China is opposed to Canada’s decision to order three Chinese mining companies to divest their stakes in three lithium miners in Canada.
A spokesperson for China’s Ministry of Commerce (MOFCOM) said on Sunday that China will take all necessary steps to protect the rights and interests of its companies.
On November 2, 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 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 spokesperson said that the Canadian government’s suppression overstretches the concept of national security, calling it 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.”
The three companies have all issued statements on the matter.
Johnathan More, Chairman & CEO of Power Metals, said that “while we are surprised by Canada’s stance towards Chinese investment into Canada’s critical minerals industry, it clearly shows that they see the opportunity and assets of Power Metals as too valuable for such foreign investment.”
He also added that Sinomine “will respond to the Canadian government shortly as they look at the appeal process.”
Lithium Chile meanwhile pointed out that “the assets operated by the Company are not Canadian assets, nor is the Company’s significant lithium resource.” Steve Cochrane, Lithium Chile’s President and CEO, hopes that “this issue can be resolved to everyone’s satisfaction.”
Ultra Lithium announced that it has, with Zangge, mutually agreed to “terminate the definitive agreement with respect to the Laguna Verde property.”
“The Board of Directors and management of the Company are very surprised at Canada’s policy against Chinese investment in Canada’s lithium projects and believe that the announcement has been detrimental to the Company’s many Canadian shareholders. The Company is assessing its legal and other options to preserve value for its shareholders,” the company said on November 4.
Chinese mining companies have been actively investing in overseas lithium projects since at least 2021, in an effort to ensure that they meet the rapidly growing global demand for batteries. Benchmark Mineral Intelligence reports that Chinese miners have so far invested about $4 billion, with over $1 billion in Canadian companies alone.
Information for this briefing was found via FDI Intelligence, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.