In October 2022, the government added an extra layer of scrutiny for inbound deals in critical minerals.
What you are seeing is the reality, that there is no blockade of Chinese investments in Canada … it is a perception issue
The changes did not specify which country’s investments would be scrutinised, but the government says it wants to secure the critical minerals sector, which is strategic to Canada’s national security.
“What you are seeing is the reality, that there is no blockade of Chinese investments in Canada … it is a perception issue,” said Dean McPherson, Head of Mining at TMX Group Ltd.
“Chinese investors are not shy to risk, they are willing to stick in and ride it out [n Canada],” McPherson added.
Daniel Lincoln, a researcher with The China Institute, told Reuters Canada may find it difficult to regulate all Chinese mining acquisitions notwithstanding the provisions in the Investment Canada Act, especially when both buyer and seller are keen for the transaction.
China doesn’t want to see ‘difficult situation’ with Canada continue, Wang says
China doesn’t want to see ‘difficult situation’ with Canada continue, Wang says
In the latest test of Canada’s new rules, China’s state-owned Zijin Mining Group last month offered to buy a 15 per cent stake in Solaris Resources Inc for C$130 million.
While Canada lists copper as a critical mineral, the deal is likely to be approved since the funds will be used to develop Solaris’ copper-gold project in Ecuador, two sources familiar with the deal told Reuters.
Solaris and Zijin did not respond to an email query by Reuters.
A spokesperson for the Ministry for Innovation, Science and Industry declined to comment on the Zijin deal, but said the government must examine each investment on its merit to ensure Canada remains open to necessary foreign direct investment.
Copper in demand
Chinese investors have been among the most active in Canada’s mining industry, ploughing C$21 billion between 1993 and 2023, according to data from The China Institute.
Last year, copper companies were the most targeted by Chinese investors. MMG Africa Ventures, a unit of state-backed China Minmetals Corp, bought a copper mine from Vancouver-based Cuprous Capital Ltd for C$1.7 billion, and Hong Kong-based Greenwater invested C$13 million in Gowest Gold, the data shows.
Jiangxi Copper Co Ltd increased its stake in First Quantum Minerals Ltd to 18.5 per cent from 18.3 per cent and the Chinese company also bought C$20 million worth of senior notes in the Canadian company last year, regulatory filings show.
Some smaller miners and explorers have been lobbying the Canadian government to allow more Chinese investments, citing difficulty in raising capital.
China takes aim at Canada’s move to block Chinese, Russian, Iranian research links
China takes aim at Canada’s move to block Chinese, Russian, Iranian research links
On Sunday, Chinese miner Yintai Gold agreed to buy Vancouver-based Osino Resources for C$368 million. Osino and Yintai did not respond to a Reuters query about if they are seeking Canadian government approval for the deal. Gold is not considered a critical metal by Canada.
Michelle DeCecco, chief operating officer of Lithium Chile, one of the three companies that Canada ordered to get rid of its Chinese investor, told Reuters there was no softening in Ottawa’s stance because of which companies are finding alternative ways to secure Chinese funding.
Soon after SRG Mining Inc received a C$16.9 million investment proposal from C-ONE, backed by Chinese entrepreneur Yue Min, the Montreal-based graphite miner announced plans to change the country where it is incorporated. On Monday, it said it would incorporate in Abu Dhabi Global Markets while maintaining its Canadian stock market listing.
SRG Mining did not respond to an email query by Reuters.
“Unfortunately, it is often to take their companies out of Canada; away from Five Eyes,” DeCecco said, referring to the intelligence sharing network comprising the United States, Britain, Canada, Australia and New Zealand.