Chinese mining investments face pressure

A little over a year after Canada’s big “crackdown” on Chinese investment in mining, companies are still lining up to pour money into the sector. 

What happened: Chinese mining giant, Zijin, plans to invest $130 million for a 15% stake in Vancouver-based critical minerals company Solaris Resources, the latest in a string of proposed investments by China-based firms into Canada’s critical minerals industry. 

  • If the investment passes a national security review, it would give Zijin — a rising mining power in Canada — a sizeable influence on the direction of Solaris.

  • In 2019, the feds approved the acquisition of the Tanco lithium mine in Manitoba by Chinese firm Sinomine, which now exports lithium back to China for its EV industry.

Why it matters: According to The Globe and Mailthe deal will test the limits of a recent crackdown on Chinese investment in the mining sector. In 2022, several companies were ordered to divest from Chinese money, and Canadian companies were virtually banned from being acquired by Chinese buyers.  

  • China runs the global critical minerals supply chain, including lithium, cobalt, and graphite. It’s used this control to hurt Western companies, especially automakers.

  • Lithium and graphite, as well as copper and nickel, are seen as key resources in the green energy transition since they’re used in EV batteries and other energy sources.

Big picture: Some Canadian firms haven’t bothered to seek approval for deals, with one miner, SRG Mining, even proposing to move its headquarters out of Canada. There’s a tough balancing act ahead: limiting Chinese influence without scaring away the industry’s heavy hitters.—LA