Natural Resources Committee on March 8th, 2021

[Dr. Nigel Steward]

I'm really not a battery expert or a manufacturer of batteries, so I really couldn't say.

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

As far as the development of the minerals that are required, though, how long is it going to take to have the production in place, specifically for these critical minerals? How much of it currently exists? Where are we in terms of that framework?

[Dr. Nigel Steward]

There's very little in the lithium space at the moment, but there's a lot of talk about many projects in Quebec and Alberta.

Phosphorous and phosphate mining is also a very interesting area. A lot of the batteries are lithium iron phosphate, and they're thermally a lot more stable. The phosphate side of the business is very good. It's an interesting area.

We just need to get these projects going. I think one key thing I mentioned earlier about being successful in the mining industry is finding an ore body that's large and has a low cost to exploit. As these markets take off, because they're new, they're very volatile. To withstand those ups and downs in price volatility you need to ensure that you're on the low end of the cost curve. That means adding an ore body with a low strip ratio, that's near the surface, that requires relatively low cost processing to extract and that is a large ore body that will last you for a long time. Those are the key elements of mining.

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

Okay.

Partly why I'm wondering about the timelines here is that there appears to be a three-year window within the new CUSMA deal to source about 75% of lithium regionally before tariffs will hit. Are we at risk of missing that window to get that production here in Canada?

[Dr. Nigel Steward]

The way we see it, lithium is definitely going to be required in the longer term. Lithium's around to stay. It's about building something for the long term, which means, as I mentioned, the large ore bodies, the low-cost ore bodies. Those are things that Canada should be focusing on.

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

Yes, but will we have those mines, though? Again, the capacity we need is 75% regionally. Are we going to be able to hit that in two or three years, or are we going to be caught up in the regulatory limbo here that's going to cause us to miss that three-year window set out by the CUSMA deal?

[Dr. Nigel Steward]

Two to three years is a short time to bring a mine on stream, with all of its processing plants and facilities, which you'll need for something like lithium.

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

Mr. Coates, I have a few questions for you. You recently co-wrote an article with Stephen Buffalo, president of the Indian Resource Council, stating that the Liberal government's approach for a green economy “could undo one of the most important examples of Indigenous engagement.”

Is it fair to say that the government pushes a false dichotomy between developing clean technology and fossil fuels?

[Dr. Ken S. Coates]

You've asked me a sensitive question, sir.

Let me put it this way. It's the main point of that article. Indigenous folks were on the outside looking in on resource development for 150 years. In fact, devastating results followed. Some of the situations were horrible with mines that were developed on indigenous territories.

Over the last 15 years, through duty to consult and accommodate legislation, treaty rights and things of that sort, indigenous folks have emerged as a major part of the natural resource economy. You get a situation in Canada right now where we're seeing these things in very stark terms. They're the wrong terms, saying that while resource development is bad, we're going to have some new economies that are good. Well, the new economy requires resource development. You know in this committee this is absolutely essential.

However, for goodness' sake—and this is my strongest observation—indigenous people are active and enthusiastic participants in carefully done resource development. They want to be part of the process. They're desperate for own-source revenues. They want the jobs. They want the commercial opportunities, and they want to protect the environment. We must be really careful to protect that.

The oil and gas industry has sort of moved off-line. The indigenous involvement in the oil and gas industry has been spectacular over the last 10 to 15 years, and now it's going to become at risk because the country as a whole is underestimating the long-term economic value of oil and gas.

Let's make sure we listen to indigenous people, and not just those indigenous people who favour a very strong environmentalist agenda.

[The Chair, Liberal, James Maloney]

Mr. Sidhu, you are next.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Mr. Chair, and thank you to our witnesses for being with us today.

Today, being International Women's Day, we continue to push for gender equality and celebrate the achievements and successes of so many women.

Dr. Steward, there are very few women working in the mining sector. One of the goals, under the the Canadian minerals and metals plan, is to have a workplace consisting of at least 30% women, hopefully more, in the mining sector by 2030, including indigenous women.

How many women currently work for Rio Tinto as labourers and in management positions? What is your plan to hire more?

[Dr. Nigel Steward]

That is a very important question for us. When we talk about the main workers, I'm not sure of the actual figures, so I apologize for that, but this is something we're very actively involved with—building, encouraging and keeping women, and anyone from a diverse background, in the company and making them feel included and respected every day.

We've actually created an officer position to do this. We're also setting the tone right from the very top. If you look at the recent announcements we've made, we have a new CEO, and in the executive committee at the company, you'll see that—and I'm pretty sure of this, although I'd have to do the math—over 30% of the participants on the executive committee of the company are now women. We've also introduced more women at the board level of the company.

This is something that we're passionate about as a company, inclusion and diversity, and something we're strongly engaged toward changing.

[Maninder Sidhu, Liberal, Brampton East, ON]

That's very promising to hear.

Our government launched a [Technical difficulty—Editor]. It would be nice to see your company part of that challenge as well.

You mentioned, in your opening remarks, that you guys are the largest mining operation across Canada and the second-largest in the world. What's important to me.... I know you operate in a few provinces across the country. I want to know about your relationships with the local indigenous populations and how could they be better.

[Dr. Nigel Steward]

You're always best asking the first nations people their opinions about this, but we strive to be trusted to work collaboratively with the first nations people across the country. We've signed many agreements across the country in the last two years, working with first nations people in all the territories in which we operate. We see them as being incredibly important partners in the work we do.

We strive to continue to improve our ESG credentials and work in a very respectful way, not only with the first nations people but with all of our stakeholders in the communities in which we operate.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Mr. Steward.

My colleague touched earlier on the demand for scandium, and in your opening remarks you spoke about producing scandium in Sorel-Tracy, Quebec.

Could you explain to this committee why you decided to extract this metal? What are the potential uses? You touched on the issue briefly, but I'd like to know more about it. Also, would you consider this a critical mineral?

[Dr. Nigel Steward]

First, yes, it is a critical mineral. Scandium is a rare earth—one of the 22 rare earth elements. The reason we were looking into it is that we were going through a sort of creative process to see what else we could do to beat the critical minerals challenge.

There are two big applications for scandium in the world. One of the largest is for fuel cells. It's an alloying element for the main ceramic used as a solid oxide electrolyte in fuel cells. This is all part of the green economy. That is the biggest use at the moment.

The second is in aluminum. The key with aluminum is that it helps to lighten structures so that less energy is required to move those structures, such as cars. The issue was that scandium was very expensive and there wasn't stability of supply. Many people wouldn't get into the manufacture of aluminum-scandium alloys because there was uncertainty about the long-term stability of supply, which is particularly important if you are a car company or are dealing with something in defence.

What we do is bring stability of supply now.

[The Chair, Liberal, James Maloney]

Thank you. You are right on time, Mr. Sidhu. I didn't have to interrupt you. I feel much better myself.

Mr. McLean, we'll go over to you for five minutes.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair.

The first question will go to Mr. Steward.

Mr. Steward, can you give us a bit of a briefing on when these mines are profitable for your company and what you do when the commodity price makes their future tenability unprofitable and, therefore, undevelopable?

[Dr. Nigel Steward]

We really don't invest in mines unless we know that we have a mine with a long life and a low cost—and that position in the first quartile of the cost curve. That is absolutely key. We won't invest if we don't have that assurance, because we know that fundamentally it wouldn't survive during any trough in commodity prices. That's one of the key things that we always need to do.

If we work that way, we can plan a lot better for the full life cycle of the mine, from creation to closure. As a mining company, we always try to work that way.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

The world market in rare earths is right now cornered by Chinese government-owned entities. They generally act as a cartel. When foreign mines seem to be coming on and taking market share, they usually flood the market from the mines they own.

Does that affect your development at all?

[Dr. Nigel Steward]

It makes us wary, for sure, of investing in a brand new mine that would produce rare earths, because of that level of volatility. This is why we have looked at being creative and looked at what rare earths sit within our ore bodies today and whether we can extract them already.

Fundamentally, the main metal or mineral we are extracting in our mines today is what keeps the mine going and surviving, and it has that low-cost position. Basically, we are creating the extraction of these additional rare earths within a fundamentally stable business. That's the way we can guard against that.

You raise a very interesting point: Is there something that governments can do to create stability of price and stability of demand, given that these minerals are so critical for countries?

For example, Canada, the U.S. and Australia are working together in the critical mineral space to try to create a sort of geopolitical stability in supply, an indigenous supply of critical minerals. Is there something that governments can do to create this stability and encourage and favour more indigenous production of these critical minerals going forward?

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

I also have one last question for you, Mr. Steward. You talk about the environment in a holistic way. The cost of the development once these elements become more rare, once they're mined a little bit, is going to obviously change the dynamics of battery production to the point where the CO2 emissions involved in mining these elements are going to be greater, perhaps, than the CO2 they replace in the transportation chain, if you will.

Do you have any comments on that?

[Dr. Nigel Steward]

What we have to do as a society is to find ways to extract minerals with a zero-carbon footprint going forward. There's not a lot of point in creating a lot of emissions, a lot of CO2, to save something elsewhere. We have to do both together. The commitment that we've taken as a company at Rio Tinto is to stay in line with our commitment to reduce our emissions by 2030 in line with the Paris Agreement, and also to be net zero in 2050.

That is going to require an awful lot of innovation. We will need to partner with people outside of our company because we don't have the ability to do all that.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay.

I have one question here for Grand Chief Bosum.

Grand Chief, can you tell us about the actual setbacks you see right now, as far as the development of resources and the involvement of the indigenous community goes, in your experience?

[Grand Chief Abel Bosum]

In our area, I think what's really lacking is infrastructure. We see that the infrastructure of the roads tends to.... Mining exploration operations tend to follow the roads. Some of the roads, of course, could lead right into the heart of areas that are culturally sensitive.

Our objective right now is to work with the government to design the infrastructure network, building for transportation, communications and electrification. I think if we could do that, then at least our people will know where mining will be taking place. I think that provides stability and predictability.