Chinese investment in Canada's core minerals continues despite regulations

Chinese investments in Canada: A recent study by the University of Alberta reveals that Chinese investments in Toronto-listed miners in Canada's critical minerals sector have persisted, a year after the country tightened foreign investment regulations in this area.

Despite Canada's actions forcing three Chinese investors to divest from Canadian critical mineral companies in 2022, investments from China and Hong Kong into Canada's critical mineral sector soared to C$ 2.2 billion ($1.6 billion) in 2023, up significantly from C$62 million in 2022.

Canada implemented additional scrutiny for inbound deals in critical minerals in October 2022, without specifying the countries whose investments would be scrutinised. This move aims to protect the critical minerals sector, deemed strategic for Canada's national security.

Dean McPherson, Head of Mining at TMX Group Ltd, noted that Chinese investors are not deterred by perceived blockades and are willing to take risks in Canada.

Daniel Lincoln from The China Institute suggests that Canada may struggle to regulate all Chinese mining acquisitions, especially when both parties are keen on the transaction, despite provisions in the Investment Canada Act.

In a recent example, China's Zijin Mining Group offered to buy a 15 per cent stake in Solaris Resources Inc for C$130 million. While copper is considered a critical mineral in Canada, this deal is likely to be approved as the funds will be used to develop Solaris' copper-gold project in Ecuador.

Chinese investors have historically been active in Canada's mining sector, investing C$21 billion between 1993 and 2023. Last year, copper companies were the primary targets for Chinese investors.

Smaller miners and explorers have been lobbying for more Chinese investments, citing challenges in raising capital. Some companies have even considered relocating their incorporation to facilitate funding.

Despite these developments, Canada remains committed to evaluating each investment on its merits to maintain its openness to necessary foreign direct investment.

(with Reuters inputs)