When the state-owned Chinese mining giant Zijin Mining Group made its bid to buy up Canadian lithium mining company Neo Lithium Corp, I imagine most people expected a strict formal national security review, and most would have expected a negative ruling. After all, Zijin has already bought out several Canadian copper and gold mining companies, and lithium is arguably an even more strategic resource.
It came as quite a slap in the face, then, when Industry Minister François-Philippe Champagne announced in record time (45 days, the fastest possible timeline for approval under the security review rules) that the takeover would be allowed. And no formal review was actually carried out, as the company itself confirms, despite recent updates to the Investment Canada Act, which brought in specific requirements for "enhanced scrutiny" of acquisitions of Canadian companies by state-controlled foreign entities.
Lithium, of course, is the new oil, a critical mineral essential for phones, computers, electric car battery production and many other high-tech uses. Canada currently has no lithium production or processing facilities, most of which are either owned, or in the process of being bought up, by China. And given the way China operates these days, do we really want to hand it complete control over such an essential mineral?
When questioned about why a more in-depth review was not carried out, Minister Champagne prevaricated and waffled. Granted, Neo Lithium does not actually have a Canadian lithium mine in its portfolio, just a mine in Argentina, but it's still puzzling why Champagne would conclude that lithium from "so far away" would not find its way into the Canadian supply chain.
He also states that lithium carbonate (which is what Neo Lithium is offering) is not of strategic value to Canada, whereas lithium hydroxide might be. In fact, lithium carbonate is extremely valuable, and more widely used in the industry than hydroxide (given the current shortage of lithium carbonate, some companies are even paying to turn hydroxide into carbonate).
Minister Champagne insists that a "rigorous" national security review was carried out, and concluded that the sale of the Canadian company was not against the national interest. However, he seems to be labouring under some serious misapprehensions, misapprehensions that are contributing to the continued hollowing out of Canadian industry. As Industry Minister, he needs to do better. And what is the security review system there for if not just this kind of transaction?
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