On reflection, a new foreign policy emerges: the mines are ours
“As Canada continues to welcome foreign direct investment, we will act decisively when investment threatens our national security and our critical mineral supply chains, both at home and abroad,” he said. he said in a statement.
The comment contrasted sharply with government inaction at the end of 2021 when Zijin Mining Group Co., a China-based miner with state-owned investors, proposed a takeover of Toronto-based Neo Lithium Corp. .
That deal was reached on Jan. 26 without interference from Ottawa, but it prompted parliamentary hearings to consider whether the acquisition should have been subject to greater scrutiny. In testimony at the time, Champagne said Neo Lithium’s mine was in Argentina and electric vehicles in North America use a different form of lithium, as reasons not to examine the deal under a microscope.
However, the government clearly changed its position on the file in the months that followed. Changes to the ICA will subject all such transactions in the critical minerals sector to greater scrutiny, with approvals only granted on an “exceptional” basis.
For the surrender order issued to the three companies, Ottawa did not target China. As Chinese state-owned companies take stakes in global mining projects and the country already controls about two-thirds of the world’s lithium processing capacity and many other battery materialsit was hardly necessary.
Meanwhile, Champagne has signaled its intention to deepen ties with “partners who share our interests and values” to help kick-start expensive mining developments.
Canada is not alone in adopting a policy of dealing more closely with its allies, a trend that US Treasury Secretary Janet Yellen has dubbed “friend shoring.”
The United States took a more subtle step this summer to offset some of China’s early battery lead. To qualify for the US$7,500 electric vehicle incentive offered under the Cut Inflation Act, automakers must ensure that their electric vehicles use battery materials that are sourced and processed in friendly jurisdictions. Vehicles containing battery materials from state-owned companies based in China are not eligible for credit under the “Foreign Entity of Concern” restrictions.
The unfavorable geopolitical climate and the Canadian government’s flip-flop on mine ownership will likely prove positive for the Canadian automotive industry and its battery supply chain.
Unlike Canadian-controlled mines at home and abroad that supply China’s lithium-ion battery industry, investment in local processing plants will create jobs in Canada, generate greater demand for local mines, and sustain the current onshore automotive supply chain.
“The growing demand for these very important minerals presents Canada with a generational economic opportunity,” Champagne said. “We are determined to seize this opportunity.”