Conservative MPs are calling for a national security review of a Chinese company’s plan to acquire substantial shares in Vital Metals, a Canadian rare earths mining company. This move follows a government directive a year ago to exclude three Chinese firms from the Canadian critical mineral industry.
On Dec. 8, Conservative MPs Rick Perkins, who is the shadow minister for innovation, and Shuvaloy Majumdar issued a
joint statement on the platform X urging Innovation Minister François-Philippe Champagne to leverage his powers and launch a review of the proposed acquisition of Vital Metals shares by Shenghe Resources, a Chinese company partially owned by the Chinese state.
“China’s acquisitions are once again threatening Canada’s economic security,” reads the statement.
“Conservatives demand that the Minister of Innovation, Science, Industry invoke the powers of the Investment Canada Act under section 25.3 immediately to review this deal to the maximum allowable timeline so we can protect Canadian resources and jobs from the control of the Chinese Communist Party.”
This provision in the act enables the review of an investment if, following consultation with the public safety minister, the innovation minister deems it a potential threat to Canada’s national security.
The Epoch Times reached out to Mr. Champagne and his department for comment but didn’t hear back by publication time.
Vital Metals, headquartered in Sydney, Australia,
says it is Canada’s first rare earths mining company. It began mining at the
Nechalacho rare earth mine in the Northwest Territories in 2021 and has another project at Wigu Hill, Tanzania.
On Oct. 23, Shenghe
announced its
plan to enter into a subscription agreement with Vital Metals, aiming to acquire up to 18.2 percent of all issued shares of the Canadian company.
This acquisition would be executed in two phases. In the initial phase, Shenghe is set to acquire 9.99 percent of Vital Metals’ issued share capital at a price of AU$0.01 per share, which totals approximately $5.9 million Australian dollars (roughly C$5.27 million).
In the second phase, subject to Vital Metals shareholder approval, Shenghe would subscribe to an additional 8.2 percent of the total issued shares at a price of AU$0.015 per share, resulting in a total subscription amount of approximately AU$8.9 million (roughly C$7.96 million).
Supply Chain, National Security Concerns
In early November 2022, Mr. Champagne
ordered three Chinese resource companies to sell their interests in Canadian lithium companies. This move came after he pledged to limit the involvement of foreign state-owned companies in the industry due to concerns about national security threats.
Critical minerals, which include lithium, cobalt, copper, as well as the rare earth elements, are vital for a number of technologies across a range of applications, such as batteries, electronics, defence, and renewable energy. China dominates critical minerals refining and processing as well as the manufacturing supply chain of battery cell components. Although not a major producer of critical minerals, it heavily invests in overseas mines, like in Canada, to secure the raw materials it needs.
Mr. Perkins highlighted that the Chinese regime holds 14 percent of Shenghe Resources. As of the latest October data from Chinese financial news platform
Sina Finance, 14.06 percent of Shenghe shares are held by a research institute operated by the China Geological Survey, a Chinese state-owned non-profit.
Mr. Majumdar also raised concerns about involvement of the Chinese Communist Party (CCP) in Canadian resource development.
“A compromised supply chain will deter investment in Canada and impede our ability to act on existing investments made to secure a resilient, Canadian-run supply chain.”
The MP further criticized the Liberal government for greenlighting the purchase of
Neo Lithium Corp., a Toronto Stock Exchange-listed lithium mining company, by the Chinese state-owned firm Zijin Mining Group Ltd. in early 2022. This approval also
faced opposition from U.S. Republican lawmakers Michael Waltz, Elise Stefanik, and Lance Gooden, who raised concerns in a
letter to several U.S. cabinet secretaries in February 2022.
