by Following a national security review, Innovation Minister François-Philippe Champagne is ordering three Chinese resource companies to sell their stakes in Canadian critical minerals companies.
Champagne’s order comes less than a week after he said Canada would limit the participation of foreign state-owned companies in the industry.
Critical minerals and metals such as lithium, cadmium, nickel and cobalt are essential components of everything from wind turbines and electric cars to laptops, solar panels and rechargeable batteries.
China is a dominant player in the refining and processing of critical minerals and in the manufacturing chain of battery cell components.
But China doesn’t produce a lot of minerals, instead investing heavily in overseas mines in places like Canada to get the raw materials it needs.
Canada and its allies are desperate to topple China’s dominance in the sector and create a supply chain that relies on more stable and reliable partners.
“While Canada continues to welcome foreign direct investment, we act decisively when investments threaten our national security and critical mineral supply chains, both domestically and abroad,” Champagne said in a written statement late Wednesday.
The Investment Canada Act requires foreign investments to be reviewed for national security, and Champagne said critical mineral investments will receive “enhanced scrutiny.”
He said a “multi-stage national security assessment process” by the National Security and Intelligence Service determined that the three companies must divest their stakes in Canadian critical minerals companies.
The order requires Sinomine (Hong Kong) Rare Metals Resources to sell its stake in Vancouver-based Power Metals Corp., which has lithium, cesium and tantalum exploration projects in northern Ontario.
Chengze Lithium International Ltd. is required to divest its stake in Calgary-headquartered Lithium Chile Inc., which has more than a dozen lithium projects underway in Chile.
And Zangge Mining Investment is ordered to sell its stake in Ultra Lithium Inc., a Vancouver-based resource development company with lithium and gold projects in both Canada and Argentina.
Canada and the United States have each identified dozens of minerals and metals that they consider essential to their future economic success.
They point to instability caused by Europe’s dependence on oil and gas after Russia’s invasion of Ukraine last winter, and rising tensions with China as reasons to ensure that supply chains are mostly in the hands of friends and allies.
In June, US Treasury Secretary Janet Yellen alluded to it during a “friend-shoring” trip to Ottawa.
“So supporting friendship is the idea that countries that share common values about international trade, about behavior in the global economy, should trade and benefit from trade so that we have multiple sources of supply and are not overly dependent on getting critical supplies. goods from countries where we have geopolitical concerns,” Yellen said.
New rules for critical mineral investments announced by Champagne last week mean that investment by state-owned companies will only be accepted “exceptionally” and will apply to investments of all sizes, from small stakes to outright buyouts.
It affects everything from exploration and development to mining, processing and refining.
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