Lack of transparency around Chinese investment in critical minerals sector threatens Canadian mining capital

Confusion surrounding Chinese investment in the Canadian critical minerals sector is causing uncertainty among investors and potentially putting Canada’s mining industry at risk, according to executives and analysts. Despite Ottawa’s announcement in late 2022 that it would only allow Chinese investment under exceptional circumstances, the lack of clear guidelines has led to continued attempts by Chinese investors to make deals with Canadian mining companies.

One recent controversial transaction involved China-based Shenghe Resources Holding Co. Ltd. acquiring a stake in Vital Metals Ltd., which owns Canada’s only operating rare earths mine. Critics, like Heather Exner-Pirot of the Macdonald-Laurier Institute, are concerned about selling critical resources to Chinese investors due to security reasons.

Moreover, the Canadian government’s inconsistent decisions on which deals to permit or block have raised questions about transparency and clarity in foreign investment regulations. This has led to Canadian mining companies facing obstacles in attracting Chinese investors, with some deals being abruptly cancelled after facing scrutiny from government officials.

The lack of clear guidelines and opaque national security review processes have left stakeholders frustrated and unsure about the future of Chinese investments in Canada’s critical minerals sector. As a result, there is a risk that Canada may lose out on much-needed mining capital, as companies may choose to base themselves in other countries with more welcoming investment policies. The ongoing uncertainty and confusion surrounding Chinese investment in the mining industry could have long-lasting implications for Canada’s role as a leading source of capital for the sector.