Canada orders three Chinese firms to exit lithium mining

Date:

  • China says Canada is violating trade and market rules
  • Shares of Chinese companies fall
  • Companies say they don’t expect a major impact on performance

OTTAWA/BEIJING, Nov. 2 (Reuters) – Canada on Wednesday ordered three Chinese companies to divest their investments in Canadian critical minerals, citing national security concerns.

In response, China accused Ottawa of using national security as a pretext, saying the divestment order broke international trade and market rules.

As countries battle to replenish the reserves of materials needed to transition to a cleaner economy, the news on Thursday pushed stocks of Chinese companies down, though they said in the filings they did not expect a major impact on their performance.

The three to divest are Sinomine (Hong Kong) Rare Metals Resources Co Ltd, Chengze Lithium International Ltd, also based in Hong Kong, and Zangge Mining Investment (Chengdu) Co Ltd.

The Canadian government has ordered the sale after “rigorous investigation” of foreign companies by the Canadian national security and intelligence community, Industry Minister François-Philippe Champagne said in a statement.

“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical 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 divest its investment in Lithium Chile Inc (LITH.V) and Zangge Mining had to leave Ultra Lithium Inc (ULT.V) .

‘UNREASONABLE’

Chinese Foreign Ministry spokesman Zhao Lijian said the Canadian government is using national security as a pretext to block normal cooperation between Chinese and Canadian companies and harm global supply chains.

“China urges Canada to stop unreasonably targeting Chinese companies (in Canada) and provide them with a fair, impartial and non-discriminatory business environment,” Zhao told a regular news briefing, adding that Beijing is firmly legitimate rights and interests of Chinese companies

Spot prices for lithium are up more than 200% in the past year, driven by supply constraints that are expected to continue.

Rystad Energy predicted that supply of primary lithium minerals will be 8.5% lower than aggregate demand for lithium in 2025, compared to about 10% less than demand this year.

“Ottawa’s latest stance underscores global competition from critical battery minerals in light of the expected boom in EV battery demand,” said Susan Zou, senior analyst at Rystad Energy, of Canada’s decision.

Sinomine Resources share price fell 7.8% to 86.74 yuan ($11.86) on Thursday, while Chengxin share price fell a whopping 4% but closed 0.7% higher at 45.65 yuan. Zangge Mining’s share price fell 3.7% over the course of the day before rising 1.1% to close at 28.96 yuan.

Last week, Ottawa said it needs to build a resilient critical mineral supply chain with like-minded partners as it outlined rules designed to protect the country’s critical mineral sectors from foreign state-owned companies.

“The federal government is committed to working with Canadian companies to attract foreign direct investment from partners who share our interests and values,” Champagne said.

Canada has large deposits of essential minerals such as nickel and cobalt that are essential for cleaner energy and other technologies. Demand for the minerals is expected to increase in the coming decades.

Earlier this year, countries like Britain, Canada and the United States partnered to secure supplies of crucial minerals as global demand for them increases.

($1 = 7.3163 Chinese Yuan Renminbi)

Reporting by Ismail Shakil in Ottawa and Siyi Liu in Beijing, additional reporting by Eduardo Baptista in Beijing Editing by Chris Reese, Sandra Maler and Barbara Lewis

Our Standards: The Thomson Reuters Trust Principles.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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