Government will only approve takeovers of large critical minerals companies in the “most exceptional of circumstances.”
In light of Swiss commodity giant Glencore receiving approval to acquire the metallurgy coal business of Canadian mining company Teck Resources, the Government in Ottawa issued new guidelines regarding foreign takeovers of large Canadian companies engaged in critical minerals. According to a statement by François-Philippe Champagne, Minister of Innovation, Science and Industry, Canada will only approve such transactions in the “most exceptional of circumstances.” The minister argues that critical minerals are becoming increasingly dragged into geopolitical competition because of their importance for high-tech and defense industries. He added that Canada still welcomes foreign capital but will scrutinize transactions more.
Raising the Topic of Net Benefit
Any foreign investment can already be subject to review by the Canadian Government under the Investment Canada Act. However, the new guidelines highlight the topic of net benefit. The Government may intervene if a transaction does not benefit the Canadian industry or competes with national interests.
Earlier this year, Minister Champagne announced plans for the Canadian Government to control foreign investment in key sectors more effectively, also referring to national interests. Then, in June, the Canadian Government allegedly blocked Vital Metals, a rare earth mining company, from selling raw materials to China. Instead, the resources used to manufacture permanent magnets, for example, remain in the country as they were sold to a government-funded organization.
Photo: iStock/Captured by Keeleigh
