Transport Committee on Oct. 2nd, 2018

[Rajesh Sharma]

We are in a ramp-up phase, so capacity going up will be about seven million to eight million tonnes.

[Vance Badawey, Liberal, Niagara Centre, ON]

Okay. What is the percentage in terms of what you have left over in unused capacity?

[Rajesh Sharma]

Right now we are in a ramp-up phase, so, really, the question of unused capacity will come later. Right now we are, let's say, at three million tonnes, and it has to be ramped up to seven million to eight million tonnes.

[Vance Badawey, Liberal, Niagara Centre, ON]

Okay.

[Rajesh Sharma]

An associated answer to that is that right now we have made short-term commercial arrangements with a private company, through a private board of IOC, and, obviously, that is not on good economic terms.

[Vance Badawey, Liberal, Niagara Centre, ON]

You talked earlier about your intermodal challenges. With respect to intermodal planning and working with your partners, be it shipping, rail or road, I would only assume that you've worked with your partners to put an intermodal plan together that would address the operations in terms of how you're moving it. Secondly to that, and attached to the challenges, you would have a plan to then address the future concerns with respect to movement, again working with your partners in a multimodal fashion to then create a more seamless and integrated intermodal system.

Have you?

[Rajesh Sharma]

Yes.

[Vance Badawey, Liberal, Niagara Centre, ON]

Do you have that plan?

[Rajesh Sharma]

We have the plan, but we have bottlenecks as well in that plan.

[Vance Badawey, Liberal, Niagara Centre, ON]

That's great. The first request, I guess, would be if you could forward that plan to us.

[Rajesh Sharma]

Okay.

[Vance Badawey, Liberal, Niagara Centre, ON]

With respect to the costs, has it been costed out?

[Rajesh Sharma]

Yes.

[Vance Badawey, Liberal, Niagara Centre, ON]

It has been.

As you may know, admittedly, the current uncertainty with steel, based on the U.S.-imposed tariffs, is something that we're trying to work through, but we haven't got to yet. With that said, there is, however, an opportunity with the current situation that we find ourselves in, due to the package that the three ministers actually announced back in July, as you may be aware, with respect to the ROs, the remission orders, and of course, the duty deferral under the duty relief. Also, as part of that package, there is a partnership with the EDC with respect to diversity dollars being made available for diversifying your operation both with respect to equipment capital as well as with respect to other initiatives that may be under way, like an intermodal or multimodal system.

I would also suggest that you work with your partners, with the plan that you have in place, to make application through the EDC to look at some of the funding arrangements that can be made to look after some of those multimodal, intermodal recommendations that I'm sure your plan identifies.

Lastly, with respect to the logistics challenges that you mentioned, I think a few people tried to get a bit deeper into what those were. Can you be very specific on what those challenges are?

[Rajesh Sharma]

When I say logistics challenges, there are three components: capacity, service and cost. These are the three challenges.

[Vance Badawey, Liberal, Niagara Centre, ON]

Let's get a bit deeper under the surface. What's the next level in terms of service? What are some of the challenges?

[Rajesh Sharma]

In terms of service—and I don't know whether this falls under the jurisdiction of this committee, I'm sure it does—our material is transported from the mine to the port through four different rail operators. They are common carriers so they are obligated to transport the material, so either we have a confidential contract with them or we go to CTA and get a tariff from them.

Some of them are facing difficulty in terms of keeping up. Specifically, if I can say, the rail line called TSH, which is owned by the three first nations, is facing challenges with respect to management, services and channelling the investments they should and do make in the right direction. That becomes the weak link, and the weakest link is really the strength of the whole chain.

[Vance Badawey, Liberal, Niagara Centre, ON]

Is that identified within your work plan, within your ultimate intermodal strategy?

[Rajesh Sharma]

Yes, that is one on service. The second on service is on the port side where, again, we are facing challenges. As I said, the Quebec government took a very important first step, but we have a long way to go in terms of having good service, good infrastructure and good facilities.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair.

I join my colleagues in welcoming both of you to committee. I was not able to participate in their travels last week, but I know that much of the testimony will find its way into our deliberations here and quite likely into the report.

I know, Mr. Sharma, that your company operates within many countries, I think it's 20, to be exact. Given that, could you provide for us a bit of a comparison in terms of Canada's transportation system and that of the other countries you're doing business in?

A follow-up question I would have is not dissimilar to my colleague's that raised the issue about the regulatory barriers that trucking companies face when moving from province to province. Could you identify any specific legislation, regulations or policies here in Canada that impede transportation?

[Rajesh Sharma]

Thank you very much.

I have experience working in Asia and Africa and have done some work in Europe, but to your specific question, I think, again, what we find, especially for mining projects, mining investments or economic activity related to mining, is that it's a chicken-and-egg story. Somebody has to lay out the infrastructure in a manner that encourages economic activity and encourages companies to invest in mining. It would be weird for companies to invest if they see it as a bottleneck and find it a challenge. That's one point I wanted to make.

Comparing Canada, I have the cost structures of Australia. I worked in South Africa and actively worked on logistics there, so I have the cost structures there. We are behind. Our costs here are higher. That needs improvement and modernization. It has nothing to do with the labour cost, but it is the cost of how we organize.

In terms of ports, and specifically with respect to iron ore, there is a public port in South Africa in Saldanha, which, when I left about seven years ago, was exporting more than 50 million tonnes. It was a seamless operation along with the rail line, and it was much more modern and much better equipped to handle large-scale volumes in a cost-effective manner. I think there is a need for improvement and investment in infrastructure that has to come from the government or a public level to enable further private investment.

In terms of policy, I think there are instruments in the Canada Transportation Act as far as rail is concerned.

I cannot talk about trucks; maybe my friend can talk about trucking.

There are mechanisms available for the protection of the shippers who are captive, but there still needs to be improvement in terms of holding the rail companies accountable for service levels and also for costs. There is scope for improvement.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I'm going to turn the rest of my time over to my colleague, Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you.

I have just one question.

Mr. Chaundy, I'd like to get a bit of feedback from you on the kinds of studies you have done relative to the export of oil products, primarily out of Saint John, New Brunswick, hopefully at some point in time, with a renewed energy east type of pipeline to the east coast.

What can you add to that?