Canada will not compel Chinese state investors in three of its major mining companies to sell their stakes because doing so would create policy uncertainty, clarified the country’s natural resources minister.
In November, the Government of Canada announced that it was ready to enforce provisions under the Investment Canada Act. The decision relates to the investment by foreign entities into critical mineral supply chains of Canadian companies.
This meant that the government was looking at certain companies within the critical minerals sector with “enhanced scrutiny,” citing national security. Three companies with investments from Chinese firms were targeted by the decision: Power Metals Corp (TSXV: PWM) which has received investment from Sinomine (Hong Kong) Rare Metals Resources Co. Limited, Lithium Chile (TSXV: LITH) which has investment from Chengze Lithium International Limited, and Ultra Lithium (TSXV: ULT) which has investment from Zangge Mining Investment (Chengdu) Co., Ltd.
The decision was met with criticism from the mining industry and raised questions about the future of other Chinese investments in the Canadian mining sector.
“If you start looking backwards at investments, it will create all kinds of uncertainty about whether an investment is ever really an investment,” Natural Resources Minister Jonathan Wilkinson said in an interview on the sidelines of Prospectors and Developers Association of Canada (PDAC) conference in Toronto.
According to Refinitiv statistics, sovereign fund China Investment Corp owns 10.3% of Teck Resources (TSX: TECK.b), Chineses state-owned CITIC Metal Group owns 26% of Ivanhoe Mines (TSX: IVN), and China’s largest copper producer, Jiangxi Copper Corp Ltd, owns 18.3% of First Quantum Minerals (TSX: FM), three firms that are among the largest miners listed in Canada.
Following the announcement in November, a spokesperson for China’s Ministry of Commerce (MOFCOM) said that China will take all necessary steps to protect the rights and interests of its companies, calling the Canadian government’s move a deliberate act of putting up trade and market barriers between Chinese and Canadian companies.
“This is against the principle of market economy, and international economic and trading rules the Canadian side has been talking about,” said the spokesperson. “We call for a fair, just, and non-discriminatory environment for Chinese companies doing business in Canada.”
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