Natural Resources Committee on March 8th, 2021

[The Chair, Liberal, James Maloney]

Thank you, Mr. McLean and others, for joining us today, and thank you to all our witnesses.

This is meeting number 15 of the Standing Committee on Natural Resources. I'm glad to see we have three witnesses with us today, joining us virtually.

I will just let you know the process. This is a virtual meeting, and they run very smoothly. We have all gotten the hang of these, but there can be little bumps along the way. I believe you've been briefed on the technical aspects of your participation. At the bottom of your screen you should have a little button that says English or French, which you can use for translation. There's a mute button, which you should keep on unless you are speaking or answering questions.

Because we're on Zoom, when someone is talking, please let them finish before you start talking. That will make things easier for all of us, but particularly for the interpreters. I thank everybody in advance for their patience.

To the witnesses, you each have five minutes to make your opening remarks. One of my jobs is to keep track of time, which necessitates my interrupting you sometimes if you're going over the time limit for your initial presentation or with respect to questions and answers after that, so I will apologize for that in advance.

We have three witnesses. We have Professor Coates from the University of Saskatchewan. We have Grand Chief Abel Bosum of the Cree Nation Government. From Rio Tinto, we have Nigel Steward.

Professor Coates, why don't we start with you, sir?

[Dr. Ken S. Coates, Joynson-Shoyama Graduate School of Public Policy, University of Saskatchewan, As an Individual]

Good morning, Mr. Chair, and thank you very much, committee members. It's a real privilege to have the chance to speak to you.

The issue of mineral supply and uncertainty in the Canadian mining industry is one of critical importance to the country as a whole. Let me start off with this observation. There's a general perception, as we look at important issues of climate change and economic retrenchment, that somehow the resource sector is in decline. The reality is very different.

In fact, with the imperatives of 2021, we have solar and wind power installations, mass digitalization, transit development and electric vehicle production. We're investing billions of dollars in renewing our energy infrastructure. In fact, what we have is a higher priority than ever on rapid, reliable and cost-effective mineral production.

Let me divide my comments into two areas. One is disadvantages and concerns. The other is opportunities and advantages for Canada.

Very quickly, obviously the uncertainty of the Chinese market in terms of mineral production and demand is critical. There is also a very strong disconnect between the environmental movement in Canada and internationally and its anti-development instincts in mineral production, which costs an awful lot of time and energy.

We underestimate the scale and intensity of global mineral demand. I spent a lot of time in Asia, and the escalation in demand is dramatic, particularly in critical mineral sectors, because of computerization and what have you.

We also have to address, in Canada, that we're not alone in this game and that there are many supply options, particularly in the developing world. Those areas have more complex issues and sometimes less favourable environments for human rights protections, environmental protections and what have you.

In Canada, we have some serious shortcomings in northern infrastructure. It's limited and it takes too long to develop. We move very slowly in that regard.

I'm very concerned about the regulatory burden and the time to development. I was talking to some officials in Ottawa who seem to suggest that the length of time it takes to make a decision is a proxy for a good decision and that the longer time frame actually necessitates a better decision. I'm not convinced of that, and I think there's some good evidence running counter to that.

We're also overly sensitive to criticism about resource development. This is a key priority for Canada, and we have to find a middle ground. Let's talk openly about what happens with our current system—the costs of delays, the time required to get permission, the direct expenses involved for companies and how that adds to their total cost structures, and the scale of abandoned and deterred investments. We're losing a lot of opportunity because we're becoming less competitive.

We have to also find a way to stop redrafting our regulations and requirements. We have fairly imprecise guidance from some pieces of our legislation at the federal, territorial and provincial levels.

We also need to reconcile the reality of Canada as a natural resource superpower with the lack of national commitment to the field. We don't see resource development as being particularly attractive or compelling these days. I think it's fair to say that our country's urban areas, which are very powerful and very appropriately powerful, are disconnected from the sector.

What about the other side? What about the advantages and opportunities in the natural resource sector and critical mineral development?

We have some of the best discovered and potential mineral deposits in the world, including in some of the more rare earth minerals and things of that sort. Canada has the minerals that this country needs and wants.

Put aside my comments about the decision-making process—put them in a box for a second—and look at the outcomes. The outcomes are that our regulatory and environmental standards are actually first-rate and very appropriate. How we get to those standards may be questionable. We can do better on the decision-making and the development structure, but we do really well on setting the baseline in terms of environmental protection and socio-cultural protection.

To a degree that we don't talk about enough, Canada has the most impressive mining sector in the world. We have enormous access to capital. We have remarkable technical expertise. There's a global reach for what we do as a sector, and our corporate structures are quite flexible.

Let me deal with one that I think is really important, and I know we're going to have a chief speaking to this more directly than I will.

On the engagement and participation of indigenous peoples, you'll notice I did not put that as a barrier. In contrast to the standard explanation, indigenous communities are not a major barrier. They are simply not. There are hundreds of agreements and some truly impressive partnerships.

In your committee I suspect you've been talking about Voisey's Bay in Labrador, Cameco in northern Saskatchewan, the Tahltan first nation in British Columbia and Tr'ondëk first nation in the Yukon. The country should not blame indigenous communities for delay.

Let me quickly wind up with strategies for where we can go from here. How do we protect the environment, respect indigenous aspirations and encourage investment? How do we do this properly?

Number one, I would invite the Government of Canada to sit down with indigenous communities and mining representatives and review the regulatory regime. We need to be a world leader in appropriate and expeditious project review and approval, and we are not that right now. We can do much better.

Let's focus on creating opportunities for indigenous equity in the mining sector. Provide indigenous communities with a seat at the table, and you will discover that the decision-making process has improved quite dramatically.

Let's talk openly. I would think that the standing committee is an excellent example of this. Let's talk openly about the nature of critical minerals, explain the global market requirements and talk to the country about how important the mineral sector is in the 21st-century economy and the particular value of critical minerals. That's absolutely essential.

Let's also talk about the fact that these resources are absolutely critical—

[The Chair, Liberal, James Maloney]

I'm going to have to ask you to wrap up now, Professor Coates.

[Dr. Ken S. Coates]

I will do that very quickly, and thank you very much.

I would simply say the irony of our times is that the pursuit of rapid technological change and innovation requires the strengthening and empowerment of our nation's resource economy. To do anything slower than that will hold us up economically.

Thank you very much.

[The Chair, Liberal, James Maloney]

Thank you, Professor.

Grand Chief Bosum, how about you go next, sir?

[Grand Chief Abel Bosum, Cree Nation Government]

Good morning.

I would first of all like to express my appreciation for being asked to participate in this committee hearing. This is certainly a topic that we welcome, as it has important implications for the way in which Canada broadly deals with situations where there is an intersection of resource development proposals and indigenous traditional lands.

As you may know, the territory of Eeyou Istchee in the James Bay region of northern Quebec comprises approximately 400,000 square kilometres. This territory has, over the years, been the object of many resource development projects in the sectors of energy, mining and forestry.

Indeed, it was the announcement of the James Bay hydroelectric project in the 1970s that created the circumstances for negotiating the James Bay and Northern Quebec Agreement, which was signed in 1975. This agreement is our treaty. Over the past 45 years, we have built upon our treaty to gradually expand the role and the jurisdiction of our communities within our traditional territory, while at the same time improving the living conditions of our people.

The Province of Quebec has historically positioned itself to become an investment-friendly province for the mining industry. By and large, the mining industry has found Quebec to have a favourable regulatory and financial landscape. This has been inviting to many mining companies for exploring and developing mines.

Currently, as in many places throughout Canada and elsewhere, there is a significant drive to identify, explore and develop mines to bring to market those metals and minerals that will play a significant role in the production of batteries with very substantial capacity for storage of electricity. Vanadium, which exists in a number of places within our traditional territory, is one such metal.

Within our traditional territory, there are also several very active operations engaged in exploration and development for lithium, which is an element that has widespread use in current battery technology. Because much of the world's deposit of lithium is concentrated in less politically stable countries, there has been particular interest in identifying and exploiting the lithium deposits found in Quebec. There are currently five lithium projects at various stages of review and environmental assessment in our region. There has been significant talk about the potential for our region to actually become the battery of the north.

We are witnessing and we are becoming the focal point of the convergence of a shift to cleaner energy, the greening of industry operations, the growing environmental consciousness of consumers, the search for strategic minerals and the recognition that indigenous peoples may indeed have a serious contribution to make to our collective understanding and thinking about sustainable development.

The Cree Nation of Eeyou Istchee has spent many decades struggling with both the province and the federal government to secure acknowledgements of our indigenous rights and our treaty rights. It is now open to serious engagement with resource development proponents wishing to carry out activities on our traditional territory.

We have secured the recognition by Quebec that all resource development projects proposed to take place on our traditional territory must go through the social and environmental impact assessment process outlined in our treaty. It is a process that must take into account our people's environmental and social concerns. It would result in our involvement in such proposed projects, including environmental monitoring, employment, training, contracting and financial benefits.

We are at a point now where we have built and maintained a relationship with Quebec in the spirit of co-operation and with the objective of creating opportunities for our people and bringing home the benefits. The latest example of this can be found in La Grande Alliance of February 2020. It is an MOU that we signed with Premier Legault that creates a network of Cree and government organizations working together on the design and implementation of protected areas, transportation, communications and energy infrastructure to achieve the balance promised under the James Bay and Northern Quebec Agreement.

We have much work ahead of us, but this new approach can shift the paradigm that has for too long imposed challenges in balancing development and protecting our traditional territory, which remains essential to the livelihood of our Cree Nation.

As the La Grande Alliance MOU demonstrates, we are open to engaging with the mining industry, an engagement in the context of our treaty and the environmental and social impact assessment regimes embedded in our treaty. It is through this regime that we assess the social acceptability of the projects. It is through this regime that we give expression to the notion of free, prior and informed consent.

[The Chair, Liberal, James Maloney]

Chief, I will have to ask you to wrap up very quickly.

[Grand Chief Abel Bosum]

Okay.

Since the signing of our treaty in 1975, through our openness to engagement we have concluded over 80 agreements of all natures. We've argued for many years that the full recognition of indigenous rights is not a threat to development. Instead, it is the necessary condition for orderly and sustainable development to take place.

By incorporating our rights into the development equation, and by finding the right mix between rights, development and governance, we have repeatedly created a win-win situation for our people and our communities, for industry, for our region and for Quebec as a whole. This must surely be a way for the future if we are ever to get beyond the dead ends of paternalism and colonialism.

Meegwetch.

[The Chair, Liberal, James Maloney]

Thank you very much.

Mr. Steward, we go over to you, sir, for five minutes.

[Dr. Nigel Steward, Head, Group Technical - Processing, Rio Tinto]

Thanks.

Good morning, Mr. Chair, members of the committee and fellow witnesses.

My name is Nigel Steward and I am the head of group technical for processing for Rio Tinto worldwide.

Rio Tinto is the second-largest mining company in the world and the largest mining company in Canada, with operations coast to coast to coast, from our world-class aluminum operations in Kitimat in British Columbia and in the Saguenay-Lac-Saint Jean region, to our Diavik Diamond Mine in the Northwest Territories, to our iron ore operations in Labrador. We have a truly national footprint, with exploration activities across the country.

Thank you very much for the opportunity to discuss the important topic of critical minerals with you today. As Pierre Gratton pointed out in his earlier testimony to the committee, Canada's mining and manufacturing sector will be critical to achieving the federal government's 2030 climate change goals and the transition to a zero-carbon future by 2050.

Rio Tinto has climate targets for 2030 in line with the Paris Agreement, and our goal is to reach net-zero emissions in our operations by 2050. We don't know what that path to 2050 looks like yet, but we know it will and must include a secure supply of critical minerals, be they battery metals such as lithium, cobalt and copper, or rare earth metals like scandium or other critical elements like gallium.

Today I would like to focus my remarks on what Rio Tinto likes to call “full-value mining”.

When we think of mining, we immediately think of primary mining or greenfield plays, but increasingly we are discovering that many of the critical minerals we need to facilitate this clean transition can and are being found in existing mining operations, in waste streams and mine tailings. Full-value mining is all about extracting as much value as possible from the ore bodies that we mine.

In our aluminum operations in Quebec, for example, we have invested many years of R and D to create a new process that basically separates out our residues into their component parts. We have been able to monetize what would have been deemed waste in the past, so that there is both an economic and an environmental benefit. Today, in our aluminum business in Quebec, 85% of the 400,000 tonnes of waste is now fully recovered in the form of multiple products that are sent to customers.

Another great example of full-value mining is what we've been able to do with our Rio Tinto Fer et Titane metallurgical facility in Sorel-Tracy, in Quebec, which extracts high-quality titanium dioxide feedstock, iron, steel and metal powders all from ilmenite. Using our processing know-how and R and D capabilities, we have figured out a way to extract scandium, one of the rarest critical minerals. We do this from our waste streams.

In January we announced that Rio Tinto would become the first producer of high-quality scandium oxide in North America, with the construction of a new commercial-scale demonstration plant.

Scandium provides us with an alloying element for aluminum. It creates new possibilities for scandium-aluminum alloyed products in applications like aerospace and defence, because scandium is unique. It's one of the few elements that increases both the strength and toughness of aluminum alloys.

Rio Tinto is investing $6 million in the construction of a first module in the plant, with an initial capacity to produce three tonnes of scandium oxide per year, or approximately 20% of the current global market.

Those are just two Canadian examples of how we are pushing the boundaries of traditional mining to extract the full value from the mineral stream. We have other examples in the U.S. as well, including a pilot project at our boron mine in California that will extract lithium from a waste stream there.

At the end of the day we need steel, aluminum, copper, cobalt and titanium. All of these elements are necessary for our collective growth and well-being. As miners, our job is not only to find these minerals but to extract them in as sustainable a way as possible. It is this desire, along with the recognition that we cannot address the challenge of climate change without minerals and metals, that pushes us more and more towards full-value mining with the lowest environmental and carbon footprint possible.

Many thanks for your attention, and I am happy to take any questions you may have.

[The Chair, Liberal, James Maloney]

Thank you to all the witnesses.

We'll start with our first round of questions for six minutes each.

I believe we're starting with Mr. Lloyd.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you, Mr. Chair.

Thank you to the witnesses for coming today.

My first question is for Professor Coates. You raised a number of really important points. This isn't a critical mineral mine, but there's a mine fairly close to my community and they come under provincial and federal jurisdiction. Recently, the federal jurisdiction has said that if you want to increase by more than 50%, you'll be subject to the federal impact assessment, whereas if it is under 50%, you'll be subject to the Alberta Energy Regulator review. In their case, they sought to expand by about 49%—playing pretty close to the line—and they were subject to a federal review. Lately, this has been compounding and causing temporary job losses and delays.

I wonder if you could talk about the impact you've seen of the new Impact Assessment Agency on getting mining projects going in Canada.

[Dr. Ken S. Coates]

Thank you, sir.

I guess my first observation would be that, in one sense it's early days. When the mining regime was brought in, it wasn't overly specific. It set out more broad contours, and it's a work-in-progress. Resource companies that I've been talking to in recent years have spoken about the flexibility of the IA process, the fact that federal officials are looking for ways to improve it and to actually see it implemented.

I would lump that process into a 15-year history of what I call “over-regulation” of the industry. We have this idea that if we do more and more regulation, more and more surveys, and more and more evaluations, it will result in somewhat better outcomes. I think that's still a testable proposition and not necessarily one that's been proven yet.

We spend a phenomenal amount of money investigating these opportunities. It takes a lot of time to do it and a lot of the money that goes into it doesn't go to the local community, it doesn't go to the local first nation and it doesn't even go to the province. It goes to broader entities. I'm really concerned, to be honest. I think we should look at expediting the outcomes and focusing on the final product.

Are we actually getting safer and better mines? We do really well in producing safe mines and we do really well in ameliorating some of the social and cultural effects, but I'm not sure those more positive outcomes are due to the length, time and cost of the regulation.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you, Professor. I might come back to you.

My next question is for Mr. Steward from Rio Tinto. I found your testimony regarding the waste—you know, going through the waste and finding new resources like scandium oxide—and I'm wondering if you can comment on any of the regulatory hurdles that might exist in going into waste.

Is there a regulatory advantage to looking at waste or is it easier to get into more greenfield projects?

[Dr. Nigel Steward]

We just look at the existing environmental legislation that we have in an operating site when we're processing our tailings, and we make sure that we're complying with those regulations, that we're informing the regulatory authorities of what we're doing and that we have permission to do what we're doing. Generally it's quicker because you're already operating within an existing permitting environment. It makes it much easier and much quicker.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Given that Rio Tinto is a global mining company and this waste idea seems to have a great deal of potential in terms of supplying, you said, 20% of the global supply of scandium, if Canada is only or primarily taking the route of going through tailings, are we going to be left behind? Do we need a combination of this tailings idea and new greenfield projects?

What's going to create the supply that's needed to ensure the world is getting Canadian critical minerals?

[Dr. Nigel Steward]

It's most likely that we're going to have to have both, but the reason.... I mean, three tonnes doesn't seem like very much, but it's still 20% of the global supply when you start talking about rare earths. The issue for us is always about when you bring supply on stream, because you can actually flood the market, depress the price and put yourself out of business.

That's one of the issues we face at the moment with a lot of these critical minerals, because they're growing, the quantities are very small and the pricing of that commodity is very, very volatile. It's matching supply to demand. That's what we have to do: match supply to demand. We have the ability to grow, but we need to start somewhere.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

You're talking about getting gallium, scandium and these things from the waste tailings. Is Rio Tinto currently in planning stages to start greenfield projects to find rare earth minerals in Canada? If not, why not?

[Dr. Nigel Steward]

We are not at the moment because we're finding a lot of materials that are very important for the future economy and to support climate change within our existing streams, so we're focusing there first.

One of the big challenges is that, if you go and look for deposits of rare earths, by their very nature they come in very small concentrations, so you end up having to deal with.... You then have to present yourselves with the environmental issue of what to do with all of the waste you generate.

That's why, from our perspective, we're looking at how we keep our footprint very small but still provide these critical minerals and metals for the future.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Steward.

Thanks, Mr. Lloyd.

Mr. Weiler, we go over to you for six minutes.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair.

Thank you to the witnesses for joining our committee meeting today. It's a really fascinating discussion already.

I'd like to pick up where my colleague left off with Mr. Steward.

I was wondering if you could speak to the critical minerals and metals that you don't currently extract in Canada, whether that's from greenfield development or from existing waste streams, which you see as an opportunity to expand in the future.

[Dr. Nigel Steward]

There's kind of a long list.

For many of them, fundamentally, we just haven't found viable deposits in Canada yet through our exploration efforts. I think that's one of the reasons some of them aren't extracted here by us. I think the challenge with what we do with all of the waste is becoming more and more of a preoccupation for us, as well as for society.

This is really why we're focusing on looking at what we already have within our portfolio, our ore bodies and within our streams that we can extract. That means that the material is here, but it's not necessarily a new mine; it's within our own processes. We're looking on our own doorstep to see what we can do to solve this problem and to support the economy and the growth of the green economy. That's just the choice we've made at the moment.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Could you also speak a little bit to the challenges of both finding and then extracting these critical minerals from existing...whether that's waste rock or other mine products?

[Dr. Nigel Steward]

I'm sorry. I don't quite follow your question.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

I was hoping you could speak to—maybe I'll reframe that a little bit—the process of extracting these critical minerals from some of the existing deposits or whether that's waste rock from the existing operations you have.