Ottawa orders Chinese companies to exit three Canadian lithium miners

As it looks to strengthen its hold on this country's critical minerals projects, the federal government has ordered three Chinese companies to sell their investments in three Canadian junior lithium miners.

Industry Minister Franois-Philippe Champagne said that following a multi-step national security review process, the government has asked Sinomine Rare Metals Resources Co.

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The Investment Canada Act gives the government the power to require non-Canadians to relinquish control of a Canadian business if it believes the investment could be injurious to national security.

Foreign investments are subject to review for national security concerns and certain types of investment, such as those in the critical minerals sector, receive enhanced scrutiny. A number of investments in Canadian companies were reviewed.

The options and possible outcomes of the order with Chengze were being reviewed by the company.

The investment made by Chengze has given the company a significant cash position, but the government's order doesn't affect the company's assets

Lithium's assets are owned by its South American subsidiaries. The assets operated by the company are not located in Canada. Chengze's investment into the company doesn't give him special rights in regards to the outcome or decisions made by the company.

The investments by Chengze were approved by the Toronto Venture Exchange, according to the company.

Chengze has experience and expertise that the company values.

There can be questions about the net benefits for the country when state-owned or controlled enterprises are involved, according to an economist and former vice-president at the Bank of Nova Scotia.

There is some need to prevent supply chain vulnerabilities from affecting industry in Canada and the West as the electric-vehicle and renewable-energy industries develop.

Pierre Gratton, chief executive of the Mining Association of Canada, said that the industry is very sensitive to both the geopolitics and the difficult choices the government is facing.

It is essential for Canada to have access to capital and markets.

Canada raised the bar on foreigners joining the country's critical minerals industry. Any attempt by a state-owned enterprise to purchase assets in the sector can now be reviewed on the basis that it could be "injurious" to national security.

Efforts will improve the administration of Canada's investment review regime. Champagne said in a statement that they would continue to announce the outcomes of the orders.

The advice of critical minerals subject matter experts, Canada's security and intelligence community, and other government partners were what led to the government's decisions.

The policy shift came after a parliamentary committee in March said Canada should launch a full security review for every investment by a company influenced by an authoritarian state.

Champagne made a decision not to do so in January when a Chinese miner acquired a Canadian company that had a project in Argentina.

The federal government was criticized by a former Conservative leader for allowing a mining company to acquire a key mineral. The government didn't do a proper security review.

The deal was thoroughly reviewed by champagne. He also said that Canada would not be relying on the production of electric batteries for their own sake.

China dominates the electric-vehicle supply chain through its refining and processing industries, despite the fact that most of the metals required by EV are mined outside the country.

The Democratic countries of North America and Europe have banded together to counterbalance China.

The Inflation Reduction Act of Washington offers a US$7,500 subsidy to encourage the production of EV in North America, while the Minister of Finance has stressed the need for friend shoring, an idea that democratic allies would build supply chains through each other.

The email address is nkarim@postmedia.

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