Exclusive-Canada won’t force Chinese state investors to divest from Teck, First Quantum By Reuters

By Divya Rajagopal

TORONTO (Reuters) – Canada will not force Chinese state investors in three of its big mining companies to divest as such a move would create political uncertainty, the natural resources minister told Reuters.

In November, Canada had asked three Chinese companies to sell their stakes in Toronto-listed lithium explorers following a national security review, drawing criticism from the mining industry and raising questions about the future of other Chinese investments in the Canadian mining industry.

“If you start looking back at investments, it will create all sorts of uncertainty about whether an investment is really an investment,” Natural Resources Minister Jonathan Wilkinson said in an interview Tuesday night on the sidelines of the Association. Prospectors and Developers of Canada (PDAC) conference in Toronto.

Three of Canada’s largest mining companies: Teck Resources (NYSE:), Ivanhoe Mines (OTC:) Limited and First Quantum Minerals (OTC:) Limited, count Chinese state-owned companies as their largest single shareholder.

This is the first time that Canadian government officials have clarified what the future holds for other Chinese investments in the three Canadian mining companies.

According to Refinitiv data, the sovereign wealth fund China Investment Corp owns a 10.3% stake in Teck, the Chinese state-owned CITIC Metal Group owns 26% in Ivanhoe Mines, while China’s largest producer, Jiangxi Copper Corp Ltd, owns 18.3% in First Quantum (NASDAQ: ) Minerals.

First Quantum shares rose 3.6% on Wednesday, also helped by news that the Panamanian government and the miner have agreed on the final text of a contract to operate a key copper mine. Ivanhoe gained 2% while Teck rose 1.3%.

Canada’s move late last year has concerned the country’s smaller mining companies seeking to raise funds for exploration for critical metals.

Wilkinson added that Canada remains concerned about Chinese state-owned companies having “control” of Canadian mining companies through mechanisms such as long-term purchase agreements, where buyers secure exclusive long-term supply of metals at a set price. .

Canada and its allies are seeking to disengage from China in a bid to diversify their supply chain into battery metals.

In the spring of this year, Canada will introduce a revamped Investment Canada Act that will disallow or place conditions on foreign investment that the government deems a threat to its national security.

But Wilkinson clarified that Canada will continue to trade with China. “Of course, Canada will continue to have trade with China, some of that may involve trade in critical minerals.”

Ottawa’s forced sale of Chinese investments in Canadian mining companies has further riled Beijing and added to the widening rift between the two countries. Diplomatic tensions between Canada and China have risen since the detention of Huawei Technologies executive Meng Wanzhou in 2018 and Beijing’s subsequent arrest of two Canadians on espionage charges.

Last year, Canada launched a new strategy in the Indo-Pacific to challenge China on human rights issues, describing China as an “increasingly disruptive global power.”