The Trump administration is investing in important Canadian metals companies. But Ottawa can stop that

The Trump administration bought a stake in two Canadian companies mining companies, a move experts say is certainly unusual, if not extraordinary. Which raises questions about whether Ottawa should ban it in the interest of national security.

It’s p“It is unprecedented for the US government itself to buy a stake in a Canadian company,” said Lawrence Herman, an international lawyer and senior fellow at the CD Howe Institute.

He said Canada should be concerned “about any foreign country purchasing an interest in a Canadian company, especially in the delicate and sensitive metals sector.” These minerals include lithium, copper, nickel and other minerals essential to modern technology.

The White House announced last week It was spending 35.6 million US dollars For a 10 percent stake in Vancouver-based Trilogy Metals Inc., which has mining interests in Alaska that the U.S. government wants to develop. The US government also has options to increase Its share and the right to appoint a member on the company’s board of directors.

It isAcquire a minority stake in Lithium Americas, another Vancouver-headquartered company developing one of the world’s largest lithium mines in Nevada.

Under this deal, the Department of Energy will receive a five percent stake in the company and a five percent stake in the Thacker Pass lithium mining project, a joint venture with General Motors.

“It’s not benign”

“These are not benign open market investments by companies,” Herman said. “These are investments by government entities in the United States… when we have a difficult and tense relationship with that government.”

Herman says that when a foreign government buys a stake in a company it raises concerns about it Whether the political interests of that government will prevailaddressed its activities.

It also warns that important technologies and sensitive information could be directed to that government, which is not in Canadian interests.

In the case of the United States, HERMAHe notes that the current administration already has policies against Canadian interests.

“Even a small contribution by a foreign country can affect the activities of the company in question. So, yes, Canada should be attentive to these matters.”

The federal government should put these investments on its radar screen and perhaps subject them to national security review, Herman says.

Under the Investment Canada Act, Ottawa can review the investments of any foreign government. The guidelines were tightened in 2022 for the vital minerals sector.

From then on, the government will only approve “significant” foreign state investments in the sector on an “exceptional basis,” meaning there must be a clear “net benefit” to Canada.

But the strengthened guidelines stipulate that a potential foreign investor in critical minerals can also be subject to a national security review. This review will be triggered if the government has “reasonable grounds” to believe that an investment may be “harmful” to Canada’s national security.

“Reasonable grounds” the government may consider include the impact the investment may have on the ability of Canadian supply chains to exploit assets or access alternative sources. The government will also take into account current geopolitical conditions and the potential impact on allied relations.

Just days after The law was tightened, and the federal government ordered – Liquidation of investments in important Canadian metals companies by three Chinese companies.

Non-controlling investments

says Sandy Walker, co-chair of the Dentons Convocation and External Investment Review Group Because the Trump administration’s stakes in Canadian companies are non-controlling investments, they may not raise significant issues.

Also, especially in current politicsShe says that given the climate, the Canadian government may not want to express reservations about it as it continues to work on a trade deal and a broader security agreement with the United States.

But what might give Canada pause is if the US government insists on it Metals from Some of these mines, once operational, go only to the United States, Walker said.

“That would be the thing that would concern the Canadian government,” she said. “This will implicate local supply chains.”

In a statement to CBC News, the Canadian Ministry of Innovation, Science and Economic Development saidForeign investments in critical minerals will be reviewed “in the best interest of Canadians,” but it will not comment on specific investments, citing confidentiality provisions in the law.

But David Rosner, who heads the competition and foreign investment group at Toronto-based business law firm Goodmans LLP, says he doesn’t think the deal itself is a strong candidate for national security concerns, in part because U.S. governments’ stakes are small.

Rosner also says that although the companies are headquartered in Vancouver, their mining assets are in the United States.

“If the US government is keen to take action regarding mining assets, they can do so, because they are located on their territory,” he said.

Rosner added that the types of transactions that… Ottawa has previously taken action regarding governments not allied with Canada when… This concerns matters such as the supply of important minerals.

Despite recent frictions, he said, there is unlikely to be a perception that “Canada is too out of sync with the United States.”

However, if there is a new trend Of foreign governments investing in important mineral companies, which will invite development. He said a new Canadian policy is needed to keep up with this trend.

“Concerns may arise from this political process.”