Vancouver critical minerals companies face strategic dilemma over Chinese investment – Vancouver Sun | CarTailz

Mining companies Power Metals Corp. and Vancouver-based Ultra Lithium are in a strategic relationship with Chinese investors that Ottawa has appointed.

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Ottawa’s decision to limit investments by Chinese state-owned companies in so-called “critical minerals” is short-sighted, says a Vancouver exploration company losing a stake from one such investor. However, Asia experts considered the German government’s increasingly aggressive stance to be overdue.

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Of three companies ordered to divest stakes in Canadian exploration companies, two — Sinomine Rare Metals Resources and Zangge Mining Investment — held interests in Vancouver-based companies that had deposits of lithium, a key component in rechargeable batteries, and either Exploring cesium or tantalum, rare earth elements critical to electronic components.

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Countries are increasingly treating such minerals as strategic assets, including Canada.

In a way, German Industry Minister Francois-Philippe Champagne’s decision “is a signal to other companies that they need to be aware of geopolitical risks,” said Asia trade expert Yves Tiberghien, a professor of political science at the University of BC

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But the chairman of Vancouver’s Power Metals wonders how champagne handles it. Jonathan More said he has no problem with Canada trying to secure its strategic interest because “I’m Canadian”.

But Ottawa needs to consider how Canadian firms can replace the investments that less risk-averse Chinese firms have been willing to make.

“Why aren’t they (cabinet ministers) there with their checkbooks,” More said. “Where will the money come from?”

Last January, Sinomine invested $1.5 million in Power Metals to buy just over 5 percent of the company and the right to secure rare earth element supplies from its Case Lake property in northeastern Ontario.

This ore would be destined for the only cesium processing facility in Canada that Sinomine already owns in Manitoba. This facility is associated with the Tanco mine, which Sinomine purchased outright in 2019 without protest from Industry Canada.

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“The government seems to have a grandiose plan to control this, but they kind of miss the point where they’re not helping the supply chain problem because (nothing else) is in place,” More said.

Losing Sinomines $1.5 million will not have a major impact on Power Metals, More said. The company still has sufficient resources to continue exploration work, but he is concerned about the potential chilling effect Ottawa’s decision will have on other foreign investors looking at Canadian companies across the base metals sector.

Yves Tiberghien is Professor of Political Science at UBC.
Yves Tiberghien is Professor of Political Science at UBC. Photo from handout /Vancouver sun

Tiberghien acknowledged that Canada’s abrupt change in direction of Chinese investment in Canadian exploration of critical minerals — Sinomine finalized its deal with Power Metals last January, and Zangge invested $4.14 million in Vancouver-headquartered Ultra Lithium in February — has caused some collateral damage will cause.

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However, the rapidly changing geopolitical scene that has led to the US distancing itself from China in what is effectively a new Cold War and countries other than China treating critical minerals as strategic assets cannot be ignored.

That, Tiberghien says, should tell companies, “You can’t just carry on as you are. It’s a new world out there,” and the conditions are dramatically different than they were three years ago.

“Canada was a liberal believer in markets, but those markets are no longer markets,” Tiberghien said of critical minerals. “They are increasingly strategic spaces” where countries like China, the US, Japan and South Korea seek more direct control.

Critical minerals are key to the move towards green and digital technology that will transform the global economy over the next 20 years, Tiberghien argued.

“It’s a strategic fight,” said Tiberghien. “Those who lead will end up with jobs, security and prosperity. Those who fall behind will only be poor and pushed around by others. This is the reality of industrial revolutions.”

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