Minister of Innovation, Science and Industry Francois-Philippe Champagne speaks at a news conference after the federal cabinet was sworn in, in Ottawa, on Tuesday, Oct. 26, 2021. THE CANADIAN PRESS/Justin Tang

Champagne in U.S. to talk unblocking supply chain, and push rare-earth minerals

Champagne in U.S. to talk unblocking supply chain, and push rare-earth minerals

OTTAWA — Unblocking North America’s clogged supply chain and making it more resilient to outside shocks — especially from China — tops François-Philippe Champagne’s agenda as he starts two days of meetings in Washington.

Champagne told The Canadian Press he will be using his face time in Washington starting Wednesday to press the Biden administration on the potential in Canada’s largely untapped rare-earth mining sector, which would allow the U.S. — and its continental neighbours — to be less reliant on China, the world’s leading supplier of those minerals.

“We have the talent, we have the renewable energy, we have the critical minerals, we have the manufacturing base, we have the geostrategic location to do that. We can lead the world,” Champagne said in an interview.

“Therefore, that’s really what I’m going to be proposing to our American colleagues and later on in this week, (to) our Mexican colleagues.”

Champagne is the federal innovation, science and industry minister, a portfolio he describes as being at the core of building back Canada’s post-COVID-19 pandemic economy. And he’s leveraging his former cabinet posts in the Trudeau government at foreign affairs and international trade with a trip to the American capital and to Mexico later in the week.

Champagne will be picking up the ball on talks that Prime Minister Justin Trudeau, U.S. President Joe Biden and others held at last week’s G20 summit in Rome on easing the supply chain crunch that has clogged U.S. ports.

The pandemic-induced bottlenecks have created shortages of semiconductors and rare-earth minerals needed to power everything from computers and cellphones to electric vehicles — obstacles to both economic recovery and the fight against climate change.

Champagne said a “regional” supply chain focus is required to make the North American continent more self-reliant and less vulnerable to offshore forces. It would also leverage the continent’s updated free trade agreement, known in Ottawa as the Canada-United States-Mexico Agreement, or CUSMA.

The minister said the vulnerability that the continent’s economy experienced at the start of the pandemic, including shortages of personal protective gear and access to vaccines, must not be repeated. Much of it, he said, was due to a reliance on China, which must now be addressed.

That, he said, has led to a “moment where we should reflect and say, ‘how do we make sure that we are more resilient for the critical elements that we will be needing to ensure prosperity over the next 20, 30, 50 years?’”

Co-operation on exploiting rare-earth minerals with the goal of supporting a self-sustaining and green electric car market would be a major way of achieving that, said Champagne.

China leads the world in rare-earth mineral extraction, accounting for almost two-thirds of production, but Canada has an estimated 15 tonnes of the elements that remain untapped. Moreover, 13 of the 35 minerals that the U.S. has identified as being critical to its national and economic security come from Canada. These include potash, indium, aluminum, tellurium, niobium, tungsten and magnesium.

“I think we’re seeing a generational transformation towards electrification. I think that provides enormous opportunities,” said Champagne. “Whether it’s around the battery ecosystem, whether it’s around the electric vehicle, whether it’s around life sciences, we have a lot to benefit from if we work closer together.”

That said, trade irritants with the Americans remain, and Champagne said he will be pressing for the relief on two fronts in Washington.

Canada has already joined two dozen countries in protesting the Biden administration’s proposed electric vehicle tax credit, calling it a violation of international trading rules.

And Champagne will continue Canada’s perennial pushback against any proposed “Buy American” provisions in U.S. economic aid packages that would limit the ability of Canadian firms to bid on American government contracts.

On a visit to Washington last month, Chrystia Freeland, the finance minister and deputy prime minster, said Canada would respond in-kind to any “Buy American” provisions by limiting access to American firms.

Champagne suggested that using access to the rare-earth minerals as a bargaining chip with the Americans was not something that he was interested in.

“My approach with the Americans is always to show that it’s in our best interest to do things together, always go back to the fact that a decision on one side will have an impact on both,” he said.

“You have to repeat these things to make sure that our friends always remember and appreciate the integrative nature of our economy.”

Goldy Hyder, the president of the Business Council of Canada, said Canada should drive a hard bargain with the U.S. on guaranteeing any future access to rare-earth minerals because of the continued Buy American threats and other protectionist policies of the Biden administration.

“We have a fiduciary duty to the people of Canada to assert our independence, our sovereignty, our responsibility, our ownership of these assets,” said Hyder.

“We have to make sure that this is not seen to be something that anybody can just kind of come in and just take and claim.”

Champagne was scheduled to meet Wednesday with U.S. Commerce Secretary Gina Raimondo and White House science officials.

This report by The Canadian Press was first published Nov. 3, 2021.

Mike Blanchfield, The Canadian Press

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