Vital Metals: Canadian Government Allegedly Blocked Deal With China

by | 19. Jun 2024 - 09:57 | Politics

The North American country wants to bolster domestic value chains and scrutinize foreign investment in the mining industry more strictly.

Vital Metals, operator of Canada’s only rare earth mine, Nechalacho, has shelved the planned sale of its raw material to China, and the rare earths will now remain in the country for further processing (we reported). This was done at the instigation of the government; the original transaction was blocked, a high-ranking anonymous government source told AFP. Further interventions against Chinese investments in the Canadian mining sector could follow, the news agency continues. Vital Metals’ press release on Monday (PDF) only stated that the government recognizes Nechalacho as a strategic asset contributing to the country’s prosperity and important mineral objectives.

Resource-rich Canada already has a significant mining industry, and wants to become a leading producer of critical minerals such as rare earths, which are increasingly in demand due to the global energy transition. To date, China has dominated the mining and, above all, processing of rare earths. Canada had already blocked investments by three Chinese companies in the Canadian mining industry in the fall of 2022. In March this year, even stricter reviews of foreign investments in strategic sectors were announced for national security reasons. Shortly before this, Canada’s Minister of Natural Resources, Jonathan Wilkinson, told Bloomberg (paywall) that Chinese investment could not be the solution for domestic mining companies looking for financial support.

Vital Metals had also sold shares to the Chinese group Shenghe, the original buyer for the rare earth material. Instead, the raw materials will go to the Saskatchewan Research Council, a government-funded research organization currently building Canada’s first processing plant for rare earths. Vital Metals had to put its own plans for constructing such a plant on hold due to a lack of economic viability.

Photo: iStock/dbvirago

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