Construction at the Lithium Nevada mine site Tracker Pass project, April, 2023. The Canadian government reviews all foreign deals in the critical minerals sector for national security concerns.Rick Bowmer/The Associated Press
Natural Resources Minister Tim Hodgson is brushing off national-security concerns about the U.S. government taking equity stakes in Canadian critical-minerals companies, saying the positions are small and the United States is an ally.
In the past few weeks, the administration of President Donald Trump announced the U.S. had taken equity stakes in two Canadian critical-minerals companies, Lithium Americas Corp. LAC-T and Trilogy Metals Inc. TMQ-T, both of which are advancing projects on U.S. soil.
Washington secured highly favourable terms in both transactions, with the right to acquire millions of shares for virtually nothing, and a board seat in the case of Trilogy.
The Canadian government reviews all foreign deals in the critical-minerals sector for national-security concerns and has the power to block transactions.
Canada is currently in a trade war with the U.S. that is inflicting massive damage on the aluminum, steel, auto and lumber sectors. Mr. Trump has also repeatedly mused about making Canada the 51st state.
When Mr. Hodgson was asked by The Globe and Mail whether there are national-security concerns about allowing the U.S. government to become a shareholder in the two Canadian critical-minerals companies, he indicated there weren’t. Mr. Hodgson was speaking in London at the conclusion of a trip focused on strengthening critical-minerals supply chains between Canada and Britain.
“The fact that an ally of ours chooses to make an equity investment into a Canadian company whose sole asset is in the United States, I don’t think that bothers us at this time,” Mr. Hodgson said.
“I think that’s capitalism in action. If they’re interested in doing that, that’s up to them.”
When asked if it was still appropriate to refer to the U.S. as an ally, he didn’t answer the question directly, but said that Canada is “very hopeful that we can get through this difficult time and we can resume the type of relationship that we’ve had with the Americans for a long, long time.”
Natural Resources Minister Tim Hodgson signalled on Thursday that China is a far bigger threat than the U.S. to the Canadian critical minerals sector.Sean Kilpatrick/The Canadian Press
But allowing U.S. state ownership of Canadian critical-minerals assets potentially goes against the government’s own policies. In 2022, Ottawa said that it would only approve significant transactions by foreign state-owned companies in Canada’s critical-minerals companies under exceptional circumstances. Quickly thereafter, Ottawa prevented three Canadian junior miners from raising money from Chinese investors. The government also made it clear that the location of the mining assets isn’t the key question, but rather whether the approval of the deal jeopardizes Canada’s national security.
Subrata Bhattacharjee, partner and national chair of the competition and foreign investment review group with Borden Ladner Gervais LLP, said that Ottawa has to clearly explain why investments from China are still a big problem, but those from the U.S. government aren’t, especially when Mr. Trump’s blatant threats to Canadian sovereignty are taken into account.
“The story here is, really, how do they actually draw that line?” Mr. Bhattacharjee said. ”That they maintain some semblance of a policy designed to keep China out, but explain why they have to derogate from the policy for these two U.S. government investments."
Mr. Hodgson on Thursday provided some insight. He signalled that China is a much bigger threat to the Canadian critical-minerals sector than the U.S. A big focus, he said, is helping Canadian companies compete against countries that have put export restrictions on critical minerals. China in recent weeks has ramped up its efforts to curb exports of rare-earth minerals as part its trade spat with Mr. Trump. China dominates global supply chains in many rare earths, which are used in the defence, technology and industrial sectors.
Tools that Canada will deploy to help the domestic mining companies sector will include stockpiling deals, offtake agreements – contracts to buy a certain amount of production from a mine – and further investments through the Canada Growth Fund. Launched in 2023, the public-sector fund has so far taken equity stakes in two Canadian critical-minerals companies.
“We will prudently look at all of the ways to make sure we counter what I call non-market activities [from] other countries that disrupt our supply chains,” Mr. Hodgson said.