Ottawa has announced stricter guidelines on foreign investments in Canada’s mining sector, particularly for firms involved in critical minerals operations. The move comes amid rising concerns about the national security risks that arise from such investments in the sector.
In a July 4
statement, Innovation Minister François-Philippe Champagne announced that from now on, proposed foreign investments will only be deemed to have a net benefit “in the most exceptional of circumstances.” He said that setting this “high bar” reflects the strategic importance of Canada’s critical minerals sector and the government’s commitment to its protection.
Under the Investment Canada Act, “net benefit” reviews are conducted to assess the economic benefit of foreign investments to the country. To determine whether a proposed foreign investment provides a net benefit to Canada, several key factors are reviewed, including its impact on productivity, innovation, and economic activity such as employment and the use of Canadian products and services, according to
Innovation, Science and Economic Development Canada.
“Canada welcomes foreign investment and recognizes how important it is, particularly for small Canadian firms to advance exploration and site development efforts,” Mr. Champagne’s statement said. “In this light, the Government must balance protecting Canada’s strategic interests while supporting the development of Canada’s resources.”
The new guidance follows a separate
ministerial statement issued on July 4, in which Mr. Champagne announced his approval of Swiss mining firm Glencore’s acquisition of Elk Valley Resources (EVR), a steel-making coal business in British Columbia operated by Teck Resources.
The federal government had opposed the transaction last year, describing it as a “hostile takeover” attempt by Glencore and citing shareholder concerns. Mr. Champagne said the government has now approved the deal “after an extensive net benefit review” and under strict conditions.
Glencore has committed to ensuring a “strong and well-capitalized Canadian operation of EVR,” pledging to establish a Vancouver-based head office and regional offices in Calgary and in Sparwood, B.C., for at least 10 years.
It has also committed to ensuring that, for the same period, a majority of EVR’s directors are Canadian and two-thirds of executive and senior management roles are filled by Canadians. Additionally, Glencore will maintain “significant employment levels at EVR” for a minimum of five years.
Geopolitical Competition
In his July 4 statement on net benefit reviews, Mr. Champagne emphasized the role of critical minerals in national defence and technological development, particularly in the context of geopolitical competition.“Foreign capital will continue to play an important role in our industry. However, Canadians cannot ignore that we are in a world of geopolitical competition, with critical minerals at the very core of advanced industrial and defence policies,” he said.
The Epoch Times reached out to the innovation department for clarification on the specific concerns related to geopolitical competition, but did not receive a response by the time of publication.
Critical minerals such as lithium and rare earth elements are essential for high-tech industries and defence applications, making them strategically vital. Foreign investments, particularly from countries like China, have raised concerns about Canadian sovereignty and the control of these crucial resources.
In November 2022, the Liberal government
ordered three Chinese firms to sell their stakes in Canadian lithium mining projects. These firms were Sinomine Rare Metal Resources Co. Ltd., which had to divest from Power Metals Corp.; Chengze Lithium International Ltd., which divested from Lithium Chile Inc.; and Zangge Mining Investment Co. Ltd., which divested from Ultra Lithium Inc.
This decision aimed to push back against investments that “threaten our national security and our critical minerals supply chains, both at home and abroad,” Mr. Champagne said in a
statement issued at the time.
Despite such pushback, Chinese interest in Canada’s mineral resources continues. Earlier this year,
Zijin Mining Group, a leading Chinese mining company, acquired a 15 percent share in Solaris Resources Inc., a Canadian critical minerals development firm focusing on copper and gold exploration projects.
As part of a
subscription agreement, Zijin has the right to nominate a board member at Solaris as long as Zijin holds a minimum 5 percent stake in Solaris outstanding common shares. The agreement also grants Zijin participation rights to purchase additional securities under specified conditions to maintain its proportional interest in the company.
In 2019,
China Molybdenum Co., Ltd., a major molybdenum producer in China, fully acquired Canada’s IXM, a
company with substantial operations at the Tenke Fungurume Mine in the Democratic Republic of the Congo, specializing in cobalt production.
The acquisition bolstered China molybdenum’s position in the global copper-cobalt market, which is critical for industries ranging from electronics to renewable energy.
In December 2019, China’s Jiangxi Copper Corporation, through a subsidiary, acquired an 18 percent stake in First Quantum Minerals Ltd., a Canadian-based mining and metals company.
