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Confusion about whether Chinese investment is welcome in the Canadian critical minerals sector is fuelling investor uncertainty and jeopardizing this country’s position as a leading source of capital for the mining industry, executives and analysts say.
In late 2022, Ottawa said it would allow investment from China only under exceptional circumstances, but it didn’t specify what those circumstances would be. In the absence of clarity over what is and isn’t allowed, Chinese investors have continued to attempt deals with Canadian mining companies. Meanwhile, some transactions that Ottawa has permitted have baffled experts, as have some that were blocked.
Late last year, China-based Shenghe Resources Holding Co. Ltd. acquired a 10-per-cent stake in Australia-based Vital Metals Ltd., which owns Canada’s only operating rare earths mine. Shenghe was also allowed to purchase Vital’s stockpile of rare earths that were mined in the Northwest Territories.
“It’s crazy that we’re selling our only rare earths stockpile that was developed in North America to the Chinese,” said Heather Exner-Pirot, senior fellow and director of natural resources, energy and environment at the Macdonald-Laurier Institute.
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