Evidence of meeting #7 for Natural Resources in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was project.
A recording is available from Parliament.
Liberal
President and Chief Executive Officer, Fortune Minerals Limited
I sure do.
Essentially, the problem with the capital market system right now is that we just don't make money in mining. That's because we've been having poor returns on our investment. There are many issues around that, and they are mainly the regulatory issues that we've already talked about, but there are some others.
For example, the chartered banks basically control the brokerage and capital markets in Canada. They don't allow investors to invest in junior companies because of compliance issues. Our pension funds don't invest in Canadian equities, let alone junior equities.
That's a problem. We basically have to make the industry more profitable. Part of that is through getting our projects through the regulatory system quicker and making our industry profitable.
Liberal
The Chair Liberal Terry Duguid
That's a good place to end. We have another panel waiting.
Let me thank all of our witnesses for a very stimulating round of presentations, questions and answers. We really appreciate it. Again, if you have other information you'd like to convey through a brief, we'd welcome it.
Thank you very much.
Colleagues, we are going to suspend for about five minutes.
Liberal
The Chair Liberal Terry Duguid
I am bringing this meeting to order once again.
I have a few comments for the benefit of our witnesses online.
For those of you participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. Also, at the bottom of your screen, you can select the appropriate channel for interpretation: floor, English or French.
I remind you that all comments should be addressed through the chair.
I would like to welcome our witnesses on this second panel.
From CN Rail, we have Kelly Levis, vice-president, industrial products, and Chris Cariglia, director, marketing, metals and minerals.
We are also joined by Réjean Girard, geologist, IOS Géosciences.
We also have Louis Ouellet, president of the Union des préfets du Saguenay—Lac-Saint-Jean.
Finally, we have Daniel Alessi, professor, department of earth and atmospheric sciences, University of Alberta.
You will each have five minutes for your opening remarks.
We are going to start with Ms. Levis.
You have the floor.
Kelly Levis Vice-President, Industrial Products, Canadian National Railway Company
Good afternoon, Mr. Chair and members of the committee.
Thank you for the opportunity to speak with you today.
My name is Kelly Levis. I'm vice president of industrial products at CN. With me today is Chris Cariglia, director of marketing for industrial products.
We welcome this opportunity to discuss the critical role of logistics in promoting Canada's emerging critical minerals sector. These minerals, such as lithium, nickel and copper, as well as rare earth elements, are essential to modern technologies, economic growth and national security. Yet their supply chain remains vulnerable to disruptions, especially in remote areas with limited infrastructure.
CN actively engages with mining companies and shippers early in their development cycles to ensure we can support the movement of ores and concentrates as soon as they come out of the ground. We've identified over 50 mine projects across Canada and the U.S. Midwest, with major volume potential in northern Quebec, northern Ontario, Manitoba, British Columbia, Michigan and Minnesota. Many of these sites are in areas where building real infrastructure would be prohibitively expensive.
To address this, CN is focusing on strategically located transload hubs as key locations across our rail network. Many of these are northernmost points in our network. We are also exploring other sites based on demand and are committed to working with indigenous partners so they can own and operate these facilities, ensuring inclusive economic development. These hubs enable truck-to-rail transfers, bridging the gap between remote mines and the national transportation rail grid.
Port access and storage are also critical. While Canada's domestic market has growing demand for these minerals, North American processing capacity for less traditional raw materials like spodumene is still developing. In the interim, access to international markets is essential. Our logistics model supports movement from mine to rail to storage, then break-bulk shipping via global ports, such as Halifax, Montreal, Quebec, Trois-Rivières, Vancouver and, in the future, Prince Rupert.
From a policy perspective, there are several areas where government support could accelerate progress.
The first is railcar manufacturing incentives. Nearly all ore and concentrate move in privately owned cars. There's an opportunity for government to support mining companies in the sourcing of railcars built in Canada using Canadian steel, strengthening both the mining and manufacturing sectors.
Streamlined mine approvals would be the second area. Streamlining or simplifying regulatory approvals would help bring projects online more quickly, allowing Canada to capitalize on its resource potential while maintaining higher environmental and community standards.
The third is strengthening Canada's labour frameworks. Canada's labour relations climate is increasingly unstable, threatening national productivity. Strikes in critical transportation sectors—marine, rail and aviation—have severely impacted supply chain reliability. These disruptions slow the movement of goods, undermining Canada's ability to maintain a productive economy and meet global trade demands, as well as its credibility as a global trading partner. A modern framework that includes effective enforcement and real incentives for timely resolution is essential to safeguarding Canada's economy while maintaining fair labour relations.
On top of this issue, there have been unintended consequences of labour regulations, like the stacking of sick leave and personal leave benefits, and duty and rest-period rules. These have seriously reduced employee availability and forced CN to hire 350 to 400 additional employees. If we want to grow our economy, we need to address these by-products of policy decisions.
CN currently transports over 41,000 carloads of critical minerals annually. By 2032, we project the potential for significantly more volume, which could represent 15,000 to 25,000 additional carloads of emerging minerals like lithium, cobalt, graphite and rare earth elements, as well as new sources of copper and nickel. We're evolving our equipment and services to meet this equally evolving demand from raw materials to future battery chemicals. We're also developing new solutions like Rotainers on flatcars and expanding our use of covered hoppers, gondolas and bulk containers to handle products at various stages of refinement.
In closing, CN is committed to being a reliable and innovative partner in Canada's critical minerals strategy. With coordinated planning, infrastructure investment and strong collaboration among industry, indigenous communities and government, we can build a resilient supply chain that positions Canada as a global leader in the energy transition.
Thank you. We welcome your questions.
Liberal
The Chair Liberal Terry Duguid
Thank you very much, Ms. Levis. You were right on the money there at five minutes.
We'll go on to Monsieur Girard.
You have five minutes.
Réjean Girard Geologist, IOS Géosciences
Good morning. I will address you in French, if I may.
I would like to begin by thanking members of Parliament for the work they do, regardless of political affiliation. I have a great deal of respect for their work.
I am an exploration geologist and have been working in mineral exploration for 43 years as an independent consultant. I will have to condense my presentation somewhat, so I apologize in advance to the interpreters.
Canada is recognized for its expertise and leadership in mineral exploration. Unfortunately, that expertise stops at the exploration stage. We have an extremely low batting average when it comes to bringing mines into production. This aligns with statements made by previous witnesses.
Remember that the only way the mineral industry can create wealth is by casting ingots. Stock market speculation of junior exploration companies does not generate wealth; there is only growth when mines are producing.
I've had the opportunity to work on hundreds of projects, many of which have reached the feasibility stage. After 43 years, none of these projects have been completed. In Quebec, the last critical mineral mine, if we exclude gold, copper and nickel, is over 40 years old. It's a graphite mine in Saint-Aimé-du-Lac-des-îles. Since then, not a single project has come to fruition. There's no denying that we have a problem.
Given the current profitability of mining projects, their development costs are too high to justify. The majority of critical mineral projects are not in large mines. A lithium mine, for example, will produce 50,000 to 100,000 tonnes a year, which is not a lot. These are small mines.
In terms of development costs, we invest about $10 million in resource definition and development, and about $20 million in metallurgy, feasibility and environmental impact studies. To get to the feasibility stage, you generally do pretty well with a budget of about $30 million.
The problem starts when the feasibility stage is reached. You have to conduct an environmental audit and a market study, in addition to ensuring the project's acceptability, among other things. If there is a modification, you have to start all over again. Ultimately, project development costs can easily reach $80 million to $100 million.
In Saguenay, for example, the BlackRock project has cost $400 million to date. Arianne Phosphate has invested nearly $100 million in its projects, which are still not developed. When the development and construction costs of a mine reach $500 million and it costs $100 million for the studies, there's a problem.
It's therefore unrealistic to ask junior companies to go through all those stages of funding and work, because they don't have the in-house expertise for it. They're unable to do that. The only way companies can succeed is by partnering with major players, multinationals that partner with the projects.
One of the problems in Canada is that just about every diversified mining company has disappeared. Mines Noranda and Falconbridge, among others, no longer exist, which means that very few players are able to carry out rare mineral development projects.
One problem facing junior companies is that most of them have little expertise and aren't able to build a technical team capable of carrying a project through. Managing environmental and metallurgy issues requires a lot of qualified staff. Naturally, they then have to turn to engineering companies, which don't always have the same goals as the mining company itself. As a result, the cost of conducting studies is exploding.
When we say that metallurgical trials usually cost $5 million for the mining sector, it's to produce the concentrate. That doesn't include primary processing, smelting and hydrometallurgy, among other things. To develop such projects, you will easily need a further $100 million. That's what it took for the Nemaska Lithium and Nouveau Monde Graphite projects, for example.
Liberal
The Chair Liberal Terry Duguid
Thank you, Professor Girard.
I'm sure there will be questions that will allow you to speak further about the topic.
Louis Ouellet President, Union des Préfets-Saguenay-Lac-Saint-Jean
Thank you, Mr. Chair.
Thank you to the members of the committee for allowing me to speak to you.
I am the president of the Union des préfets du Saguenay—Lac-Saint-Jean, which represents five regional county municipalities. Our organization is the voice of the mayors of 49 municipalities and more than 285,000 citizens. We work particularly closely with the Mashteuiatsh first nation. In fact, it is a model co-operation that, in my opinion, should be extended across the country.
Our mission is to develop a shared vision, assert a strong regional identity and support promising projects that address regional and even national challenges. One such project is the Canadian northern corridor, which I would like to present to you today.
For the past four years, our organization has been working to improve our region's rail network so that our deepwater port can accommodate mineral resource development in our province's north. We have invested nearly $1.3 million to find solutions to secure the existing rail lines in all our communities and to determine the lesser impact route of the new rail line to connect our region to the Chibougamau-Chapais sector, first of all. Naturally, this was made possible thanks to the collaboration of the first nation.
Since geopolitics has changed a great deal since the last election in the United States, the rail project has become essential, in our opinion—so that critical minerals from Quebec and the Ring of Fire in northern Ontario can reach the ocean and eastern Canada.
Outside our region, there is a section of about 160 km that has to be rebuilt from Lebel-sur-Quévillon. The track has been removed, but the structures are in place. We know that the Cree community in the area, through the Grande Alliance, is very interested in seeing the 160-kilometre section rehabilitated. We met with mayors from northern Ontario and spoke with all the reeves in Abitibi-Témiscamingue, and their enthusiasm for this project is very real.
We believe we have the fastest and most cost-effective solution to achieve our country's ambitions for the transportation and export of critical minerals. The route exists, but it has to be reactivated in certain areas, and improved and secured in other areas.
Our people have always risen to the occasion when it comes to major projects. We are the top aluminum producers in Canada, and even in America. We are currently conducting major, even colossal, renewable energy projects in our territory—wind energy projects. We have the energy, the skills, the will and the people to continue on this path.
We have a year-round deepwater port. We have 1,200 hectares of industrial land nearby that can accommodate any type of industry. One of the members of the Union des préfets du Saguenay—Lac-Saint-Jean, the City of Saguenay, is talking to us about regionalizing the benefits. In addition, we have a military base, the Bagotville military base, which helps secure our infrastructure and supplies for our international partners.
We estimate that $700 million in investments will be needed in our region for the sections that are on our territory. For the missing 160 km, the Grande Alliance studies are available. The rest of the Ontario route needs to be analyzed.
In short, to help Canada achieve its ambitions, we believe we are the cheapest, fastest and most efficient way to connect much of our country to a year-round deepwater port. In addition, we have the population required for the development of our territory to be done particularly efficiently.
I am now available to answer any questions committee members may have.
Liberal
The Chair Liberal Terry Duguid
Thank you.
Our final witness is Daniel Alessi.
Please proceed. You have five minutes.
Daniel Alessi Professor, University of Alberta
Thank you, Mr. Chairman.
Good afternoon.
I would like to thank the committee for inviting me to testify today. I am honoured to do so.
As the world moves towards low-carbon technologies, global demand for critical minerals is projected to grow exponentially. Critical minerals, whose supply may be vulnerable, are chemical elements that are essential in modern technologies and that are necessary for economic or national security purposes. Technologies including lithium-ion batteries, permanent magnets, electric motors, solar panels, wind turbines, semiconductors and other components in advanced manufacturing require these elements.
The good news is that Canada has abundant mineral resources and a skilled workforce, and it stands to benefit by developing its critical minerals potential.
By the government's own account, Canada already produces more than 60 minerals and metals, and produces 22 of the 50 minerals that the United States Geological Survey considers to be critical. Our country benefits from a stable political system and a strong regulatory environment that may need adjustment in some cases, as we heard today, but it also respects indigenous land rights and has a well-developed mining services sector that I believe has the potential to pivot towards further critical minerals development. These aspects, in some ways, give Canada a competitive advantage in providing minerals that are sourced responsibly, which should be incentivized and will matter increasingly to buyers, governments and other partners around the world.
The opportunity also exists for us to build vertical domestic production chains. For example, an area where I have some expertise is the chain that begins with low-grade lithium-bearing sedimentary brines, like those found for example in Saskatchewan, Alberta, Manitoba and British Columbia, in the western Canadian sedimentary basin. We could take those low-grade brines all the way to high-grade lithium salts and, if we let ourselves dream a little, could maybe even manufacture lithium-ion batteries in Canada, producing far more economic value than simply exporting a raw ore.
Having been a co-founder of an Edmonton-based lithium extraction technology company between 2019 and 2023, I would be happy to discuss with the honourable members of this committee some of our successes and the challenges we faced there. Also, as an educator who's turned out people at master's and Ph.D. levels for jobs in Canada that require expertise in critical minerals, I'd be happy to talk about those challenges in training people in the workforce in Canada at the university level.
With increased demand on the horizon, our national development plan at this point is very crucial. Natural Resources Canada noted in their press release in March of this year that the “demand for critical minerals is expected to double by 2040”. By some of the accounts that I've read, we may experience even greater demand by then.
If Canada delays further, it risks being left behind or producing and delivering only raw materials with less economic value.
We should also be aware that jurisdictions with less stringent environmental regulations, with lower labour costs or with better-developed critical minerals infrastructure may capture more of the market share in the near term. In this regard, the government's announcement this year of a second round of investment in a critical minerals infrastructure fund was welcome news.
I also believe that our country should pursue invention, innovation and technology development in this critical minerals space, for example, with research into the downstream extraction and processing technologies. This research and development intrinsically attracts top talent from around the world. It results in well-paid jobs, and it offers the opportunity to develop intellectual property, including patents in Canada, which can then be licensed around the world.
Developing critical mineral resources themselves also offers, of course, significant economic upsides, with mining jobs and other job creation, including in remote, northern or indigenous communities, and with a strengthening of Canada's position in the global supply chains.
Developing critical mineral resources takes time and capital, and it takes careful consideration of social and environmental impacts. As we heard in a previous panel, it can take many years for a mining project to begin operations, with no revenue until that time. With that in mind, KPMG did a survey in March 2024 of Canadian mining leaders. They found that while 91% of them were “optimistic” about the country's position, 98% said that their companies could use “more investment”, a stable policy and regulatory environment, and tax incentives.
We heard also that the development of infrastructure in remote regions, the transportation and logistics, the processing and refining capacity itself, the technologies that I mentioned and the indigenous partnerships are also important considerations.
I would add, I think, the point that responsibly sourced and environmentally sound operations are also a must, but they need to be dovetailed into reality. I think that's where, certainly, academic partners can be useful.
The potential benefits to our country are substantial: economic growth, job creation, greater sovereignty and a leading role for Canada in the digital and green economies.
Thank you very much.
Liberal
The Chair Liberal Terry Duguid
Thank you, Professor Alessi.
We'll go on to our first round of questions.
We'll start with Monsieur Martel.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Thank you, Mr. Chair.
Thank you to the witnesses for being here. Thank you very much to Mr. Girard, who is joining us from France.
Mr. Ouellet, people in my riding want projects and we want them to be successful. I was very disappointed—as were many others—because the GNL Québec project in my riding was terminated. Many people dreamt of seeing this project come to fruition, particularly the equipment manufacturers. I think we had the assets required for this project. We didn't get it, which was unfortunate. However, we must remain optimistic. Now we're hearing about the Canadian northern corridor, which I believe is Mr. Simard's project.
Why do you think this project is realistic and viable?
President, Union des Préfets-Saguenay-Lac-Saint-Jean
Mr. Martel, I hope I can convince you that we are the best thing since the invention of sliced bread. In the case of the GNL Québec project, it seems to me that social licence was quite strong in the region. The problem lay with transporting the product. We certainly felt it when it came to factors that could lead to further degradation of the planet. Public pressure has increased, which has led us to this situation.
Geopolitics has changed, and visions for economic development have also changed enormously. We must remember that we are in a trade war. When there is a war, you have to respond to it. The project we're proposing is a deepwater port, not a lake area. We need only look at what's happening with the St. Lawrence River these days, where marine transportation costs are increasing because of fairly significant drops in water levels. We are suggesting a deepwater port, and the public supports our project. In addition, there are existing routes and rail lines. Now we have to complete this project, which, in my opinion, is necessary not only for our territory's economy, but also for Canada's.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Thank you, Mr. Ouellet.
We haven't yet discussed the provenance of the minerals, but we're told they will come from Sudbury or the surrounding area.
Mr. Girard, Mr. Ouellet talked about the social licence of the GNL Québec project. Do you agree with that?
Geologist, IOS Géosciences
I think there was a slight problem in terms of social licence. I don't have inside information, but to my knowledge, this problem did not exist in Saguenay. There was a lot of talk about Tadoussac, where I have a cottage. The project caused an uproar among the population because it would have disturbed the beluga habitat.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Personally, I want projects, and I'm trying to stay positive. Do you think the Canadian northern corridor project is feasible?
Geologist, IOS Géosciences
Yes, the project is feasible. I don't know the economic details, so you'd need to talk to the CN representatives, who could tell you more about it. The old National Transcontinental Railway, a corridor that ran through Abitibi and has been half dismantled, would easily relieve congestion in the shipment of materials from west to east, via a port such as Saguenay.
Let's return to the Saguenay natural gas project. I don't know the source, but I was told one of the reasons it didn't go forward. A problem with the availability of electricity would have made it impossible to power the plants. When we talk about infrastructure problems, the availability of electricity is often an obstacle to project development. I'm not talking about installing an electrical wire, but rather about having enough electricity.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Mr. Girard, I'd like to talk about social licence, which we often hear about. It's a nice expression, but what does it mean? If one in 300,000 people disagree with a project, does that mean there's no social licence?
Geologist, IOS Géosciences
There's what we observe, and there's my opinion. Currently, in certain situations, a single person or a small group of people can block projects. For some individuals, the common good comes after personal gain. Take the example of the Arianne Phosphate project, which you're no doubt familiar with. The Saguenay port ran into problems because a few cottage owners in Anse-à-Benjamin blocked the project.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
If I understand correctly, a few residents can block any project. In that case, it becomes difficult to create wealth.
Liberal
Liberal
Claude Guay Liberal LaSalle—Émard—Verdun, QC
Thank you, Mr. Chair.
I want to thank the witnesses for taking the time late in the day to be with us and answer our questions.
The question is for Madam Levis from CN. We heard this idea of a northern rail corridor. I'm an industrial engineer by trade, so I try to optimize everything. I spend my career doing that.
We have new volumes of critical minerals. I have many mining projects...that come and see me in northern Ontario at Abitibi-Témiscamingue and Saguenay. That, to me, speaks of a significant potential increase in volume that needs to be shipped within the next few years.
The ports that you mentioned earlier where CN is able to bring materials currently are not deep-sea facilities...12 months a year. They're more lakers or intermediates, which requires more offloading and onloading.
The préfets are talking about this northern corridor that could go from northern Ontario to Saguenay. I'm wondering If CN has actually studied that, and if CN has updated the volume potential forecast requirements into the future to see how much it would cost, if it would be feasible and the kinds of volumes. Is that a better idea than your current network, depending on whether we want to ship to international markets out of Canada?