Champagne tells miners not to circumvent rules on China at PDAC

Breadcrumb Trail Links Mining Commodities Policy preventing China from investing…

Policy preventing China from investing in Canadian miners being tested

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It has been almost 18 months since Prime Minister Justin Trudeau’s government announced a policy that prevents “non-like-minded” nations such as China from investing in Canada’s critical minerals sector, and yet the issue continues to be an industry talking point.

That’s partly because a few Canadian miners have announced deals linked to Chinese companies in the past three months. These deals have not been completed and need to be approved by the Canadian government, but they are being followed by many in the mining industry to better understand the limits of Chinese investments in the sector.

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Industry Minister François-Philippe Champagne provided some clarity on the issue on March 4 at the Prospectors & Developers Association of Canada convention in Toronto, where he warned companies not to try to “circumvent” the rules.

The minister was specifically asked about the case of Montreal-based SRG Mining Inc., which planned to redomicile to the United Arab Emirates after agreeing to sell 19.4 per cent of the company to a Chinese company. The company said moving out of Canada meant the deal would not require federal government’s clearance.

Champagne’s response, though, was more general and not targeted at SRG.

“I would say to anyone watching or reading, it’s never smart to try to circumvent the rules,” he said. “The Government of Canada has a number of tools in our tool box to make sure Canadian law is upheld.”

SRG Mining on March 5 said it has cancelled its deal with Carbon One New Energy Group Co. Ltd.

“The SRG decision this morning, I think, was a helpful decision that they would essentially not redomicile in order to accept Chinese investments,” Energy and Natural Resources Minister Jonathan Wilkinson said on March 5. “We have been pretty clear that we are not interested in investments generally from state-owned enterprises, but certainly the ones that are raising significant flags will be those that require some kind of offtake agreements, those that require control of shareholders or those that provide for significant board representation.”

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The issue with Chinese miners first came into focus in November 2022, when Canada ordered three Chinese companies to divest their shares from three Canadian lithium miners.

That was a month after Ottawa released a policy making it more difficult for foreign businesses either owned or influenced by “non-like-minded” nations to own or invest in Canadian miners that deal with critical minerals such as lithium, copper and nickel.

These three minerals, along with 28 others, are considered critical because of the key roles they are expected to play in the gradual transition away from energy produced from fossil fuels. The restrictions were imposed to ensure Canada lessens its dependence on China, which dominates the critical minerals sector.

The move also seems to be a part of a wider goal by the United States and Canada to rely more on friendlier nations.

Aside from SRG, Vancouver-based Solaris Resources Inc., which is developing a copper deposit, announced a $130-million investment from Zijin Mining Group Co. Ltd. in January.

In February, Vancouver-based Osino Resources Corp. agreed to sell itself to Yintai Gold Co. Ltd. for $368 million. While this deal is focused on gold — not a mineral the Canadian government considers critical — and is not likely to face enhanced scrutiny from the federal government, it still highlights the influence of Chinese investments.

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Canada’s Minister of Energy and Natural Resources Jonathan Wilkinson also spoke at the convention about the importance of forging critical minerals deals with allies.

“Right now, it is abundantly clear that the mining and processing of critical minerals is concentrated into few countries. Some of them do not share our interests, our priorities or our values,” he said. “This must change. We cannot allow our future prosperity, economic security and our ability to meet net zero-goals to be held hostage.”

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