Canada Orders Chinese Companies To Divest From Its Critical Minerals Sector

The Canadian federal government has ordered three Chinese companies to sell their stakes in Canadian businesses involved in critical mineral production, after a national security review.

The order, which came from innovation minister Francois-Philippe Champagne, aims at limiting foreign company participation in Canada’s resource sector, especially in the critical mineral segment, according to Global News.

“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical minerals supply chains, both at home and abroad,” Champagne said in a statement.

China has emerged as a major thorn in the side of the U.S. and Canada with respect to their transition ambitions, which include turning the two countries into major sources of critical minerals such as lithium, cobalt, and copper.

However, while both the U.S. and Canada have spent decades trying to shrink their mining industries as they transformed from industrial to post-industrial economies, China has been expanding its critical mineral supply chain. To date, the country is the biggest processor of rare earths in the world, for instance, and also the biggest lithium processor.

The three Chinese companies that were ordered to divest their interests, had these interests in companies involved in lithium mining, both in Canada and abroad, including in Chile and Argentina.

Because of China’s undisputable dominance in the critical minerals sector, the U.S. and Canada are also discussing the idea of so-called friend-shoring: sourcing critical minerals and metals from friendly jurisdictions only, which would naturally exclude China.

China’s processing capacity, however, remains quite a challenge, even if the friend-shoring idea gets the backing of more resource-rich nations. Even if the U.S. and Canada find a way to source their minerals either at home or from friendly countries, processing might need to take place in China for the observable future.

By Irina Slav for Oilprice.com

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