Canada has ordered China to divest from mining companies in the country

Canada has ordered China to immediately sell its stake in three Canadian mining companies as the need to invest in critical minerals clashes with growing national security concerns.

Canadian Industry Minister François-Philippe Champagne said on Wednesday that three Chinese companies will have to divest junior mining companies.

“While 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,” Champagne said in a written statement.

The order comes after a “multi-stage” review by Canada’s national security and intelligence agencies determined that the three companies must exit the Canadian mining industry for national security reasons.

Critical minerals and metals include lithium, cadmium, nickel and cobalt. They are essential for clean energy technologies, including turbines and electric cars and solar panels. They are also an essential part of laptop computers and rechargeable batteries.

In recent years, China has become the largest refiner and processor of critical minerals and has built an extensive supply chain that depends on raw materials from overseas mines.

Canada has vast, largely undeveloped deposits of nickel and cobalt, and Chinese companies account for a growing share of foreign investment in the sector.

Earlier this year, Canadian miner Neo Lithium Corp was taken over by China’s state-controlled Zijin Mining Group Co, a move that prompted a parliamentary hearing on the potential national security threats posed by China’s increased investment.

Under the Champagne Directive, 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.

The move comes a week after Ottawa tightened rules on foreign investment in the critical minerals sector. Champaign said that investments by state-owned companies will only be approved “exceptionally” and will cover not only takeovers but also small investments.

Amid fears of China’s growing dominance, nations have come together. Earlier this year, countries including Britain, Canada, the US and Australia launched a global partnership to secure access to critical minerals.

Relations between China and Canada have remained strained since the arrests of Huawei executive Meng Wenzhou and Canadian businessmen Michael Kovrig and Michael Spavor in 2018. Recent reports that China is operating secret police stations in Canada have prompted an investigation by federal police. further cooling of relations.

China pushed back on Thursday, calling Canada’s move a breach of cooperation between the two nations and an attempt to damage global supply chains.

“China urges Canada to stop disproportionate targeting of Chinese companies [in Canada] and provide [the companies] with a fair, impartial and non-discriminatory business environment,” Chinese Foreign Ministry spokesman Zhao Lijian told reporters, adding that Beijing would defend the rights and interests of Chinese companies on board.

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