- China says Canada has broken trade and market rules
- Chinese company stocks fall
- Companies say don’t expect a huge impact on performance
OTTAWA/BEIJING (Reuters) – Canada on Wednesday ordered three Chinese companies to liquidate their investments in Canada’s critical minerals, citing national security.
In response, China accused Ottawa of using national security as an excuse and said the divestment order violated international trade and market rules.
As countries vie to shore up reserves of materials needed to transition to a cleaner economy, the news pushed shares of Chinese companies lower on Thursday, although they said in stock exchange filings they did not expect a significant impact on their performance.
The three who were ordered to liquidate their investments are Sinomine (Hong Kong) Rare Metals Resources Co Ltd, Chengze Lithium International Ltd, also headquartered in Hong Kong, and Zangge Mining Investment (Chengdu) Co Ltd.
Canadian Industry Minister Francois-Philippe Champagne said in a statement that the Canadian government had ordered the withdrawal of foreign companies after “rigorous scrutiny” by the Canadian National Security and Intelligence Community.
“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our vital mineral supply chains, both at home and abroad,” Champagne said.
Sinomine was asked to sell its investment in Power Metals Corp (PWM.V)Chengze Lithium was asked to withdraw its investment in Lithium Chile Inc (LITH.V) And Zangge Mining Wanted To Exit Ultra Lithium Inc (ULT.V).
Chinese Foreign Ministry spokesman Zhao Lijian said the Canadian government is using national security as an excuse to prevent normal cooperation between Chinese and Canadian companies and harm global supply chains.
“China urges Canada to stop the unreasonable targeting of Chinese companies (in Canada) and provide them with a fair, impartial and non-discriminatory business environment,” Zhao said at a regular press briefing, adding that Beijing will resolutely defend the legitimate rights and interests of Chinese companies.
Spot lithium prices are up more than 200% in the past year, driven by supply constraints that are expected to continue.
Rystad Energy forecast primary lithium metal supply to be 8.5% less than total lithium demand in 2025, compared to about 10% less demand this year.
“The latest stand from Ottawa highlights global competition for bio-battery metals in light of the expected surge in demand for EV batteries,” Susan Zou, senior analyst at Rystad Energy, said of Canada’s decision.
Sinomine Resources’ share price fell 7.8% to 86.74 yuan ($11.86) Thursday, while Chengxin’s share price fell as much as 4% but closed 0.7% higher at 45.65 yuan. Zangge Mining’s share price fell 3.7% on the day before rising 1.1% to close at 28.96 yuan.
Last week, Ottawa said it should build a resilient vital minerals supply chain with like-minded partners, as it outlined rules aimed at protecting the country’s vital mineral sectors from foreign state-owned companies.
“The federal government is determined to work with Canadian companies to attract foreign direct investment from partners who share our interests and values,” Champagne said.
Canada has large deposits of important minerals such as nickel and cobalt that are necessary for cleaner energy and other technologies. The demand for metals is expected to expand in the coming decades.
Earlier this year, countries including Britain, Canada and the United States established a partnership aimed at securing supplies of important minerals while increasing global demand for them.
(dollar = 7.3163 Chinese yuan)
Additional reporting by Ismail Shakeel in Ottawa and Si Liu in Beijing; Additional reporting by Eduardo Baptista in Beijing; Editing by Chris Reese, Sandra Mahler and Barbara Lewis
Our criteria: Thomson Reuters Trust Principles.
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