Chinese Firm Looks to Acquire Vancouver Lithium Company Shares Despite Ottawa’s Toughening Stance

 

Another Chinese firm is seeking to acquire shares of a Vancouver-based lithium company, a move that defies Ottawa’s efforts to safeguard the sensitive critical mineral sector from China’s involvement.

In 2022, Innovation Minister Francois-Philippe Champagne directed three Chinese companies to divest from Canadian lithium firms, aiming to restrict foreign government investments in the critical minerals supply chain, saying that he would only allow Chinese state-owned firms to invest in Canadian critical minerals companies under exceptional circumstances.

The federal government reiterated this stance in an August 2023 statement, clarifying the application of the Investment Canada Act for foreign state-owned enterprises seeking to invest in Canada’s critical minerals sector.

Despite Ottawa’s efforts to tighten regulations, Chinese companies persist in pursuing opportunities in the sector. The most recent example is a US$70 million investment by China-based Ganfeng Lithium in Vancouver-based Lithium Argentina.

On March 5, Lithium Argentina revealed an agreement with Ganfeng for the acquisition of a 15 percent stake in its indirectly wholly-owned subsidiary, Proyecto Pastos Grandes. This subsidiary manages an advanced-stage lithium brine project, Pastos Grandes, in the northwest city of Salta, Argentina.

Ganfeng has the right to acquire an additional 50 percent of the Argentine lithium project for US$330 million in case of a change in control of Lithium Argentina, the release said.

This is the second time in recent years that a Chinese company has tried to take control of Pastos Grandes. In 2021, Contemporary Amperex Technology Co. Ltd. (CATL), a major electric car battery manufacturer, tried to buy Canada’s Millennial Lithium Corp., which owned Pastos Grandes at that time.

However, Lithium Americas, the predecessor to Lithium Argentina, outbid CATL’s offer for Millennial Lithium. Lithium Argentina said in the March 5 release that it later acquired the Pastos Grandes project through its acquisition of Millennial in early 2022.

Lithium Argentina stated that its agreement with Ganfeng is “subject to certain conditions,” including regulatory approvals from the People’s Republic of China and settlement of relevant transaction agreements.

Chinese Investments

China currently dominates the global critical minerals supply chain, holding an 80 percent market share in some cases. Major players from the country have continued to make investments in Canada over the past few years.

US House Oversight Committee’s Hearing on Securing the Critical Mineral Supply Chain

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In another recent investment in the Canadian critical mineral sector, China-based Zijin Mining Group entered a subscription agreement with Vancouver’s Solaris Resources Inc.

On Jan. 11, Solaris disclosed the $130 million deal, involving Zijin’s private placement of Solaris common shares at $4.55 per share by a Zijin affiliate. A private placement is the sale of stock shares or bonds to selected investors and institutions rather than on the open market.

In December, Conservative MPs also expressed concerns about another Chinese investment. Tory innovation critic MP Rick Perkins and MP Shuvaloy Majumdar called for a national security review of Shenghe Resources, a partially state-owned Chinese rare-earth miner, acquiring substantial shares in Vital Metals.

Vital Metals, headquartered in Sydney, Australia, says on its website that it is Canada’s first rare earths mining company. It began mining at the Nechalacho rare earth mine in the Northwest Territories in 2021 and has another project at Wigu Hill, Tanzania.

In April 2022, China-based company Sichuan Yahua Industrial Group Co. Ltd. announced its plan to acquire 13.2 percent of Ultra Lithium Inc., a Vancouver-based lithium and gold exploration firm.

Both lithium and rare earths are among the 31 minerals classified by the Canadian government as “critical” for national security, innovation and economic development, and various “green energy” applications.