The Trump administration has acquired stakes in two critical Canadian companies. mining companies, this step, according to experts, is certainly unusual, if not extraordinary, and which raise questions about whether Ottawa should block them in the interests of national security.
This is “p”“buying a stake in a Canadian company is perhaps unprecedented for the US government itself,” said Lawrence Herman, an international lawyer and senior fellow at the CD Howe Institute.
Canada should be concerned, he said, about “any foreign interest in purchasing a Canadian company, particularly in the sensitive critical minerals sector.” These minerals include lithium, copper, nickel and others that are essential for modern technology.
The White House announced last week he spent US$35.6 million for a 10 percent stake in Vancouver-based Trilogy Metals Inc., which has mining interests in Alaska that the U.S. government wants to see developed. The US government also has options to increase their share and the right to appoint a member to the company’s board of directors.
This is also trueit owns a minority stake in Lithium Americas, another Vancouver-based company that is developing one of the world's largest lithium mines in Nevada.
Under the terms of the deal, the Department of Energy will receive a five percent stake in the company and a five percent stake in its Thacker Pass lithium project, a joint venture with General Motors.
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“Not benign”
“This is not a benign investment by corporations on the open market,” Herman said. “This is an investment by government entities in the United States … when we have a difficult, tense relationship with this government.”
Herman says that when a foreign government buys a stake in a company, it raises concerns about will the political interests of this government dominateate my activity.
It also warns that critical technology and sensitive information could be sent to this government, which is not in Canada's interests.
In the case of the US German notes that the current administration is already pursuing policies that are against Canadian interests.
“Even a small stake in a foreign country can impact the performance of the company concerned. So yes, Canada needs to be sensitive to these issues.”
The federal government should take a look at these investments and possibly subject them to national security review, Herman says.
Under the Investment Canada Act, Ottawa can review investments by any foreign government. In 2022, the rules were even tightened for the critical minerals sector.
From then on, the government will only approve “significant” foreign public investment in the sector on an “exceptional basis,” meaning there must be a clear “net benefit” for Canada.
But the expanded guidelines say a potential foreign government investor in critical minerals could also be subject to national security scrutiny. This review will be triggered if the government has “reasonable grounds” to believe the investment could be “harmful” to Canada’s national security.
The “reasonable grounds” the government will consider include the impact that the investment may have on the ability of Canadian supply chains to operate the asset or access alternative sources. The government will also consider current geopolitical circumstances and the potential impact on alliance relations.
Just a few days after The law was strengthened, the federal government ordered sale of investments in Canadian mining companies by three Chinese companies.
Non-controlling investments
Sandy Walker, co-chair of the Dentons Convocation and Foreign Investment Review Group, says: Because the Trump administration's stakes in Canadian companies are non-controlling investments, they may not pose significant problems.
Moreover, especially in the current political situationUnder such circumstances, the Canadian government may be reluctant to express reservations on the issue as it continues to work on a trade and broader security agreement with the United States, she says.
However, what might give Canada some pause is if the US government insists that minerals from some of those mines, when they come online, will only go to the U.S., Walker said.
“That would be a concern for the Canadian government,” she said. “This will impact domestic supply chains.”
In a statement to CBC News, Innovation, Science and Economic Development Canada saidd Foreign investments in critical minerals will be considered “in the best interests of Canadians” but will not comment on specific investments, citing privacy legislation provisions.
But David Rosner, who heads the competition and foreign investment group at Toronto-based law firm Goodmans LLP, says he doesn't believe the deal itself is a strong candidate for addressing national security concerns, in part because the U.S. government stakes are low.
Rosner also says that while the companies are headquartered in Vancouver, their mining assets are in the United States.
“If the United States government recognized the need to take action on mining assets, they could do so because they are on their territory,” he said.
Rosner added that the types of transactions in which Ottawa has previously taken action involving non-Kaanda governments when this concerns issues such as the supply of critical minerals.
He said that despite recent disagreements, it is unlikely that there is a perception that “Canada is significantly at odds with the United States.”
However, if a new trend appears foreign governments investing in critical mining companies, which will require development. New Canadian policies will keep pace with this trend, he said.
“And concerns may arise as a result of this political process.”
