Natural Resources Committee on June 2nd, 2023

[Michael Kram, Conservative, Regina—Wascana, SK]

Mr. Chair, could the committee ask for that information to be in?

As a concerned British Columbian, I would just like to make the comment that Domtar effectively, in my opinion—people can question whether it's an informed one; I'll leave it to them—has monopsony power and can set the price for things like hog fuel, which is a critically important area and can change the course of an industry, especially the smaller ones.

I just want to say, Mr. Chair, that this is important. It's not just the national security; it's also the competitive aspects of our marketplaces.

[The Chair, Liberal, John Aldag]

Thank you, Mr. Albas.

We're going to go online next, to Mr. Sorbara.

The floor is all yours for five minutes.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Good morning, Chair.

Good morning, everyone. Happy Friday to you.

This has been a very important conversation, a very insightful one.

I want to ask Ms. Dojack this first.

You used the word “factors” when you talked about looking at a mini transaction and acquisition and determining that the purchaser is attached to a non-market entity, a sovereign wealth fund or a government-backed organization. How much weight do you put in that factor in terms of doing the analysis? I think today, when you look around the world, whether the transaction is $30 million or whether it's $3 billion, the IP attached to the transaction, the state actor who is the acquirer.... That, to me, raises a lot of questions, particularly where we are in the world.

Can you talk about that for a second, please?

[DeNeige Dojack]

Yes, ownership and whether or not something is a state actor or is potentially influenced by a state actor is a factor that is considered in a national security review.

Reviews are holistic, so there's no definitive waiting. It depends on the nature of the transaction and the amount of equity that the particular investor has, as well as their overall influence on the company—whether they have board seats and things like that.

It would be difficult for me to say. There's a percentage weighting that a particular factor is given. It is a holistic review that is conducted in conjunction with Canada's security and intelligence partners as well as relevant departments and agencies. In the case of a natural resource transaction, that would be Natural Resources Canada. Together, as a community, we assess the transaction and all the relevant factors, including whether or not an entity would be state owned or state influenced.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

There is this term that's used, “the golden share”. An entity, a government, may own 5% of a company, effectively blocking the company from being taken over, and it's used quite effectively around the world.

In this case, say company A based in China could have a 5%, a 10% or a 3% equity stake in company B based in another country, and that company can then purchase assets abroad, but de facto, even though company A only owns a small percentage, it has much influence on company B. I think about that. To me, that scenario is there.

I want to ask a second follow-up question.

The Investment Canada Act.... There is a bill going through Parliament. How different would the analysis be today or ex ante? How different would the analysis be going forward from what is done under the existing or the old Investment Canada Act in this type of transaction?

[Mark Schaan]

I'll address two aspects of your question.

First, just to touch on your previous question, it is worth noting that influence, ultimate control, control in fact and meaningful control are all factors that are extraordinarily important to the understanding of a given investment. They are obviously factors that are considered within the national security provisions of the act.

With respect to Bill C-34, which continues to work through the parliamentary process in terms of modernizing and updating the Investment Canada Act, it does make fundamental improvements to the overall functioning of the act. That said, many of the core aspects, notably the continued usage of a national security review for all investments and a net benefit review of those that meet the threshold are an important part.

Some of the improvements, though, for instance, are things like the capacity for us to have binding undertakings under the national security provisions of the act. Right now, for something that we put in through the order-making process and other aspects, it will allow for those in a more direct way. It will also allow us to be able to maintain things like an ongoing set of sensitive technologies in sensitive industries, which will allow us to ensure that we've been very clear about the types of investments that will need preclearance as a function of the act.

[The Chair, Liberal, John Aldag]

We're out of time. It goes fast.

It will go even faster now, because we're going to Mr. Simard, who has two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Earlier, you answered one of my colleagues by explaining the commitments you had negotiated. You talked about the Saint‑Félicien kraft pulp mill, the investments in Gatineau and patent maintenance.

How is it that you can tell us that? Isn't that confidential?

[Mark Schaan]

As my colleague said, the companies' commitments under the Investment Canada Act are part of their annual report. This will ensure that the company will continue to comply with them.

[Mario Simard, Bloc, Jonquière, QC]

So you could table documents related to that with the committee.

The reason you can tell us about it is because the information is public. So you could table with the committee the documents relating to the company's commitments to the government.

[Mark Schaan]

As I noted earlier, much of this is subject to the confidentiality provisions of the act. However, the company has agreed to publicly—

[Mario Simard, Bloc, Jonquière, QC]

I apologize for interrupting you, Mr. Schaan, but if this information were confidential, you would not tell us that the company committed to maintaining the kraft pulp mill and making investments in Gatineau. If that information were confidential, you would not be telling us that this morning. Now that you've told us about it, it's no longer confidential.

[Mark Schaan]

If I could finish, Mr. Chair, I would note that, while much of this is subject to the confidentiality provisions of the act, we have the permission of the firm to reveal the commitments in this particular instance. They are as I have documented. I'm happy to ensure the committee has those.

[Mario Simard, Bloc, Jonquière, QC]

Did you get permission from the company to disclose the ownership structure?

[Mark Schaan]

I'm not in a position to outline any further information related to the ownership structure of the firm.

[Mario Simard, Bloc, Jonquière, QC]

You could answer my question with a yes or no. Did the company allow you to define its ownership structure, yes or no?

[Mark Schaan]

I'm not in a position to reveal any further information related to the ownership structure of the firm.

[Mario Simard, Bloc, Jonquière, QC]

At the very least, you could answer my next question.

We're trying to find out if there's a connection between Mr. Wijaya and Sinar Mas.

Does the minister have that information?

[Mark Schaan]

As I noted as part of my previous responses, Mr. Chair, ownership structure is one of the fundamental fields required under the Investment Canada Act. That was provided as part of this overall application.

[The Chair, Liberal, John Aldag]

Thank you.

We're out of time on that one.

We'll now go to Mr. Angus for his two and a half minutes.

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

Thank you so much.

One reason this issue has become such a concern is that we've had whistle-blowers from Asia Pulp & Paper in Shanghai, saying this expansion in Canada is a “fibre grab”.

In fact, one official said, “It's a fibre grab. They want to keep the perception that Paper Excellence is an asset of Canada for Canada and by Canada, but in reality, it's a feeder for the Chinese machine.”

I ask that because, in the Resolute review, Paper Excellence was obliged to divest itself of the Thunder Bay mill operation, but the forestry rights were retained by Resolute, which is retained by Paper Excellence and, possibly, Asia Pulp & Paper.

You can't run a mill without trees, so why would you let those trees be handed over to Asia Pulp & Paper through Paper Excellence?

[Mark Schaan]

I believe the member is referring to two different aspects of the review of transactions related to this industry. The first is specific to the national security review, and the other is the review of the Competition Bureau with respect to transactions and whether this creates a significant lessening of competition.

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

Okay. I asked the question because I spoke with a forester from Thunder Bay who said that allowing Paper Excellence and Resolute to control that forestry licence without having to maintain the jobs at the mill is a great game of trickery.

You said the company allowed you to give some explanations of what it's up to. Would you ask the company whether it would explain to us what it is going to do with that damned wood fibre? Is that going to China? Why is it not going to a mill in Thunder Bay, where we have hundreds of workers who are dependent on those forests? Why would the Canadian government allow Paper Excellence to walk away with those forestry rights? How do I explain that to workers? How do I explain to communities that you guys are doing your job?

[Mark Schaan]

As I noted, Mr. Chair, this transaction was subject to the Investment Canada Act for the purposes of the national security review. It was not subject to a benefit assessment, as a function of the fact that it was an indirect acquisition. From a national security review perspective, this transaction was deemed to be able to proceed following the meaningful commitments made by the firm.

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

It was a fibre grab, then. Did you not have a problem with that?