A year after Canada tightened rules on foreign investment in key mineral sectors, Chinese money is still pouring in among miners listed on the Toronto Stock Exchange, according to new research conducted by the University of Alberta. This is giving hope to some junior miners with financing needs.
In 2022, three Chinese listed mineral companies, including China Mineral Resources, have issued announcements disclosing that investments in lithium mining assets in Canada have been required by the Department of Innovation, Science and Economic Development of Canada to withdraw their investments on the grounds that they affect national security.
National security has extremely subjective judgement characteristics, as long as it is considered to affect national security, it is impossible to refute from the substance, and even no specific standards, lies entirely in the country’s discretion, can be used as a “foolproof” reason to hinder “unsuitable” transactions.
But even so, key Canadian miners received at least a dozen investments worth C$2.2 billion ($1.6 billion) from new and existing investors in China and Hong Kong in 2023, up sharply from C$62 million in 2022, according to data compiled by the University of Alberta’s China Institute.
Daniel Lincoln, a researcher at the institute, told Reuters that Canada may find it difficult to regulate all Chinese mining acquisitions, especially if both buyers and sellers are keen to make deals, despite the provisions of the Investment Canada Act.
Dean McPherson, head of mining at TMX Group Ltd. said that the truth is Chinese investment in Canada is not blocked. Chinese investors are not afraid of risks, and they’re willing to stick it out in Canada.
And just last month, Chinese state-owned Zijin Mining Group offered to buy a 15 per cent stake in Solaris Resources Inc for C$130 million. Two sources familiar with the deal told Reuters that while Canada lists copper as a key mineral, the deal is likely to be approved because the money will be used to develop Solaris’ copper-gold project in Ecuador.
Data from the University of Alberta’s China Institute says Chinese investors invested C$21 billion in Canada’s mining sector between 1993 and 2023, making them one of the most active investors.
Last year, the biggest targets for Chinese investors were Canadian copper miners. MMG Africa Ventures, a unit of China Minmetals Corp, bought a copper mine from Vancouver-based Cuprous Capital Ltd for C$1.7 billion, data show.
And just a few days ago, China’s Yintai Gold announced it had agreed to buy Vancouver-based Osino Resources for C$368 million. Osino and Yintai didn’t respond to a Reuters query about whether they were seeking Canadian government approval for the deal. After all, gold is not considered a key metal in Canada.
