Natural Resources Committee on March 26th, 2021

[Dr. Roderick G. Eggert]

I'd be happy to.

I think Canada and the United States are natural partners in this area, not just because of our close geographic proximity but also because of our similar attitudes about the role of government generally in commercial activities. I think it should be a two-pronged approach when seeking out collaborations there.

One prong is in the education, workforce development, basic research and development area. For example, there could be government-to-government collaborations assessing the resource potential of unconventional primary resources. What's the potential of recovering speciality materials, things like gallium, indium and tellurium from mined wastes that, at present, are unrecovered? What are the opportunities in the areas of commercial policy, public funding and collaborative efforts at pilot and demonstration facilities to speed along or accelerate the deployment of new technologies even more aggressively?

There could also be industry-led collaborations involving entities from both countries that focus on priority, raw-material supply chains, perhaps modelled after something called SEMATECH in the United States in the 1980s and 1990s, which basically sanctioned industry collaborations toward a strategic priority, semiconductors.

[Bryan May, Liberal, Cambridge, ON]

Thank you for that.

With the new U.S. administration placing a heavy emphasis on trilateralism and wishing to also bring Mexico back to the table, not just Canada, do you see there being a role for Mexico in the U.S. critical mineral strategy? What would that role look like between Canada and Mexico?

[Dr. Roderick G. Eggert]

I don't have a thoughtful response to that except that it seems to be a natural opportunity to explore, given, if nothing else, the geographic proximity and potential efficiencies in transportation between different stages in a multi-stage raw-material supply chain.

[Bryan May, Liberal, Cambridge, ON]

How far-reaching do you believe the influence of China is with this? I know we've had some conversations already today about the instability of the industry and price fluctuations, and as you know, all these businesses want assurances that there is that reliability of the market. How far-reaching would you say China is on that issue particularly?

[Dr. Roderick G. Eggert]

I think it is far-reaching. I'm not sure how much of that far-reaching impact is intentional, however, on the part of the Chinese. I think, by and large, in the area of raw material supply chains, they're primarily focused on using their domestic mineral resources to further manufacturing in China, so they're looking out for China. As someone mentioned, they are actually becoming somewhat resource-dependent on foreign countries, and in many of the supply chains, they actually have greater dominance in the mid-stream than they do at the mining stage.

[Bryan May, Liberal, Cambridge, ON]

How am I doing for time, Mr. Chair?

[The Chair, Liberal, James Maloney]

You have 13 seconds. Put them to good use.

[Bryan May, Liberal, Cambridge, ON]

I'll simply thank Dr. Eggert for his comments today.

[The Chair, Liberal, James Maloney]

Great. Thank you, Mr. May. I appreciate that.

We'll go on to Mr. Simard for two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Dr. Zaghib, as you mentioned in your presentation, transportation electrification is the industry best positioned to tackle climate change and help us move towards a low carbon economy.

In this sense, is carbon pricing a good measure to develop the electrification of transportation in your opinion?

[Dr. Karim Zaghib]

Yes, this is an important avenue. However, we also need to be careful. We must not upset customers who own gas-powered cars, especially middle-class families.

In addition to taxation, there should be a hybrid strategy that includes incentives, where both levels of government, federal and provincial, inject money to help average families buy these vehicles. We need to educate people. Young people today are very familiar with electric cars. However, if we start forcing middle-class people to change no matter what, they'll resist.

Slowly, with gradual changes, people will buy into the idea. The fact that both levels of government are establishing the stimulus programs we've seen recently is important.

[Mario Simard, Bloc, Jonquière, QC]

Generally, in major economic transitions, the government tries to get involved. In recent years, superclusters have been created. We saw this in the field of artificial intelligence, where the federal government announced a $950 million strategy. The idea was to create 50,000 jobs over a 10-year period. As we saw, this was not very successful in the field of artificial intelligence.

Do you think this kind of supercluster could be created not only in the battery sector, but especially in the critical minerals and rare earths sector?

[Dr. Karim Zaghib]

On the energy transition, batteries and hydrogen, the federal government must absolutely be involved in the process, whether through clusters or programs directly related to the Department of Innovation, Science and Economic Development or an interdepartmental program. It must be part of a very collaborative process, because this is the way of the future.

We forget that the energy transition affects not only the electrification of transportation, but also energy storage. We saw what happened in Texas with its power networks. Storage includes the network where the car and the house are connected, for example. All this corresponds to what I call the globalization of the energy transition.

[The Chair, Liberal, James Maloney]

I'm going to have to interrupt. I apologize for doing that.

Thank you, Mr. Simard.

Mr. Cannings, now we're going over to you.

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

Thank you. I'll just stay with Mr. Zaghib, because he's all warmed up there.

However, I just want to mention something. You talked about how the conversion to electric vehicles might be slower because of middle-aged, older people. KPMG just put out a poll that showed that 60% of people in Canada have said they want their next vehicle to be electric. Therefore, this might, and I think probably will, happen a lot faster than some people think.

I want to ask you about the circular economy that you mentioned. When we talk about electric vehicles or electrification, a lot of that revolves around things like batteries and the recycling of these batteries.

I have some companies in my riding that are leaders in that technology. What opportunities do you think there are in that branch of the circular economy?

[Dr. Karim Zaghib]

It's a great question.

Today we're going to have equilibrium between urban mines and natural mines. Urban mines will be for recycling. We have three types of recycling.

In terms of direct recycling, today with cell fabrication, between 5% to 10% of these cells are not used, so we need to recycle them. Right now, we have a huge market for direct recycling.

Behind that, we have cobalt, nickel and manganese. We don't like to continue to get these minerals from mining, so recycling becomes a very important complement with mining, natural mining, and so on. We can also create jobs and save jobs, because we have the technology. We have the process here in Canada. Also, it can be a great opportunity to work with the U.S.A., to develop a circular economy initiative between the U.S.A. and Canada for upstream, downstream, and recycling of materials.

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

Thank you.

To focus on graphite, which you mentioned, I have a graphite mine in my riding. They obviously are facing that problem of finding the middle market, because 99% of the places that use graphite to make anodes in lithium ion batteries are in China. I wonder if you could comment quickly on what the Canadian government could do to stimulate the growth of that middle market in Canada.

[Dr. Karim Zaghib]

Yes. I've known this material for 35 years. We have two ways to make graphite. There's natural graphite, and we can also use petroleum coke to make artificial graphite. I believe the federal government must help with this mine or this artificial graphite. Assist them with investments to bring machines here. If we have the machines, we are able to make it at low cost, with the greenest and least CO2 emissions.

I have a lot of experience. For example, when I was at Hydro-Québec, I licensed technology to Nouveau Monde Graphite. With innovations—

[The Chair, Liberal, James Maloney]

Thank you, Doctor. I apologize that I have to keep interrupting, but we have to keep to our schedule.

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

Thank you.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Cannings.

We will now go to Ms. Stubbs for five minutes.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you, Chair.

Thanks to all the witnesses for being here.

Of course, just for clarity on this issue around regulatory approvals, among the major mining developers in the world, Australia has an average of two years for approval of mining projects. The United States has an average of seven years for the approval of mining projects. Canada has an average of over 10 years for the approval of mining projects. Of course, right now there are two mining applications sitting in the queue in Canada, along with $20 billion worth of other resource projects sitting in the queue, waiting for cabinet decisions and to proceed through the assessment.

I would invite any witnesses, although I think we've already established the answer, to advise on whether or not there in fact are any projects for rare mineral development waiting for approval right now in Canada.

I don't know if Dr. Kucharski knows, or....

The answer is that, no, there aren't any rare mineral projects waiting in the queue for approval and assessment. Of course, it's directly linked to the fiscal and regulatory uncertainty in Canada and the negative impact on the private sector. I want to applaud this committee for taking on this study. I worry, though, about the length of time it takes for things to happen in Canada.

Last year, on behalf of the Conservatives, I called for stricter rules on foreign takeovers of strategic natural resource assets and projects, in particular from state-owned enterprises and China's Communist Party. I do want to applaud the government on the announcement they made this week.

There remains the fact that the ongoing challenge for Canada is that much of the infrastructure required and the approval for mining projects takes too long. An example of that is Teck's Frontier mine, which spent eight years in the approval process. Then they cancelled their application, because they were getting signals that the Liberals would deny it. This uncertainty has a major impact on investment and development and really makes no sense. I'm sure the members of this committee all know that there's an abundance of lithium resources in lithium brines and subsurface oil fields in Alberta and that the oil sands are also sources of titanium and zirconium. The oil sands as a sector is the largest private sector investor in clean tech in the entire Canadian economy.

Given those resources there, the resources in B.C., the abundant rare earth resources in northern Quebec, in the Northwest Territories and in Ontario, do any of you, Dr. Eggert, Dr. Kucharski or Dr. Zaghib, know about any pilot projects that are going on right now to develop these projects that hopefully one day can make their way into the uncertain regulatory process in Canada?

[Dr. Roderick G. Eggert]

I'll just say very quickly that I have the impression that there are pilot and demonstration activities ongoing in Canada, but I can't name any in particular.

[Shannon Stubbs, Conservative, Lakeland, AB]

Okay, thank you.

Do any other witnesses know of any pilot projects happening with the private sector collaborating with all of the different levels of government?

Certainly to unlock the oil sands and the third largest crude oil reserves on planet earth, it did take risk taking, pioneering and really proactive partnerships among governments, academic and research institutions and, of course, obviously, the private sector, which is crucial in all of this.

Dr. Eggert or Dr. Kucharski, can you comment on the CUSMA provisions that contain that three-year window where auto manufacturers can receive duty-free treatment if they source 75% of the lithium being used regionally?

I wonder if you have any thoughts on the likelihood, the feasibility or the ability of Canada to be able to scale up to reach that level of production within the remaining timeline, which is only two years.

[Dr. Roderick G. Eggert]

I am not familiar with that particular CUSMA provision.