The Trump administration has bought a stake in two critical Canadian companies. mining companies, a move that experts consider certainly unusual, if not extraordinary, and that raise questions about whether Ottawa should block them in the interest of national security.
is “p“It is possibly unprecedented that the United States government itself is buying a stake in a Canadian company,” said Lawrence Herman, an international lawyer and senior fellow at the CD Howe Institute.
Canada should be concerned, he said, “about any foreign state purchasing interests in a Canadian company, especially in the critical and sensitive minerals sector.” Those minerals include lithium, copper, nickel and others that are essential to modern technology.
The White House announced last week that it would spend $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 developed. The United States government also has options to increase their participation and the right to appoint a member of the company’s board of directors.
It is also necessarywith a minority stake in Lithium Americas, another Vancouver-based company, which is developing one of the world’s largest lithium mines in Nevada.
Under that deal, the Department of Energy will take a five percent equity stake in the company and a five percent stake in its Thacker Pass lithium mining project, a joint venture with General Motors.
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‘Not benign’
“These are not benign investments in the open market by corporations,” Herman said. “These are investments by government entities in the United States … when we have a difficult and tense relationship with that government.”
Herman says that when a foreign government buys a stake in a company, it raises concerns about whether the political interests of that government will come to dominateate their activities.
It also warns that critical technologies and sensitive information could be directed to that government, which is not in the best interest of Canadian interests.
In the case of the United States, Herman points out that the current administration already has policies against Canadian interests.
“Even a small shareholding by a foreign state can influence the activities of the company in question. So yes, Canada has to be attentive to these issues.”
The federal government should put these investments on its radar and possibly subject them to a national security review, Herman says.
Under the Investment Canada Act, Ottawa can review investments by any foreign government. The guidelines were even tightened, in 2022, for the critical minerals sector.
Since then, the government will only approve “significant” foreign state investments in that sector on an “exceptional” basis, meaning there has to be a clear “net benefit” to Canada.
But the strengthened guidelines state that a potential foreign state investor in critical minerals could also be subject to a national security review. This review would be triggered if the government has “reasonable grounds” to believe the investment could be “detrimental” to Canada’s national security.
The “reasonable grounds” the government would consider include the effect the investment may have on the ability of Canadian supply chains to exploit the asset or access alternative sources. The government would also consider the current geopolitical circumstances and the potential impact on allied relations.
Just a few days after the The law became stricter, the federal government ordered the Divestment of investments in Canadian critical minerals companies by three Chinese companies.
Non-controlling investments
Sandy Walker, co-chair of the Dentons Calls and Foreign Investment Review Group, says Because the Trump administration’s stakes in Canadian companies are non-controlling investments, they may not raise major issues.
Furthermore, particularly in the current political situationTo the climate, the Canadian government may not want to express reservations about them while it continues to work on a trade agreement and a broader security agreement with the United States, he says.
However, what might give Canada pause is if the US government insisted that minerals of Some of these mines, once they are operational, only go to the United States, Walker said.
“That would be the kind of thing that might worry the Canadian government,” he said. “That would involve domestic supply chains.”
In a statement to CBC News, Canada’s Ministry of Innovation, Science and Economic Development saidForeign investments in critical minerals will be reviewed “in the best interests of Canadians,” but he will not comment on specific investments, citing the law’s confidentiality provisions.
But David Rosner, who heads the Competition and Foreign Investment Group at Toronto-based law firm Goodmans LLP, says he doesn’t think the deal itself is a strong candidate for national security concerns, in part because the stakes for U.S. governments are small.
Rosner also says that although the companies are based in Vancouver, their mining assets are in the United States.
“If the United States government was conscious of taking action regarding mining assets, it could do so, because it is on its territory,” he said.
Rosner added that the types of transactions in which Ottawa has previously taken action involving governments not aligned with Caanda when These are issues such as the supply of critical minerals.
He said that despite recent friction, there is unlikely to be a belief that “Canada is significantly out of alignment with the United States.”
However, if there is a new trend of foreign governments investing in critical mining companies, that will require the development of. a new Canadian policy to keep up with that trend, he said.
“And that political process could raise concerns.”
