Ottawa restricting foreign state-owned investments in critical minerals

The federal government is restricting the involvement of foreign state-owned companies in Canada's critical minerals sector amid a global rush for the resources and growing tensions with China.

Industry Minister Francois-Philippe Champagne and Natural Resources Minister Jonathan Wilkinson announced the new approach in a statement Friday, saying critical minerals are key to Canada's prosperity and security.

"Increasing demand and constrained supply of these all-important minerals are presenting Canada with a generational economic opportunity, and the government of Canada is committed to seizing that opportunity while delivering on its ambitious climate goals," the ministers said.

"While we continue to welcome foreign direct investment that supports this goal, Canada will act decisively when investments threaten our national security and our critical minerals supply chains."

The new rules will make it more difficult for companies owned or operated by foreign governments to buy or invest in the industry, with the government planning to set a higher bar for whether such a transaction is considered beneficial to Canada.

Among the factors that will be considered are the extent to which a foreign government might have control over Canadian assets, the amount of competition in the sector, and whether the deal might endanger Canadian security.

The new rules come as companies and countries around the world are moving to secure critical minerals such as aluminum, lithium and cobalt, many of which are vital for electronics and low-carbon technologies including semiconductors, batteries and electric-vehicle motors.

The rules also coincide with growing tensions with China, which has purchased or invested in Canadian mines and other natural resources to feed its own domestic industries.

The federal government is expected to release by the end of the year what it is calling a critical minerals strategy, which will seek to position the country as a leader in supplying the resources to industries and other countries around the world.