Natural Resources Committee on March 2nd, 2022

[The Chair, Liberal, John Aldag]

Great. Thank you.

Now we're going to move to Monsieur Simard for his six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

I don't know whether my question is for Mr. Hannaford or Ms. MacNeil. I want to address something in the document provided, namely, the contribution to help manage the mountain pine beetle in Alberta.

In Canada, Quebec is probably the province with the largest forest industry. It's followed by British Columbia, then Ontario and Alberta, which is far behind.

In Quebec, the spruce budworm is currently wreaking havoc. The area of damage has increased by 23% in the Bas‑Saint‑Laurent region alone. I'm not seeing one penny from the federal government to fight the spruce budworm.

I'll give you some background on the situation. The Quebec government invested $55 million in 2021 to stop the infestation in the Saguenay‑Lac‑Saint‑Jean, Bas‑Saint‑Laurent and Gaspésie regions. The federal government's most recent investment to fight the budworm was in 2018. That investment was $75 million for the Atlantic provinces only. Did the Irving family have anything to do with that? I'm not that cynical.

My question is very straightforward. Why was Quebec left out?

[John Hannaford]

I will refer to Ms. MacNeil in a second.

I would say, though, that the government has been very clear in its support for the forest sector across the country. There are more than 200,000 people and over 300 communities that rely on the sector. Since budget 2017, the government has committed over $345 million to support the sector in terms of innovation and transformation.

I think there has been a significant level of support across the country with respect to these areas of development, but I'll turn to Ms. MacNeil with respect to the budworm in particular.

[Beth MacNeil]

I would like to mention a few things. First of all, the investment we made in the mountain pine beetle in Alberta is to protect the forests in eastern Canada. It's to stop the eastward spread of that particular forest pest.

I would also like to make a correction to the honourable member's comments. We invested $11.6 million in the spruce budworm. We reprofiled unspent monies, which was announced in the economic update in December 2020. That $11.6 million went specifically to the spruce budworm spraying in the province of Quebec.

With regard to the comments on the early intervention strategy in Atlantic Canada, we recognized, among the federal expert researchers, that trying to intervene early on in the spread of the spruce budworm from the Quebec region into Atlantic Canada was the best way to identify those hot spots and control the pests from damaging the spruce and fir trees in most of Atlantic Canada. It is cost shared. The participation is 60:40 for federal and provincial investment.

[Mario Simard, Bloc, Jonquière, QC]

I'll briefly step in to redirect the conversation.

Many communities in Quebec depend entirely on forestry. As far as I know, Alberta's economic driver isn't forestry. You're talking about $11 million in 2020. If I recall correctly, this $11 million wasn't only for Quebec, but also for the Maritime provinces. It's out of line with the $25 million that I'm seeing now.

Above all, this overlooks the very precarious situation of the forest sector in Quebec resulting from the spruce budworm crisis. I can't believe that the information presented today doesn't include anything to address the spruce budworm crisis.

[Beth MacNeil]

I would like to point out that the province of Quebec and the forest sector in Quebec are extremely important to the forest sector writ large in Canada, particularly in advancing the bioeconomy.

Since 2019, we have invested $38 million in FPInnovations, headquartered in Pointe-Claire, to produce tomorrow's fibre-based forest products. We've also invested more than $25 million—

[Mario Simard, Bloc, Jonquière, QC]

I'll interrupt you because this is a new topic.

If you want to talk about innovation in the forest sector, I'd like to remind you that the 2021 budget included $54.8 million over two years for 2021‑22.

I don't know why, but I don't see it in your current breakdown.

[Beth MacNeil]

I believe you are seeing, in the supplementary estimates this year, a proportion from the announcement of $54.8 million in budget 2020-21. Through our calls for proposals, we have already started to fund projects, for instance Anomera's bioplastic project in Quebec.

I would also like to point out that $43 million of our $65 million spent on two billion trees this year alone has been in the province of Quebec.

[The Chair, Liberal, John Aldag]

That's the end of the six minutes.

Mr. Angus, we will go over to you for your six minutes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

We thank you so much for gracing us with your presence and your expertise. This is really important for us.

I want to begin by discussing the issue of strategic metals and the need for a strategy. In the little town I live in, when it rains we see pink on the hills. That's cobalt, but cobalt is a very rare metal. It is at the heart of some of the worst human rights abuses on the planet in the Democratic Republic of the Congo. It is the blood metal. Unless we find alternatives, we are going to continue to perpetuate horrific human rights abuses. Lithium is another key metal. There is horrific environmental devastation caused by it.

We're looking at these alternatives in light of a geopolitical struggle with China, which is controlling more and more of the market. In Canada right now, just over the hill and down the road from me, we have the first cobalt processing facility, which would be good but the feed is still coming from the DRC. In terms of the government's commitment, we have mines, but in terms of having a strategy to ensure control of strategic metals like cobalt and lithium, I'm concerned that we're not taking steps that are important. For example, the selling of the Neo Lithium company to a Chinese state-owned enterprise strikes me as....

Why would we sell a Canadian-owned company to the Chinese when it's about lithium? They are trying to control the market. Was there an assessment done by your department on this?

[John Hannaford]

Thank you very much, Mr. Angus.

I'll turn to my colleague Mr. Labonté for more detailed comments, but I would say a couple of things. First of all, as I mentioned earlier, the government recognizes the critical importance of the development of these assets for economic reasons, for environmental reasons and for geopolitical reasons. There are obviously a range of different other suppliers in the market with respect to a number of these goods, but I think that one of the real assets that Canada has is its ESG reputation, and this is an opportunity for us to further elaborate the soundness of the environmental and governance practices that result in the development of these assets.

I'll turn to my colleague Mr. Labonté for further elaboration.

[Jeff Labonté, Assistant Deputy Minister, Lands and Minerals Sector, Department of Natural Resources]

Thank you for the question.

To build on the comments by Deputy Hannaford, I would say that very clearly you've struck on two very important minerals, and of course the development of how those minerals reach market and what they're used for is extremely important. In view of that, certainly when, as you said, there's an acquisition, there is the Investment Canada Act, under which a review is conducted about the investment, and that review is headed by the Department of Innovation, Science and Economic Development.

Departments like Natural Resources and others around the federal family contribute to the review and are part of the reviewing process that takes a look at each of those transactions. Therefore, we do bring our expertise to bear on those and provide—

[Charlie Angus, NDP, Timmins—James Bay, ON]

I guess what concerns me is that the United States has raised a huge red flag. China is trying to control the market, and we just let them buy a lithium company. The argument I've heard from the government as well was that they weren't really a Canadian company anyway. That's because Canada has 75% of the world's mining companies registered here, and they're registered here because they get corporate protections. They get tax incentives, and they get to sell their stock.

If you ask me, if they want to use our advantages, then they're a Canadian company. The fact that we let a Chinese company take over one of the most critical assets, which is in such short supply, and we gave it to a Chinese government company without raising a flag is really concerning.

I hope that Natural Resources would have at least put up some of those flags.

[Jeff Labonté]

I think, as has been referenced, that transaction happened in the market and it was an acquisition of a Canadian-controlled company. Under the Investment Canada Act, like all investments, it was reviewed. In that act, there is the requirement that state-owned enterprises that acquire a Canadian company be reviewed and there are actually guidelines that provide further requirements for the review when it relates to critical minerals or critical mineral—

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'm sorry to interrupt. Would you consider the fact that, since we are in a geopolitical struggle with China over these key minerals, we should maybe actually rewrite the Investment Canada Act? We're letting a state-owned company take it. This isn't just a market acquisition. We allowed a Canadian company that used all of our corporate protections to be given to a Chinese state company. Do we have to look at rewriting the act?

[Jeff Labonté]

I think that's perhaps a question for Innovation, Science and Economic Development Canada, but certainly the act has all the provisions that are necessary for Canada to take a look at acquisitions, as I said, that happen by state-owned enterprises, as well as those that require critical minerals.

Your reference was to lithium. There are 20 different lithium projects under development in Canada. Canada does have lithium resources that are being developed domestically and there is a market growing in terms of electric vehicle production, as you would know. The two largest lithium producers in the world are the United States and Chile, followed by China.

[Charlie Angus, NDP, Timmins—James Bay, ON]

But China controls the cobalt market. China is trying to control these—

[Jeff Labonté]

China has the largest—

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'm sorry to interrupt. It's just that if we are going to allow a Chinese state company to take critical assets, we can't really say that we have a critical minerals strategy.

[Jeff Labonté]

The honourable member may take that position, but I'm not sure I'd take the same view.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Fair enough.

[Jeff Labonté]

All of the things are reviewed.

What I was pointing out on lithium was just that there's the production of lithium and the processing of lithium, and that difference is quite profound. In terms of the production of lithium, the two largest producers, which dominate some 45% of the market, are the United States and Chile. The processing, of course, as you pointed out, happens more predominantly in China and it is significant and is certainly something that the market is responding to.

As I mentioned, there are some 20 different projects under way in Canada around lithium. They're in Quebec, Alberta and Saskatchewan, and they're using new and different ways of developing lithium so that there will be lithium supply to feed the value chains that we expect will emerge.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you so much for that.

[The Chair, Liberal, John Aldag]

Folks, we're out of time.

We now have seven minutes before the vote. I'm wondering what the committee would like to do. We have the voting part on the supplementary estimates, so we could release the officials and move to the vote.

How much time do we want to do the other vote? We could start on the discussion. It will be seven minutes or so before we get into it. At this point are willing to let the officials go?

[Some hon. members]

Agreed.