Allied Gold CEO Peter Marrone, shown speaking in Denver, Colo., in 2013, says he is confident the federal government will clear his company's acquisition by Zijin.Rick Wilking/Reuters
China’s Zijin Gold International Co. Ltd.’s proposed $5.5-billion acquisition of Allied Gold Corp. AAUC-T has cleared a national security review from Canada, removing a major impediment to the deal closing.
Allied chief executive officer Peter Marrone said in an interview with The Globe and Mail on Wednesday that the 45-day window for the federal government to raise concerns about the transaction had passed, meaning it had been approved by default.
“We’re clear on national security,” he said.
“Clearly it is another important milestone.”
Shareholders at Allied voted decisively in favour of the deal last week.
China’s Zijin Gold to acquire Canadian miner Allied Gold in $5.5-billion deal
Industry Minister Mélanie Joly reviews all proposed foreign takeovers of Canadian companies for national security regardless of the size of the deal. Such reviews include assessing the impact on Canada’s defence capabilities, the effect on the supply of critical goods and services to Canadians, and the potential for the deal to enable foreign espionage.
Justin Simard, a spokesperson for Ms. Joly’s department declined comment, citing confidentiality constraints under the Investment Canada Act.
Zijin did not respond to a request for comment.
Ottawa still has the power to block the Zijin acquisition of Allied if it fails to pass a net economic benefit review, which is continuing. That review addresses the deal’s impact on factors such as the Canadian economy, jobs and domestic supply chains.
Zijin, which is indirectly owned by the Chinese government, in January reached a deal with Toronto-based Allied to acquire it for $44 a share in cash, an all-time high for the stock.
Allied operates mines in Mali and Côte d’Ivoire, producing about 375,000 ounces of gold a year. The company went public in 2023 with significant financial backing by Mr. Marrone.
The deal was being scrutinized on national security grounds at a time when Canada’s business relations with China have been on the mend.
Under former prime minister Justin Trudeau, Ottawa cracked down on Chinese ownership in the Canadian mining sector, in large part because of national security concerns about the Asian superpower controlling so much of the global critical minerals sector, particularly in lithium, cobalt and rare earths.
While Canada has mostly permitted Chinese investment in the gold sector, owing to it not being classified as a critical mineral, there have been exceptions. In 2020, Ottawa blocked Shandong Gold Mining Co. Ltd.’s attempted acquisition of TMAC Resources Ltd. The deal was rejected owing to national-security concerns stemming from TMAC’s mine being located near tidewater in the Northwest Passage, a highly strategic shipping route in the Canadian High Arctic.
Since taking office just over a year ago, Prime Minister Mark Carney has improved Canada’s relationship with China as part of his efforts to diversify trade away from the United States during the trade war.
During a visit to China in January, Mr. Carney announced he was reducing tariffs on Canadian imports of Chinese electric cars. He also made it clear that Canada is open to significantly more inbound investment from China.
Meanwhile, Finance Minister François-Philippe Champagne just last week led a delegation of Canadian business leaders to China, which included Canada’s big banks, and major institutional investors such as the Canada Pension Plan Investment Board, culminating in a bilateral pledge to deepen financial-sector ties.
Mr. Marrone is highly confident that the Zijin acquisition will also clear Ottawa’s net economic benefit test, adding that the Chinese company should be able to satisfy any conditions the government may put on the deal.
“Based on discussions that have taken place so far, we understand the type of undertakings that are being asked, and they are, I would describe as ordinary course,” he said.
Those undertakings would likely include Zijin maintaining an office in Canada and committing to hiring a certain number of Canadian officers, he added.
Mr. Marrone said Allied has around 65 employees who work out of its Toronto head office, while there are about 4,000 who work at its mines abroad.
The net benefit review is expected to continue for another 30 days, Mr. Marrone said.