Natural Resources Committee on March 26th, 2021

[The Chair, Liberal, James Maloney]

I call this meeting to order.

Welcome, everybody, to meeting number 18 of the Standing Committee on Natural Resources.

As everybody knows, we're doing this by way of Zoom, so we have to be a little bit patient and try to avoid talking over one another and to make sure that our translators have enough time to digest and translate the questions or comments. Everybody's patience is much appreciated.

Before I introduce the witnesses, I want take a trip down memory lane.

First of all, I want to welcome Mr. Fast, who I know is substituting today.

I want to welcome our new parliamentary secretary, Mr. Serré, who is here today only as an observer. We look forward to working with you going forward. This is a homecoming for you. You started out on this committee. Mr. Cannings, Ms. Stubbs and I were part of that original cast back in 2015, so welcome back.

Ms. Stubbs, it's very good to see you today. Welcome back. I think you're here for only an hour, so we better make it count. We're very glad to see you, as always.

On that note, I'd like to welcome our witnesses.

With us today are three individuals and two groups. We have Dr. Eggert, professor, Colorado School of Mines; Dr. Heffron, professor, global energy law and sustainability, and Jean Monnet professor in the just transition, University of Dundee; and Dr. Jeffrey Kucharski, professor, Royal Roads University. As well, we have Investissement Québec and the Research Institute of Mines and the Environment.

Each of our witnesses, as individuals or a group, will get up to five minutes to make opening remarks. I emphasize that it is up to five minutes; I may have to cut you off if we go over on time. We do have strict time limits here. Once all of the witnesses have completed their opening statements, I will open the floor to questions from our members.

Why don't we jump right in? I will go in the order you appear on the agenda, starting with Dr. Eggert.

I should point out that you are free to speak, and encouraged to speak, in either or both official languages. You have translation available to you at the bottom of your screen. All of your mikes and equipment have been tested, so there should be no problems.

Dr. Eggert, you have the floor.

[Dr. Roderick G. Eggert, Professor, Colorado School of Mines, As an Individual]

Mr. Chair and members of the committee, thank you for the opportunity to appear today.

I'm a professor of economics and business at the Colorado School of Mines, specializing in mineral economics.

Since 2013, I've been deputy director of the Critical Materials Institute, a public-private research consortium established by the U.S. Department of Energy. It consists of research collaborations, involving national laboratories, universities and companies and is aimed at accelerating innovation to help secure raw materials and their supply chains, and ensure the development and deployment of clean energy technologies.

I have organized my opening remarks around one central question, and then toward the end, I'll offer a few preliminary thoughts on possible U.S.-Canada collaborations.

My central question is, what kind of industrial policies should the United States, and, separately, Canada, have toward raw material supply chains? Note that I refer to industrial policy. This reference is deliberate. How a nation takes advantage of its mineral wealth as a producer and how it manages it's supply-chain risks as a consumer fundamentally reflect choices they make about how to approach industrial policy.

I would observe that a false dichotomy often exists in discussions of public policy that are organized around two caricature-like, mutually exclusive approaches to policy. At one extreme there's the “let the market decide”, a sector agnostic approach, and then at the other extreme there's the “have government pick winners and losers”. In reality, most, if not all, governments operate in a messier middle ground between these extremes.

The real questions are: first, how can and should governments support market solutions which focus our attention on things like education and basic pre-competitive research; and second, how can and should governments steer more quickly, so that the market might direct commercial activities toward particular sectors and technologies?

For raw material supply chains, the education and basic research approach would focus on the long-term—five years, 10 years or more—and would only provide scene setting strategic analysis, but would focus on the important inputs to commercial activities, such as educated people and knowledge obtained through basic pre-competitive research.

On the second issue of steering more quickly over the short to medium-term, we might focus on specific sectors. If we think about raw material supply chains, things like establishing public-private partnerships to incentivize and accelerate technology deployment and commercial activity in a specific, more narrowly defined, supply chain, these could include magnets, motors, electric vehicles, or rare earth magnets and motors, battery materials, anodes, cathodes and batteries, for example.

The essence of national industrial policy should be determining the right balance of government activities that support private solutions over the long-term and help steer more actively, and aggressively over the short to medium-terms commercial activities of special priority.

In terms of areas of possible collaboration—and these are not exhaustive, I might suggest—there are opportunities for U.S.-Canada. Certainly, information sharing and broad, forward-looking strategic analysis related to raw materials, university to university co-operative programs and exchanges for students and faculty. This could also include government-to-government collaborations to assess unconventional primary resources, the recovery potential of valuable materials from processed waste streams from both historical and ongoing mining, and the potential for circularizing material life cycles.

Anyway, according to my clock, I'm now at five minutes, so I will stop and look forward to discussing these and other possible collaborations or anything else you might like when we get to questions.

Thank you very much.

[The Chair, Liberal, James Maloney]

Thank you very much, Doctor. You're right on time, so it's much appreciated.

We'll go over to Dr. Heffron, for five minutes.

[Dr. Raphael J. Heffron, Professor, Global Energy Law and Sustainability, Jean Monnet Professor in the Just Transition, University of Dundee, As an Individual]

Thank you for the opportunity to speak to you here today.

I'm a professor in global energy law and sustainability at the University of Dundee. We have one of the oldest energy law centres here, 44 years old this year. I'm also a Jean Monnet professor in the Just Transition, which is an award given by the European Commission.

I'm going to tell you about some research and policy work I've been doing. It's based on this issue of critical minerals and justice.

A crucial issue for the continued development of critical minerals centres on what the vision is for this industry. In today's world, that vision needs to have justice at its core. As the critical mineral industry keeps developing in Canada, justice needs to apply at the planning, construction, operation and decommissioning phases of a critical mineral project.

It's important that society is clear that (a) the critical minerals industry has learned from errors in the energy sector over the years in project development; (b) the value of the critical minerals industry to the energy transition; and (c) that the critical minerals industry will contribute to Canada's just transition to a low-carbon economy.

The critical minerals industry has clearly a vital role and it is necessary to ensure that the stakeholders are all clear that the industry needs what we can refer to as a “social licence to operate” off Canadian citizens.

In terms of exploring risks, as further development of the critical minerals industry is planned in Canada, it will be vital that the risk profile of the industry is reduced. This has clear benefits in lowering costs of finance, ensuring continued operations on site without stoppages, contributing to economic growth, providing good jobs and contributing to the energy transition. In order to achieve all this, the role of justice has to be clear so that all stakeholders will be satisfied.

The international political, business and societal agenda is changing with increased calls for more fairness, equality, equity and inclusiveness—in essence, justice. Hence it's important that Canada remain ahead of such change and have policy that is flexible to adapt to this change.

We can see these calls for more justice if we follow developments due to the 2015 Paris Agreement; climate change action; the UN sustainable development goals; and taxation, disclosure and transparency issues such as ESG investing, rules of foreign investment, economics, environmental impact assessments, insurance, project finance and the rise in imagery and data.

President Joe Biden has gone even further and appointed an energy justice director within the Department of Energy in the U.S.

All these areas I mentioned are calling for more justice, and they try to develop and improve just outcomes within society. For the critical minerals industry, ensuring that justice is at the heart of its development will only be positive. It will ensure that their business will actually develop and with less risk, and it will be sustainable into the future. That is, it will not have to stop operations due to a lack of available insurance, and so on.

Therefore, what are we talking about here when we talk about these forms of justice? We can look at this from, let's say, a just framework. What this involves is examining the problem from four levels.

The first level is ensuring distributive, procedural and restorative justice. I will be brief in explaining them.

Procedural justice should be clear. Restorative justice concerns the need to ensure projects are decommissioned; that is, cleaned up properly. Distributive justice is key, as there should be fairer distribution of wealth created from the critical minerals industry. There is no reason for mining companies to keep earning super-normal profits.

The second level of analysis looks at recognition and cosmopolitan justice. These, in essence, concern inclusiveness. Recognition refers to ensuring, for example, indigenous communities are recognized. Cosmopolitan justice ensures we are engaged with impacts across borders; that is, what will be the contribution of critical minerals to the global energy transition? How will it impact Canada's energy and climate targets under the Paris Agreement and other international commitments?

The third level of analysis concerns space. Where will these critical mineral developments be in Canada? Are they in clusters where, as a result, there might be excessive environmental impacts? Will they contribute positively to regional development across Canada?

The fourth level focuses on timelines and planning for different scenarios in 2030, 2035, 2040, 2050, etc. Here, this question can be asked: When does Canada want an operational critical minerals industry that is just and sustainable? If it's 2030, for example, what types of law and policy—

[The Chair, Liberal, James Maloney]

Doctor, I'm going to have to ask you to wrap up very quickly.

[Dr. Raphael J. Heffron]

[Technical difficulty—Editor]

I will finish by saying that today all stakeholders in the critical minerals industry need to be satisfied, and this can be accomplished by reducing the risk profile of the sector. To do so, the vision for this industry has to be that it plays a vital role in ensuring Canada’s just transition to a low-carbon economy. Applying a framework to achieve justice can provide a pathway for all stakeholders to engage with to ensure that investment happens and the industry grows in a just and sustainable way.

[The Chair, Liberal, James Maloney]

Thank you, Doctor.

Dr. Kucharski, you're next, for five minutes, please.

[Dr. Jeffrey B. Kucharski, Professor, Royal Roads University, As an Individual]

Mr. Chair and members of the committee, thank you for the invitation. It's my sincere pleasure to appear in front of this committee today. I'm a professor at Royal Roads University in Victoria. I do research and publish on issues related to energy, geopolitics and international trade.

Canada has an abundance of strategic resources that the world, especially the Indo-Pacific region, needs to help develop and sustain their economies. The Indo-Pacific region, driven by continued economic and population growth, will lead global demand for energy and critical minerals in the coming decades. According to the International Energy Agency, the region will account for approximately 60% of a global growth in energy demand by 2040, which will require more than $1 trillion U.S. in annual energy infrastructure investment.

In my published work, I define strategic resources as including Canada's energy resources, such as fossil fuels and uranium, as well as critical minerals, such as rare earth elements. I say that critical minerals are strategic, because they're relatively scarce, located only in certain locations, essential to a modern economy and integral to the energy transition. Access to critical mineral resources is a national security question for many countries and is increasingly vital to economic growth, peace and security.

We need to recognize there are risks to the stability and security of strategic resource supply chains. In the case of critical minerals, limited global supplies, the digital revolution and decarbonization efforts are driving resource scarcity and thus competition to secure uninterrupted access to CRMs. The principal risk is disruption of supplies, whether through shortages, embargoes, trade wars, conflicts or, as seen more recently, global pandemics.

In addition to resource competition, the use of market power as a tool of economic leverage can also be a source of risk. In the past, China has demonstrated a willingness to use its near monopoly over processed rare earth elements as political leverage against countries with whom it has disagreements. In 2010, China cut off Japan from key rare earth supplies in response to a territorial dispute over the Senkaku, or Diaoyu Islands. As well, in May 2019, Chinese president Xi Jinping visited one of China's rare earths magnet plants in a thinly veiled warning to the United States over escalating trade tensions.

Chinese economic strategy documents have continued to discuss leveraging its market power over rare earths in response to geopolitical disputes. Canada and our partners therefore need to prioritize efforts to develop alternative sources and bring them into production as soon as possible.

I'm encouraged by the efforts of the federal and provincial governments to develop a critical minerals strategy, compile a critical minerals list, and enter into agreements with key allies and partners such as the United States and Japan. Developing a viable supply chain for critical minerals in Canada will be the first priority. Ultimately, Canada must also have a strategy in place to leverage our capabilities and resource endowments to forge closer economic, security and political relations with important regions of the world.

It is manifestly in Canada's interest to support the economic and regional security of our partners and allies, and by that I mean those that uphold rules-based international order in the Indo-Pacific region, including Japan, South Korea, Australia, India and others. Canada needs to be well positioned to meet the growing demand for energy and other strategic resources, and to establish a reputation as a stable and reliable supplier and partner to the region. Canada's stake in the preservation of peace and stability in the Indo-Pacific region is significant because our future prosperity will increasingly depend on stable trade, and the political and security relationships we have there. Critical minerals can be an important asset for Canada in this effort.

Canada's economic future depends, in large part, on how we position ourselves to deal with the opportunities as well as the challenges posed in the Indo-Pacific region. It's my hope that federal and provincial governments will work towards coordinating their critical mineral strategies within the overall framework of a broader Indo-Pacific strategy, which I understand is under development now within Global Affairs. It will be important to leverage the benefits of Canada's critical mineral capabilities and resources in order to help advance Canada's broader interests, as well as support economic development, environmental sustainability and security in this important region.

Thank you very much.

[The Chair, Liberal, James Maloney]

Thank you very much, Dr. Kucharski.

We're going to Investissement Québec and Dr. Zaghib.

[Dr. Karim Zaghib, Strategic Advisor, Investissement Québec]

Thank you, Mr. Chair.

Good afternoon, everyone.

My name is Karim Zaghib. I currently hold two positions. I am a professor of practice at McGill University and a strategic advisor with Investissement Québec. Before that, I was a researcher for 26 years and also served as general director of Hydro-Québec's Center of Excellence in Transportation Electrification and Energy Storage. I have 35 years of experience in the energy sector. I have developed research, particularly regarding the circular economy, with an interest in materials, from mining to mobility to recycling.

Critical minerals and rare metals are very important for the energy sector, especially for the energy transition, and for health, economic and military applications. Several countries, including China and the United States, classify critical materials and rare metals as national security issues. According to the U.S. Department of Commerce website, the United States classified 35 such minerals in 2018.

Nearly all of those minerals can be found in Quebec, including aluminum, indium, titanium and niobium. Some great opportunities lie ahead for Canada.

I will speak more specifically about batteries, since that's my area of expertise. Batteries, particularly lithium-ion batteries, have an anode, a cathode and an electrolyte. Anode materials such as graphite, silicon and copper can be found in Canada. This is also true regarding the cathode with aluminum, nickel, cobalt and manganese, for example. So these materials are readily found in Canada.

What matters most is this.

We need Canada to have a stable and secure supply chain with zero CO2 emissions. We need collaboration between provinces and also with the United States.

These are great opportunities. Right now, 85% of lithium-ion batteries are produced in China, Japan and Korea. You have OEMs in Ontario, in the U.S. and also here in Quebec.

The stable supply chain here in Canada respects human rights because we have no kids working in mines. We need to think about a strategic plan between our government and also the relationship between the private sector and government sectors.

The opportunity is right here and we do not want Canada to become like Africa, just selling our natural resources to others. We need to make the first transformation here, the second transformation and so on.

Don't forget, we have talented engineers and we have the best universities here. Our universities here in Canada are similar to what they have in Boston or the Silicon Valley and so on. Beyond that, we have creativity. We have one of the largest portfolios of patents and license technologies to many companies worldwide.

I want to really see great collaboration and also to think about transportation of our materials and so on. As you know, when you spoke about lithium, the basis of lithium-ion is the lithium. We have at least six places in Quebec for lithium. Then when you see batteries, for example, Elon Musk says we need nickel. We have nickel here in Canada. We have all the materials here.

I would just like to conclude with...stable, secure, less CO2 emissions, the trustability of our natural resources and to create jobs in North America.

[The Chair, Liberal, James Maloney]

Thank you very much.

Last, we have Dr. Godbout for five minutes.

[Dr. Jovette Godbout, Executive Director, Research Institute of Mines and the Environment]

Good afternoon, everyone.

Thank you for your invitation. I was asked to appear to present my organization's expertise in responsible mineral resource development, and to comment on the level of support the federal government should provide for research.

I am the executive director of the Research Institute of Mines and the Environment at the Université du Québec en Abitibi-Témiscamingue, or UQAT. The Abitibi-Témiscamingue region has a long history of mining. UQAT is recognized around the world for its expertise in mining and the environment. Since it was created 35 years ago, UQAT has made socially and environmentally responsible mineral resource development a key component of its development.

Thanks to our numerous partnerships with mining companies, Quebec government ministries and other Quebec, Canadian and international universities, the high level expertise of our professors, the creation of the Research Institute of Mines and the Environment and our research chairs, we can proudly assert ourselves as a key player in the field.

The Research Institute of Mines and the Environment has already been very successful in illustrating our willingness and ability to act as a major player in the responsible development of critical and strategic minerals.

For instance, back in 2014, one of our professors, Dr. Benoît Plante, who now holds a chair, obtained his first collaborative funding to work on the geochemistry of rare earth mining waste. Since then, he has secured over $1 million in private and government funding to develop knowledge of the environmental geochemistry of strategic mineral resources, particularly with respect to lithium, rare earths and graphite mines.

In 2015, UQAT partnered with the Cégep de l'Abitibi-Témiscamingue and its affiliated centre to apply for the first time for $7.5 million in funding from the Quebec ministry of the economy and innovation to develop its research and innovation capacity related to the development of strategic metals in Abitibi-Témiscamingue, funding that was finally granted in 2018.

Even before we obtained this funding, we believed in the field so much that we recruited Professor Lucie Coudert to join our organization. She specializes in the recycling of strategic metals by hydro-metallurgical processes and battery recycling.

With the funding obtained from the Quebec ministry of the economy and innovation, we helped create the Elements08 Strategic Metals Excellence Centre. Of the $7.5 million in funding obtained, UQAT received $3.1 million. With this funding, we were able to recruit two professors to our team to round out its expertise on the entire life cycle of a mine. We welcomed Jean-François Boulanger, a specialist in strategic mineral processing, and Marc Legault, a specialist in the geology of strategic mineral resources.

These new recruits have enhanced UQAT's team of specialists, which now includes 16 professors specializing in the entire mineral development process. Our faculty is one of the largest mining and environment faculties in Canada, and can intervene in every step of the process, from exploration to soil restoration.

Lastly, we also recently created an institutional research chair in the environmental geochemistry of critical and strategic mineral resources.

I was asked to comment on how much support the federal government should provide to this sector. I must say that I agree with Dr. Zaghib. We have a—

[The Chair, Liberal, James Maloney]

Doctor, perhaps we can address those ideas during the course of the questions. Unfortunately, we're out of time right now. We have to move on.

[Dr. Jovette Godbout]

Okay, thank you.

[The Chair, Liberal, James Maloney]

Thank you.

We'll start the six-minute round with Mr. Zimmer.

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

Thank you, Mr. Chair.

I want to thank the witnesses for coming here today for this important study about critical minerals. We see that Canada has a very important position in the world. I've always said that the world needs more Canada, not less. We need to develop these resources.

Before I get into the questions, I want to correct the record. We heard the minister talk about the Conservative policy on climate change. I want to read into the record what Conservatives actually believe about climate change. I will read it right from our policy document, as follows:

The Conservative Party believes that responsible exploration, development, conservation and renewal of our environment are vital to our continued well-being as a nation and as individuals.

We believe that an effective international emissions reduction regime on climate change must be truly global and must include binding targets for all the world’s major emitters, including China and the United States.

[Bryan May, Liberal, Cambridge, ON]

A point of order, Mr. Chair—

[The Chair, Liberal, James Maloney]

Mr. Zimmer, can I ask you to pause for one second? There's a point of order. Thank you.

Mr. May.

[Bryan May, Liberal, Cambridge, ON]

Thank you, Mr. Chair.

I appreciate what Bob is doing and what he's trying to clarify. I don't think it has anything to do with the meeting. I'd like him to get back on track with the theme of the meeting, please.

[The Chair, Liberal, James Maloney]

All right. Thanks—

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

I appreciate that, Mr. May. I'll get right back to it. I'll finish with this:

We believe [as Conservatives] that the federal and territorial governments should make joint investments to study and address climate change adaptation in the North.

Again, just to clarify, we heard some erroneous statements by the minister earlier this week, and other members of the governing party, but—

[Bryan May, Liberal, Cambridge, ON]

Mr. Chair, a point of order.

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

—I will get on to my questions.

[The Chair, Liberal, James Maloney]

Mr. May.

[Bryan May, Liberal, Cambridge, ON]

I think what Bob is doing here is incredibly disingenuous. To suggest that the minister is potentially lying to this committee is wrong.

I think the minister pointed out a very important question that I think Canadians across the country are concerned about in wanting to know where members of Parliament stand on their party's policy.