Mine sale to Chinese fully vetted, minister says

The purchase of Canadian mining company Neo-lithium and its mine in Argentina by a Chinese enterprise was adequately reviewed for national security risks, Industry Minister François-philippe Champagne said Thursday.

“Transactions involving critical minerals are systematically and thoroughly reviewed and scrutinized. Neo-lithium was no exception. Let me be very clear: Neo-lithium was reviewed by the government and national security experts. Full stop,” Champagne told the House of Commons industry committee.

The committee launched hearings into the sale after the Conservatives criticized the government earlier this month for allowing it without launching the national security review process provided for in Section 25 of the Investment Canada Act.

Champagne defended the government’s decision not to trigger that review. He argued the government did consider national security implications in the initial review process it undertook to determine whether there was enough concern about the transaction to launch a national security review under Section 25.

Champagne said the national security review process is a multi-step one, and “from day one, security and intelligence agencies assess information and intelligence related to the Canadian asset being acquired.” He said investments that could be harmful to national security then go to the governor-in-council, which can order a further “extended review under Section 25 (3)” of the ICA.

He said that first step didn’t trigger an extended review because “there was sufficient information to make a determination at that stage of the review that no national security harm could arise as a result of this transaction.”

Neo-lithium announced in October that it would be acquired by Zijin Mining Group for $960 million. Lithium, which is on the Canadian government’s list of 31 critical minerals, is used to make batteries.

On Wednesday, experts told the committee the Neo-lithium sale by itself might not necessarily raise national security concerns, and that the location of the mine means that there was no way to ensure its product actually ends up in Canada. But the experts also cautioned the sale is part of an industrial strategy by China to become dominant in tech manufacturing, and told the MPS Canada needs to work on securing critical minerals production and supply chains.

Jeff Kucharski, a senior fellow at the Macdonald-laurier Institute and adjunct professor at Royal Roads University, told the committee it follows at least two other acquisitions of Canadian lithium companies by Chinese companies in the past few years, and the process under which the government considers each transaction on its own merits misses the big picture.