The Trump administration is investing in Canadian critical minerals companies. But Ottawa can stop it

Trump administration has bought stake in two Canadian companies Mineral companies, experts say the move is certainly unusual, if not extraordinary. And that raises questions about whether Ottawa should block them in the interest of national security.

This “p“For the U.S. government to buy a stake in a Canadian company is probably unprecedented,” said Lawrence Harman, an international lawyer and a senior fellow at the CD Howe Institute.

Canada should be concerned, he said, “about any foreign state buying an interest in a Canadian company, particularly in the sensitive critical minerals sector.” Those minerals include lithium, copper, nickel and others that are essential to modern technology.

The White House announced last week It was spending US$35.6 million For a 10 percent stake in Vancouver-based Trilogy Metals Inc., which has mining interests in Alaska that the U.S. government wants to see developed. The US government also has options to increase Its shareholding and the right to appoint members to the board of the company.

this is also tuckAnother Vancouver-headquartered company owns a minority stake in Lithium Americas, which is developing one of the world’s largest lithium mines in Nevada.

Under that deal, the Energy Department will take a five percent equity stake in the company and its Thacker Pass lithium mining project, a joint venture with General Motors.

‘Not gentle’

“These are not benign investments by corporations in the open market,” Harman said. “These are investments by government entities in the United States … when we have a difficult, strained relationship with that government.”

Harman says that when a foreign government buys a stake in a company, it raises concerns Will the political interests of that government prevail?Ate its activities.

He also warned that critical technologies and sensitive information could be directed to a government that is not in Canada’s interests.

In the case of America, HarmaAnn notes that the current administration already has policies against Canadian interests.

“Even a small stake by a foreign state can influence the activities of the company concerned. So, yes, Canada has to pay attention to these matters.”

Harman says the federal government should keep these investments on its radar screen and possibly subject them to national security review.

Under the Investment Canada Act, Ottawa can review any foreign government investment. The guidelines for the critical minerals sector were further tightened in 2022.

From then on, the government will only approve “significant” foreign state investment in that sector on an “exceptional basis”, meaning there must be a clear “net benefit” to Canada.

But the enhanced guidelines state that prospective foreign state investors in critical minerals may also be subject to national security review. This review will be initiated if the government has “reasonable grounds” to believe that the investment could be “detrimental” to Canada’s national security.

“Reasonable grounds” the government would consider could include the impact of the investment on the ability of Canadian supply chains to exploit the asset or access alternative sources. The Government will also consider the current geopolitical circumstances and potential impact on allied relations.

a few days later Act tightened, federal government orders Divestment of investments in Canadian critical minerals companies by three Chinese companies.

non-controlled investment

Sandy Walker, co-chair of the Denton Convocation and Foreign Investment Review Group, says Because the Trump administration’s stakes in Canadian companies are non-controlled investments, they cannot raise significant issues.

Also, especially in current politics“In any climate, the Canadian government will not want to express reservations about them as it continues to work on a trade deal and a comprehensive security agreement with the United States,” she says.

However, it may cause some disruption to Canada if the US government insists on minerals from Some of these mines, once operational, go only to the U.S., Walker said.

“This would be something that could concern the Canadian government,” he said. “This will impact domestic supply chains.”

In a statement to CBC News, Canada’s Ministry of Innovation, Science and Economic Development saidForeign investments in critical minerals will be reviewed “in the best interests of Canadians”, but will not comment on specific investments, citing confidentiality provisions of the Act.

But David Rosner, who heads the competition and foreign investment group at Toronto-based business law firm Goodmans LLP, says he doesn’t think the deal is a strong candidate for national security concerns, partly because the U.S. governments’ stakes are smaller.

Rosner also says that, even though the companies are headquartered in Vancouver, their mining assets are in the United States.

He said, “If the United States government was conscious of taking action regarding mining assets, it could do so, because it is within their territory.”

Rosner said the types of transactions Ottawa has previously taken action against governments not aligned with CANDA This deals with matters such as critical mineral supplies.

He said that despite recent differences, it is unlikely that “Canada is unfairly aligned with the United States.”

However, if there is a new trend Foreign governments are investing in critical minerals companies, which will be needed for development. A new Canadian policy to maintain that trend, he said.

“And concerns may emerge from that policy process.”