The federal government announced on Wednesday that Sinomine (Hong Kong) Rare Metals Resources Co., Ltd, Chengze Lithium International Ltd. and Zangge Mining Investment (Chengdu) Co., Ltd. must sell their stakes in Power Metals Corp., Lithium Chile Inc. ., and Ultra Lithium Inc. respectively. The government said it made its decision after consulting critical minerals experts and the security and intelligence community. Last Friday, Ottawa said it would allow approval only for deals involving state-owned companies investing in Canadian critical minerals companies on an “exceptional basis,” a development Wesley Wark, senior fellow at the Center for International Governance Innovation, said. The Globe and Mail was Canada’s most dramatic tightening of takeover rules in a decade. The new rules apply not only to acquisitions of Canadian companies, but to investments of any size, including smaller non-controlling interests in every aspect of the resource industry, from exploration and development to mining and refining. Last week’s announcement, and the crackdown on specific investments revealed Wednesday, comes after years of a largely laissez-faire approach by the federal government to Chinese investment in Canada’s critical minerals sector. While Ottawa has the power to block Chinese investment in Canadian critical mineral assets if it feels there is a threat to national security, it has not always followed through. Three years ago, the federal government approved the acquisition of the Tanco mine in Manitoba by China’s Sinomine. At the time, Tanco was one of the world’s few sources of the critical mineral cesium, a key input to atomic clocks and radiation detectors. Earlier this year, Sinomine began producing lithium at the mine and shipping it back to China for use in its domestic electric vehicle industry. In January, Ottawa cleared the takeover of Neo Lithium Corp., a Canadian lithium developer, by Chinese state-controlled Zijin Mining Group Co. Ltd. without a thorough security review. That takeover precipitated parliamentary hearings and put federal Industry Minister Francois-Philippe Sabin on the defensive. In June, Jonathan Wilkinson, federal natural resources minister, signaled in an interview with The Globe and Mail that Ottawa was preparing to fight the flood of Chinese investment in Canada’s critical minerals.
