Via AG Metal Miner
Canada has a new foreign investment rule that is sure to send ripples through the mineral and metal mining sector. Indeed, the country recently requested that China immediately sell its holdings in three Canadian mining companies. According to media reports, national security is the primary reason for the new order. Indeed, the decision followed a “multi-step” review of Canadian security by the country’s intelligence agencies.
Three Major Metal Mining Companies Affected
Canada’s Industry Minister, François-Philippe Champagne, said three Chinese companies would be required to divest from junior mining companies. According to the new directive, Sinomine (Hong Kong) Rare Metals Resources Co Ltd, Chengze Lithium International Ltd, and Zangge Mining Investment (Chengdu) Co Ltd must sell their stakes in Power Metals Corp, Lithium Chile Inc, and Ultra Lithium Inc.
Despite the move, Canada insists it will continue to welcome overseas ventures. However, the country plans to change its approach to reviewing such foreign investment. According to officials, the focus going forward will be on potential national security concerns.
The Minister of Innovation, Science, and Industry (ISI) spelled out the policy evolution in an early November statement. Of course, the crux of the message focused on asking investors to divest from the three junior Canadian exploration companies. But the Minister also underlined how the Government was determined to work with Canadian businesses to attract FDI. Specifically, they want to attract foreign direct investment from partners that share the country’s interests and values.
China Still Dominates Critical Mineral and Metal Mining
Again, all of this stems from a recent review performed by Canadian intelligence. The report simply stated the three companies needed to leave the Canadian metal mining industry on national security grounds. As is typical with such decisions, the “dirty details” were not made public.
China sits atop the largest stockpile of critical minerals in the world. Moreover, it has become the world’s largest refiner and processor of many elements crucial to modern manufacturing. The country also has massive, largely undeveloped deposits of both nickel and cobalt.
The term “critical minerals” typically refers to lithium, cadmium, nickel, and cobalt. These elements are integral to clean energy technologies, electric cars, solar panels, and rechargeable batteries.
Re-Prioritizing National Security May Be a New Trend
Canada’s policy shift resulted from a parliamentary committee that took place in March. The new rule envisages a full security review for every investment by a company influenced by an “authoritarian state.”
Of course, Canada is not the only country to put national security before business. Earlier this year, countries including Britain, the US, and Australia established a global partnership to secure access to critical minerals.
China has so far dubbed Canada’s move a “breach of cooperation” between the two nations. To Beijing, Canada seeks to intentionally disrupt global supply chains. One Chinese foreign ministry spokesman said that Canada must stop this targeting of Chinese companies and prove a fair, impartial, and non-discriminatory business environment.
By Sohrab Darabshaw
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