Natural Resources Committee on April 12th, 2021

[Sean Cleary]

I think it's critical. It's critical for nuclear and many other uses in industries, albeit it's niche compared to other minerals like precious metals and base metals like copper and nickel. The processing of those components can be done for the most part in North America, although that has been under pressure, I would say, over the last 20 years.

More and more of this processing is going offshore to Asia and other parts of the world, and that is dangerous. That's why I'm talking about securing the supply chain. It is as critical to secure the supply chain for nuclear as it is for steel. Without these two things, we don't really have a modern economy in the modern world. These are at the forefront. From my perspective, that's where government should start: What are the most important elements of our modern society and how do we secure those elements that are already here? We have them, and it's building an integrated supply chain along the line of what some of the other witnesses have suggested.

You have entrepreneurs who want to do that. The challenge has been the ability to do it, the capital to do it and the environmental steps. It's difficult to get these projects approved environmentally, so red tape removal from environmental but dealing with responsible companies that are focused on ESG is the way to go—and having a plan.

[Bryan May, Liberal, Cambridge, ON]

Can you elaborate on how the market has shifted over, say, the last decade in this space, and how has that affected BlackRock's plans to develop and process these minerals?

[Sean Cleary]

By market, do you mean the minerals market or the capital market?

[Bryan May, Liberal, Cambridge, ON]

I mean specifically minerals.

[Sean Cleary]

I would say, in terms of titanium, that we have good productions of titanium out of Canada in Quebec, really from one supplier, but we have massive titanium resources in the country that are undeveloped. Quebec could be a world leader in vanadium, and it could be a world leader in refined iron products done in a very sustainable way, using the processes that we're using in terms of grey hydrogen and moving to green hydrogen when these things are available.

Quebec is uniquely set up to be able to do this, because we have the iron resources and we have green electrical energy. Canada, in general, is very well set up, because we also have large supplies of natural gas that can supply grey hydrogen.

I think it's important for the government to recognize that, if you're going to have a hydrogen strategy, you have to start with grey hydrogen, which comes from natural gas. Yes, in the early days you're going to have emissions from that, but you can quickly move to a green hydrogen strategy or a blue hydrogen strategy over time. However, that has to be driven by the willpower of government.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Cleary. I'm going to have to stop you there.

[Bryan May, Liberal, Cambridge, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, James Maloney]

Thank you, Mr. May.

Members, that takes us to the end of the second round. We're supposed to stop at 12:30 p.m. and move on to committee business.

We have two options. We can proceed into the third round, in which case we'll get to Mr. Zimmer and Ms. Jones and we can stop there, or we can amend the time and give the Liberals and Conservatives each three minutes and stick to the two and a half minutes for the Bloc and the NDP. That will take us past 12:30 p.m. and get us through this whole round. I still think we can probably get our committee business done in that time.

Does anybody object to amending it, or do you want to stick to the schedule?

There's no objection. Okay.

Mr. Zimmer, I'll give you the floor, then, for three minutes.

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

Thank you, Mr. Chair.

Thanks to our witnesses.

Mr. Cleary, I only have three minutes, so I'll get after it.

You talked about Canada being left behind unless we do something about it, and then you talked about securing our future. You also talked about red tape being a limiter in what our industry is capable of doing. I'm up in northern B.C. We do natural resources here. We mine and go after oil and gas, forestry, etc. How do we not get left behind?

I know that's a really broad question for two minutes, but do your best.

[Sean Cleary]

My suggestion would be to focus on the big industries where we could use capital injection.

I would focus, at least in eastern Canada, on iron and producing green steel. If we were to have a green steel strategy in this country, it would drive so much innovation in mining, metallurgy and everything in between. All of a sudden, we would have a driving need for ferroalloys, which would drive the supply of the battery minerals. Those critical minerals for batteries are all related to these other supply chains. If you already have an existing demand from, for example, the steel industry, and you can produce.... The world steel industry is going through a global shift. We want to make sure we're not left behind on that.

The shift to green steel, driven by hydrogen and existing technologies, which are commercialized, is the way to go. Once we have that, then we have a built-in demand for ferroalloys. Many of those ferroalloys are critical minerals. That's going to be the supply for the batteries and electric vehicles.

I hear a lot of talk here about electric vehicles. To me, that's the end. It's not the beginning. How do you make a car? You need steel, and you need the other materials for the cars, the batteries and everything else. That's where it starts and stops.

We have a massive supply of iron. We have a massive supply of hydroelectric power and the ability to make hydrogen in this country. That's where we should be focused.

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

If you were to remove red tape, specifically, could you give us a general focus on what that would look like?

[Sean Cleary]

The number one area where we spend time and money on is answering questions from government analysts at the environmental agencies. It's not that these questions aren't good, but they're continuous, for years. It's the re-asking of certain questions in different ways. Asking us to retest things that we've already tested, or whether we could interpret the results one way or the other.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Cleary. I'm going to have to stop you there. We've amended the schedule, so I'm going to have to be pretty strict here.

Ms. Jones, we will go to you for three minutes.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you, Mr. Chair.

My question is for Ms. Houde.

In November, the Government of Canada partnered with the Government of Quebec to invest $2 million to develop a 135-tonne electric dump truck that was to be tested and validated at the ArcelorMittal mine. Can you tell us about this project, and what its implications are in the electrification of other heavy vehicles?

Also, can you answer a question around the Government of Canada's critical mineral list and how it aligns with the manufacturing process for many of the components of a project like this?

[Sarah Houde]

Regarding the truck, it's a good example of an ecosystem coming together to prototype a new type of truck, 100% electric, that will be tested at the Nouveau Monde Graphite mining site next year. It's a good example of a 100% Canadian, locally manufactured, locally developed with Quebec expertise truck, which will be tested here and then could be exported around the world. This is a very interesting example of an alliance for a local supply chain.

I don't know if you have other specific questions on that project.

[Yvonne Jones, Liberal, Labrador, NL]

No, that's good.

I'll move to Mr. Blondal if I have enough time, Chair.

When he spoke earlier, he said he was really agnostic in terms of where they sourced their lithium from. What are his thoughts on the idea of Canada developing more critical minerals domestically to ensure low risk to the supply for businesses like the one's operating?

[Sarah Houde]

Did you first want me to answer your second question? I did not yet do so.

[Yvonne Jones, Liberal, Labrador, NL]

I'm sorry. If there's enough time, you can go ahead.

[The Chair, Liberal, James Maloney]

You have about 30 seconds for whatever is going to happen here. Somebody just jump in.

[Sarah Houde]

I'll reply very quickly. For the list you mentioned, I think it's a very important first step so that we can identify what we need to work on strategically, and then really work on a second transformation to attract foreign direct investment and to work on all the other next steps.

It's the first strategic step to really go further, integrated with all the other actions that we are taking in that field.

[The Chair, Liberal, James Maloney]

Thank you very much.

Thank you, Ms. Jones.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you.

[The Chair, Liberal, James Maloney]

Now we'll go to Mr. Simard, for two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

I remember one speaker talking about the need for strategic reserves of critical minerals. This brings up the whole issue of national security, which we haven't necessarily addressed.

Having participated in the battle over aluminum, I know that, in the United States, aluminum produced here in Saguenay—Lac-Saint-Jean is a national security issue.

Mr. Breton, do you think that there should be the same type of policy for critical minerals? What can you tell us about this?

[Daniel Breton]

Absolutely. We see this as a national security issue. If we don't make sure to maintain some control over our strategic mineral resources, we may not be able to ensure our Canadian supply chain for the electrification of transportation.

There are precedents for this. You spoke about aluminum. I remember that, in the 2000s and 2010s, in the United States, some businesses wanted to buy an oil company, which I won't name. The United States federal government said that it wouldn't allow these businesses to acquire the company for national security reasons. In Canada, we can remember talk of potash being purchased by foreign interests. However, Stephen Harper's Conservative government decided to block the sale for reasons of national interest.

Although we're talking about the electrification of transportation, when we discuss critical and strategic minerals and rare earths, we're also talking about electronic issues, meaning electronic products that we use more and more often. We're also talking about military issues. A few years ago, the Pentagon pointed out that we were losing control for strategic reasons. The Pentagon said that, if we didn't wake up, we would end up with China, which had stopped letting these strategic minerals out of the country for reasons of national interest.

For strategic reasons, the agreement between Joe Biden and Justin Trudeau was potentially to determine how Canada could ensure that it didn't end up in a position of dependency, as was the case with oil in the Middle East in the 20th century. This type of position could cause major international geopolitical tensions.

We believe that this issue must be looked at very carefully.