Ottawa surprised the mining world with its decision in November to bar three Chinese companies from buying stakes in Canada’s lithium businesses due to national security concerns.
Since then, investments from Chinese miners into Canadian companies that own properties containing minerals, such as lithium, copper or nickel, that are in high demand and needed for the energy transition away from fossil fuels have been unheard of.
In addition, Canada, the United States and other Western nations have taken steps to redesign their supply chains away from China, which dominates the production of critical minerals, and towards friendlier nations.
But one Chinese-owned mine in Manitoba, which until last year was Canada’s only producer of lithium, continues to produce a concentrate of the metal needed to make batteries that power electric vehicles.
Located about 160 kilometres northeast of Winnipeg, the Tantalum Mining Corp. of Canada Ltd., the Tanco mine as it’s known, has been owned by Sinomine Resource Group Co. Ltd., a Chinese public company, since 2019. It has been producing lithium since December 2021.
“I try not to let a lot of the external factors influence the day-to-day operations,” Joey Champagne, Tanco’s facility general manager in Manitoba, said. “We will have further discussions, as top management and leadership of the organization, about some of these topics, but from a Tanco operation perspective, we are still operating … and doing what, ultimately, we are here to do.”
The federal government’s order wasn’t directed at Sinomine’s control of Tanco, but it did ask the Chinese company to divest its shares from Vancouver-based Power Metals Corp. Champagne described the order as a “bit of a surprise,” but added it wasn’t “too detrimental” on Sinomine’s focus on growing its North American operations.
“Regardless of the things going on in the political background, Sinomine itself, ultimately, is a publicly traded company and from our side we want to be responsible and a good corporate citizen, not only here, but anywhere,” he said. “I don’t think it was worth the time and investment in trying further rebuttals (of the order).”
Why the federal government targeted Sinomine’s investment in Power Metals and not its control of Tanco is due to the details in the Investment Canada Act, the law that governs foreign investment in this country.
I try not to let a lot of the external factors influence the day-to-day operations
Joey Champagne, Tanco’s facility general manager
At the end of October 2022, Ottawa raised the bar that foreign companies need to clear to invest in Canada’s critical minerals industry by stating that such investments would lead to extended reviews by the government on the grounds that they could be injurious to national security.
A week later, Canada’s industry minister said the federal government had decided to order three Chinese companies to exit three Canadian lithium miners following a “multi-step national security review process.” China’s foreign ministry criticized the move at the time, with a spokesperson saying it went against the principle of a market economy and international trading rules.
The approval of these investments made by the Chinese companies had not been finalized, so Ottawa had room to reject them. Sinomine’s takeover of Tanco from Cabot Corp., however, took place in 2019, which is why the company wasn’t too worried about the operation, Champagne said.
“To be honest, there were no fears from the Tanco perspective, that’s due to the timing of the investment,” he said. “The change in ownership of Tanco happened three years previously. I am not a lawyer, but I am not sure any conditions that ultimately could have been met to make anything of the change.”
In March, Canada’s industry minister, François-Philippe Champagne, was asked at a press conference if he might try to nationalize the Tanco mine. He mentioned the limitations of the Investment Canada Act, but added he was hoping to modernize the act to increase the authority of the minister with an eye on forthcoming deals.
Tanco’s Champagne said he understands the federal government’s concerns, but added the company’s main goal is to expand locally and provide Canada with the lithium it needs in the future.
“What we want to do is just make sure we are continuing communications with government on all levels so that we can better educate them on our plans, on our strategies and really show them our commitment to keeping this industry local and growing in the area,” he said.
Tanco has an annual lithium production target of 30,000 tonnes, while North American Lithium, the only other project in Canada producing the metal, aims to extract 226,000 tonnes of lithium annually. The operation is owned by two Australian companies and started commercial production in March.
But Tanco hopes to expand and produce about 100,000 tonnes of lithium annually in the near future.
Tanco currently exports all its lithium to a sister company in China, where the concentrate is converted into a material that can be used to produce EV batteries, but Champagne hopes Tanco can do the conversion in Manitoba through a lithium chemical plant the miner is planning to build in the region within three years.
“The market is in need in this area for battery-grade products and we see that shift happening locally,” he said. “We prefer to keep growing the industry here locally; that’s our goal and plan.”
Champagne added that since Sinomine already has the talent and technology to run these kinds of chemical plants in other parts of the world, it would be easier for it to build and maintain such an operation compared to some other miners.
A spokesperson from Manitoba’s trade ministry said in a statement that while lithium development and exploration represent a significant opportunity for the Manitoba economy, “critical minerals must be developed in ways that respect Canada’s national security interest.”
The federal government’s industry ministry declined to comment.