Yahoo Finance Champagne rebuffs criticism his anti-China stance will hurt miners, calling himself a 'hawk' on security
Industry Minister François-Philippe Champagne said that his sudden decision to block Chinese investments in three Canadian lithium companies last year was “well-received” by Canada’s partners and allies, as he tried to allay concerns by some miners that the move has had the unintended consequence of making the country a less desirable place to invest.
However, Champagne defended his decision, saying there is “more intersection today than ever before between national security and economic prosperity,” and that most of the world realizes that.
“I have been a hawk when it comes to these national security reviews,” Champagne said at a press conference at the Prospectors & Developers Association of Canada’s (PDAC) convention in Toronto on March 6. “I see a record number of people who want to invest in Canada, so I don’t have those concerns.”
Some miners have gone public with their worries that the federal government’s newfound emphasis on security could put a chill on investment and reduce the pool of funds from which Canadian companies can draw.
Robert Friedland, the founder of Ivanhoe Mines Ltd., one of Canada’s major mining companies, said at a PDAC session on March 5 that Canada’s crackdown on Chinese investment in critical minerals would make it more difficult for miners to produce the metals needed for the global energy transition. He said that junior miners would be deprived of Chinese capital.
Mark Bristow, chief executive of Barrick Gold Corp., the world’s second-largest gold miner, said in late January that it made “no sense” for Western nations to introduce policies and incentives that encourage deglobalization as a way to tackle the influence of authoritarian regimes in the energy sector when the world is already struggling to meet its climate goals.
A top executive from Calgary-based Lithium Chile Inc., one of the mines which lost its Chinese investment as a result of the order, described Ottawa’s move as “short-sighted” and “disappointing” in an interview with The Financial Post in mid-February. And in January, Toronto-based TMX Group Inc., which runs the S&P/TSX composite index and TSX Venture Exchange, said that Ottawa’s decision to order three Chinese companies to divest their stakes created “concern and uncertainty” among miners listed on the indices.
Champagne’s comments suggest he’s unmoved by the complaints, showing the extent to which geopolitics has shifted in recent years. When Prime Minister Justin Trudeau was elected in 2015, he hoped to become the first G7 country to do a free trade deal with China. Now, Trudeau’s government is embroiled in controversy over reports that Beijing interfered with the last federal election, suggesting there will be little hope of normalizing relations in the near future.
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For his part, the industry minister said the government has been “very clear and up front” with potential investors about what it thinks is “acceptable and not acceptable.”
Champagne last year said the order to remove the Chinese investors was the result of a “multi-step national security review process” taken under section 25.4(1) of the Investment Canada Act (ICA), which gives the government the power to require non-Canadians “to divest themselves of control” of a Canadian business if authorities believe the investment could be injurious to national security.
The government justified the decision by saying it was important to ensure Canada remained in control of critical minerals such as lithium, nickel and copper, which are used in electric vehicles (EVs) and are currently in high demand as countries look to meet their climate goals.
Analysts said the order was also part of a larger effort by the United States, bigger European economies and Canada to shift supply chains away from China, which dominates the EV industry, and towards friendlier nations.
In a bid to further strengthen foreign investment rules, Champagne tabled legislation in December that would give the industry ministry more time and authority to assess foreign transactions that might compromise national security, while also making penalties for violating the ICA more severe.
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