into coordinating everything and making it one sensible, strategic package for developing this industry.

In other words, we should be doing this with intent and deliberately. We should know exactly what we're aiming at before we start, before we embark on it, because that is what's going to attract investors and it's what's going to impress the end-users such as the automakers. If they decide that we have our act together, they might well follow suit and sign on with us.

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

Thank you.

Mr. Chair, how much time do I have left?

[The Chair, Liberal, James Maloney]

You have just over a minute.

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

I'll turn to Ms. Lappin to follow up on what Mr. Deith just mentioned. He was talking about the same thing you were in terms of having a real plan, but I think you mentioned something along the lines of government procurement or things that a federal government could do to get some of these projects through that critical stage where they need to scale up. Would you like to expand on that?

[Liz Lappin]

Sure. There are a number of areas, of course, where the government might be looking to purchase equipment that uses lithium-ion batteries or similar technology that would go into an EV. The things that immediately come to mind are electrifying fleets, and so on and so forth, and even materials for defence.

I recognize that there are certain activities that are federal versus provincial, but within the context of our net-zero aspirations moving forward in Bill C-12, it might be interesting to tie those ambitions to helping the lithium-ion battery supply chain in Canada evolve and having government procurement incent that.

Does that make sense?

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

It does. Thank you very much.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Cannings.

We're going into the second round and we have only 15 minutes left, so we probably won't get through the whole round.

We'll start with Mr. Zimmer, for five minutes.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Thank you, Chair.

Good morning. I appreciate your appearing before our natural resources committee to speak to us on the topic of critical minerals, and probably more importantly, the associated value chains in Canada and how critical those are. As those critical minerals become ever more important in the electrification of our nation and our world, Canada will be once again a world leader in their production.

That said, the positive can quickly be outweighed by Canada losing control over it. The concerns around foreign takeovers of our Canadian mining sector are real for many Canadians. We all know how mining is always looking for much-needed capital to match the exploration potential with developmental potential. I see that in my northeastern B.C. riding. Mining is a big deal up here. It's what we do, but it's always tough to get that capital. When it happens, though, a lot that is positive happens in our community.

Certainly, capital is more than important; it's crucial, as we saw in a recently attempted takeover of Canada's TMAC Resources. I'll refer to an article in The Globe and Mail:

This monopolizing aligns with China's years-long effort to dominate the global supply of minerals, including its grip on the 17 rare earth elements—vital for the technology we use today and will use tomorrow, from the solar panels, wind turbines, electric vehicles and fast-charging batteries that could be the key to a clean-energy future to cutting-edge military tech and weapons.

Some of you have already mentioned this and concerns about turning that potential over to communist China.

My question is a simple one. I'm assuming I know the answer, but I'm going to get into another question after that.

Are you concerned about the Chinese communist government's monopolies, global dominance, and so on, and other competitive nations and their potential takeovers of our Canadian operations?

Anybody can go ahead.

[The Chair, Liberal, James Maloney]

I see that Mr. Deith's hand is up.

[Jamie Deith]

Yes.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

That's not what I expected.

Is there anybody else?