Natural Resources Committee on March 26th, 2021

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

I'll be nice, Mr. May.

[The Chair, Liberal, James Maloney]

Thank you, Mr. May and Mr. Zimmer.

Look, there are all kinds of issues that we disagree on, but I think we can all agree that it's inappropriate to suggest that any member of this committee or any member of Parliament or anybody who appears before this committee is saying something that is deliberately untrue or false.

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

Far be it from me to say that, Mr. Chair. All I said was that it was erroneous. Whether they knew about it or not, it was erroneous, because I just corrected the record.

Let's get on to the questions.

[The Chair, Liberal, James Maloney]

All right. I just wanted to clear that up.

Go ahead.

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

Thank you.

Dr. Kucharski, I really appreciated your comments about the $1 trillion in energy infrastructure that will be necessary just to keep up. We see that in the future the electrification of our world is just going to grow. It's not going to get smaller in any way, shape or fashion. You also spoke about China's near monopoly and using that position to threaten other nations with that monopoly. I'm concerned about that. I'm concerned about that too when it comes to the Communist Party's investment in Canada. I've never seen it more aggressive, and possibly using our own resources somehow against us.

You mentioned alternative sources and that we need a strategy. What would you do to make this happen? What would that strategy look like in terms of investment? When it comes to state-owned enterprises investing in Canada, what would that look like in the future?

[Dr. Jeffrey B. Kucharski]

I think I'm suggesting that Canada and its partners and allies collaborate together to exploit the natural endowments we already have, such as here in Canada; share technology and investment dollars to invest in critical mineral supply chains here at home; work to supply each other; and be a competitive source of supplies of these critical minerals to do the industries and technologies that will be important to the energy transition as it proceeds over the next several decades. I'm not advocating in any way Chinese investment in Canada by state-owned enterprises. It's quite the opposite. I'm encouraging Canadians to develop their own supply chains in collaboration with partners and allies.

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

Thank you. I think we all agree on that. Being a northern British Columbian, I have mines in my riding. We have oil and gas. We have forestry. We have many of those natural resource sectors, and we covet investment but the right investment.

I would like to go to Dr. Zaghib about your comments. You talked about developing our resources and the jobs that come with them in North America. How would you advise us? You're obviously here advising us today, but we want to take these steps further down the road. We see the potential of critical minerals. A lot of Canadians may not know that we have a lot of these minerals in our very own country to develop.

Dr. Zaghib, how would you advise us to give a more positive direction for this sector? What would you do to advise us in our jobs here in Ottawa?

[Dr. Karim Zaghib]

I'll just give the numbers. This is from Harvard University. Eight million died in 2018 from fossil fuel pollution, à cause l'essence, à cause du diesel. We need to accelerate the penetration of electrification as soon as possible. This can be a great economic balance. Quebec is importing $1 billion each month in petroleum and so on. This means that the strategy to enhance this kind of electrification is very important.

When we come to, I think there was a question about China and so on—

[The Chair, Liberal, James Maloney]

Doctor, I'm going to have to stop you there. We're going to have to move on to the next set of questions, unfortunately.

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

[Paul Lefebvre, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

Thank you to all the participants for joining us.

We have another amazing panel of witnesses today. This is super-exciting.

I'm coming to you from Sudbury, the mining innovation capital of the world, as we say. We also call it the nickel capital of the world. Right in my backyard we have nine operating mines and 350 small and medium-sized enterprises in the mining sector alone.

This has been a very exciting study that we have embarked upon. Certainly, as was mentioned, one of the main questions is how we protect or create the supply chain in Canada when it comes to critical minerals from prospecting, exploration, extraction, processing and manufacturing to commercialization that we can do: the magnets, the motors, the anodes and the cathodes. How do we create the supply chain here and make sure that those jobs stay here?

We've heard from many witnesses over the last meetings that we certainly have a large role to play, but we can't play it alone. We need to have partners and allies.

Before I embark upon that, Dr. Kucharski, with regard to your opening remarks on the lay of the land right now when it comes to rare earths, critical minerals and the role that one other country is playing and how it's dangerous for one country to have the monopoly in that, what effect will it it have if we continue on that path and if countries like Canada do not take a stake in protecting those critical minerals? As we know, we just tightened the rules yesterday on foreign takeovers in Canada to protect critical minerals. That was something we did with those rules as a federal government. I just want to hear from you very quickly on the importance of protecting those supply chains because of our market-driven economy versus a state-owned economy.

[Dr. Jeffrey B. Kucharski]

I think that's why it's important for us in Canada to have our own supply chain independent of countries like China that exert monopoly or near monopoly power over certain critical minerals.

Going forward, it's expected that the economic growth in China is going to drive demand for rare earths and critical minerals, such that it's very likely that China will not be exporting as much as it is currently. Not only can critical minerals be used as a tool for political leverage, but also demand itself within China is going to reduce the supply of critical minerals from the country going forward. It's that much more important that we here in Canada, working with our partners and allies, develop these supply chains so that our industries, including the defence industry and the clean energy sector, are not starved of these important materials, which would put in jeopardy our industries here at home.

[Paul Lefebvre, Liberal, Sudbury, ON]

Thank you.

Dr. Godbout, the committee Chair unfortunately had to cut you off. I had the impression you were about to conclude your remarks and make some suggestions regarding the support you hope to get from the federal government.

I had the honour of visiting your campus last September and making some announcements regarding support. I saw the amazing and important work being done there. I'd like to give you a chance to finish your opening remarks, particularly with respect to your work in the area of developing critical and strategic minerals, and also how the federal government could support you and show how important that development is.

[Dr. Jovette Godbout]

Mr. Lefebvre, thank you for your question and for giving me the opportunity to expand on this.

Quebec and Canada have acquired considerable expertise in the responsible development of known base and precious metals, so we aren't starting from scratch.

I agree with Dr. Zaghib that it's important not to try to reinvent the wheel, but rather to map the expertise in Canada, focus it and support it.

How can research be supported right now?

It's important to understand that, because of market conditions and existing monopolies, the competitiveness and funding of research in the critical and strategic minerals sector are very different than in other sectors. In order to obtain funding levers for research, the industry in Quebec and Canada needs cash investments, especially from the federal government.

We therefore need to review our funding models, because the companies are all in the same place and are well upstream from the mineral development process. We're talking about exploration companies whose financial resources are precarious. In order to move forward on this front, research needs a different kind of support, specifically more public than private investment. We also need greater support for research infrastructures and platform development, because so much technological innovation is needed.

[Paul Lefebvre, Liberal, Sudbury, ON]

Thank you very much, Dr. Godbout.

Since I only have five seconds left, I simply want to say thank you.

I would like to ask a lot of questions of the witnesses, but I will let my colleagues undertake that.

Thanks to everyone.

Thank you so much for being here.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Lefebvre. You were right on the button.

Mr. Simard, we'll go over to you, sir, for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Chair.

Thank you to all the witnesses.

It's nice to see you again, Dr. Zaghib. We've already had a few conversations on other topics.

Something that really piqued my interest from your presentation was when you talked about how a stable and secure supply chain could be a key element with respect to critical minerals.

What weaknesses and areas for improvement could the federal government address in establishing this supply chain?

[Dr. Karim Zaghib]

Thank you for the question, Mr. Simard.

We have the materials, the mines and the talent. As for what's missing, let me give you an example.

We have a graphite mine and we want to make this material marketable. We would like to produce spherical graphite from the mine and purify it. Unfortunately, we don't have the industry in Canada to do this, so we have to buy machines from China, Japan or elsewhere.

The federal government therefore needs to work closely with innovation institutes to expedite the development of this industry so we can manufacture the machines close by and be independent, not only in terms of the supply chain but also manufacturing. There are trade secrets, intellectual property and so on, which makes for a very weak link. Appropriate government investments would help us solve this problem. We need to ensure that the processing happens here in Canada for this to be successful.

[Mario Simard, Bloc, Jonquière, QC]

Okay.

I'm not an expert on critical metals, but I recall hearing from Mr. Fung from Torngat Metals a few weeks ago. He explained how to obtain permanent magnets from rare earth oxides.

If I understand you correctly, in terms of permanent magnets, we might not have the infrastructure needed to do the processing in Quebec or Canada, and this infrastructure therefore needs to be developed.

[Dr. Karim Zaghib]

As I was saying, we really need to develop this primary processing, then secondary, until the product reaches the customer, all here in Canada, with the right machines. Otherwise, we will lose the expertise and the know-how. I agree with that. This all applies not only to materials and the energy transition, such as batteries, but also to rare metals. We therefore need this solution quickly, with help from the Canadian government.

[Mario Simard, Bloc, Jonquière, QC]

You said in your presentation that the issue of critical minerals and rare earths is interpreted in the United States as being strategic elements that are matters of national security. We had some experience with that as part of the CUSMA negotiations. We were asking the government to bring in measures to ensure the traceability of aluminum, to ensure that it was produced in North America. There was the problem of aluminum coming from China by way of Mexico.

Could the same kind of traceability be established for critical minerals and rare earth elements?

[Dr. Karim Zaghib]

We already have traceability projects, particularly regarding CO₂ emissions, because in Canada, we do have green materials made with renewable energy, including hydro, solar and wind. We can also make [Inaudible—Editor] with intuition and creativity to ensure that these materials are made in Canada.

So, yes, it's possible to ensure the traceability of the origin and the traceability of a product with a green signature without CO₂ emissions.

[Mario Simard, Bloc, Jonquière, QC]

My next question is for you, Dr. Godbout.

From the answer you gave to my colleague, Mr. Lefebvre, earlier, I understood that in other sectors there is a partnership research model whereby businesses are investing a third of the missing funding.

Is it true that it's harder to establish these kinds of partnerships in the critical minerals sector?

[Dr. Jovette Godbout]

Yes, this Canadian model is envied around the world, because it allows industry to be involved in R & D. It also allows universities to conduct research that is applied to the sector in question.

In the critical and strategic minerals sector, at the moment there are no lithium mines or rare earth mines in operation, for example. This industry does not have the same financial means to support research. It is therefore true that we are not at all at the same level in terms of research capacity.

On top of that, since we live in a market-driven world and are competing not with each other but with countries that have a monopoly on the market for these substances, intellectual property and patents—in other words, confidentiality aspects of the research results—will be important issues to consider.

[Mario Simard, Bloc, Jonquière, QC]

Should we be considering a different funding model, especially for this strategic sector?

[Dr. Jovette Godbout]

I think there should be specific envelopes from the public sector. Research in Europe for example, particularly in France, is funded by the state, but boosted by industry participation. I think this should be the case for our critical and strategic minerals sector. It would not be a question of changing the research into base and precious metal mines, but rather about setting aside envelopes to develop research in this sector.