Canada Orders Three Chinese Companies Out of Its Critical Minerals Deals Over ‘Security Concerns’
09:38 GMT, 3 November 2022
Earlier in the year, after similar moves by the US, Australia, New Zealand and the UK, Canada became the final member of the Five Eyes intelligence-sharing group to ban or restrict China’s telecom giant Huawei's access to the country's 5G networks, citing alleged espionage concerns.
SputnikA trio of Chinese resource companies have been ordered by Ottawa to sell their interests in Canadian critical mineral firms as part of the attempt to limit the Asian giant's clout under the pretext of
espionage concerns.
Sinomine (Hong Kong) Rare Metals Resources Co Ltd is to sell its stake in Vancouver-based Power Metals Corp, Chengze Lithium International Ltd has been ordered to quit Calgary-based Lithium Chile Inc, and Zangge Mining Investment (Chengdu) Co Ltd has been instructed to withdraw from Vancouver-based Ultra Lithium Inc, the Canadian government announced in a statement on 2 November.
“These companies were reviewed via the multi-step national security review process, which involves rigorous scrutiny by Canada’s national security and intelligence community,” Canadian Industry Minister Francois-Philippe Champagne said in the statement.
“The government’s decisions are based on facts and evidence and on the advice of critical minerals subject matter experts, Canada’s security and intelligence community, and other government partners.”
The Canadian federal government’s order comes after Ottawa had already tightened rules regarding new investments in Canada’s critical minerals sector last week. On 28 October it was announced that any transactions involving investments by state-owned firms into Canadian critical minerals companies were to be approved on an “exceptional basis”. The rule takes no account of the size of investment, and includes non-controlling stakes relating to Canada’s resource industry, ranging from exploration and development to mining and refining.
Canada has large deposits of critical minerals, with around 200 active mines. The country is a key global producer of copper, nickel and cobalt and boasts mineral projects for rare earth elements such as lithium, graphite and vanadium.
As China has invested heavily in overseas mines, including in Canada, for its critical mineral refining and processing needs, Ottawa and its allies have been trying to erode Beijing’s dominance.
As was the case with the Washington-spearheaded Huawei crackdown, when the Chinese telecom giant found itself in the crosshairs of America's allies, Canada and the US have been identifying dozens of minerals and metals they deem essential while claiming potential national security threats emanating from Beijing. In June, US Treasury Secretary Janet Yellen visited Ottawa and highlighted the need for "friend-shoring", saying:
"So, friend-shoring is the idea that countries that espouse a common set of values about international trade, conduct in the global economy, should trade and get the benefits of trade so we have multiple sources of supply and are not reliant excessively on sourcing critical goods from countries where we have geopolitical concerns."
'Weaponizing' World Economy
China is currently the dominant global player in refining and processing of 16 minerals essential to cutting-edge technologies, according to the US Geological Survey. Critical minerals and metals, such as lithium, cadmium, nickel and cobalt, are essential for developing advanced technologies for electric vehicles, solar panels, wind energy generation, computers, fibre-optic cables, semi-conductors, batteries, as well as having diverse defense, aerospace and medical applications.
Weighing in on recent moves by the US, such as the Joe Biden administration's latest export
restrictions on high-tech semiconductor chips to China, the country's Foreign Ministry spokesman Zhao Lijian said on 2 November:
"The US has coerced its allies to join in suppressing China’s economic development. This can only cause huge damage to the stability of global industrial and supply chains, seriously violate free trade rules and gravely undermine the economic development of countries and the wellbeing of their people. We will continue to work with the international community to oppose the US’ economic coercion and bullying practices to jointly keep the world economic system, rules and foundation stable."
Beijing also denounced the latest statements made by Australia, as minister for resources Madeleine King said that her country could act as a potential resource alternative to China.
“Australia’s critical minerals are at the centre of an important moment in history which could dictate the shape of the world that we will live in for the next century,” King said at a conference hosted by the Australian National University (ANU), adding later in a media interview that it was the government’s intention to “make the most of the natural endowment we have of these resources, so that we can provide an alternative source of them from China”.
Zhao warned Canberra not to use its large deposits as a “political tool or weapon”.
"Countries need to face their due responsibilities in the global supply of relevant minerals, and ensure the normal functioning of relevant trade and economic cooperation. No one should use the economy as a political tool or weapon, destabilize the global industrial and supply chains or punch the existing world economic system," Zhao said.
Earlier this year, the Canadian government
banned Huawei and ZTE products and services and ordered companies who use such items to remove them, with the Minister of Innovation, Science and Industry Francois-Philippe Champagne announcing that the decision was made after a thorough review by independent security agencies and in consultation with Canada's closest allies. Before that, four members of the so-called Five Eyes intelligence-sharing alliance - the US, UK, Australia and New Zealand - had already banned or restricted Huawei from their 5G network, citing alleged threats to their national security.
In response, China's ambassador to Canada, Cong Peiwu, slammed warnings "invented" by the US against Huawei, saying:
"Not a single country or organisation that has been using Huawei's products suggested or expressed security concerns. It is invented by the United States, and the main purpose for that is to crack down on Huawei."
29 October 2022, 07:41 GMT
‘Politicization’ of Economic Cooperation
Canada and its allies are working hard to try and undermine China's leadership role in the sphere of critical minerals supply, Zheng Angguang, Deputy Dean of the Institute of International Relations, Nanjing University told Sputnik.
They are seeking to build a supply chain that relies on partners that Washington and its allies consider “more stable” and “reliable". This is yet another example of the politicization of trade and economic cooperation, reflecting the blatant ideological bias and double standards embraced by the United States and its allies, Zheng added.
Such a pattern of behavior not only endangers the legitimate interests and rights of Chinese companies, but also affects Canada's own interests and undermines the development of industries in which it specializes, Zheng said.
Allowing politics to influence Canada's investment environment and reputation may result in erosion of the integrity and sustainability of the global production chain of key minerals, which play a key role in areas such as new energy sources, the expert pointed out.
“China is not only a key market for associated minerals, but also has the most advanced mining and processing technologies, as well as the most complete production cycle in the world. You cannot rely only on Canada and its allies in the development of related industries,” Zheng concluded.