Restrictions on foreign investments create a grey area in Canada's mining industry

The Canadian government’s move to restrict foreign investment in Canada’s mining sector has created a grey area for mineral explorers and developers, according to Torys partner Braden Jebson.

In an interview with BNN Bloomberg, which was syndicated in The Toronto Star, Bloomberg Law News, Mining.com and GoldSeek, Braden discussed these recent developments and what they mean for the world’s mineral explorers and mine-builders, many of which are headquartered in Canada.

“Given how broadly the government is interpreting its mandate here, there’s certainly a lack of clarity around the edges in some specific circumstances,” he said.

The government’s intentions to limit mining deals involving foreign state-owned entities began in November 2022, when it called for three Chinese firms to divest from Canadian lithium explorers. However, the following year, Saudi Arabia was able to purchase shares of a metals and mining company, giving them part ownership of nickel operations in Ontario.

The challenge is that the government has not yet set out how much—and from which countries—foreign investment will be accepted within the sector. “Even when the government is setting out what looks like a red line, they’re often leaving themselves discretion so that there aren’t hard-and-fast rules,” Braden said.

Read: Guide to mining regulatory and legal regimes in Canada

With Canada and many of its Western allies becoming increasingly concerned about securing critical minerals and loosening China’s global dominance over the industry, Braden says the government’s decision-making is predominantly guided by the strategic importance of the minerals involved.

“The general understanding is that the government’s not likely to approve an investment in critical minerals from a foreign state-owned entity that does not share similar interests and values as Canada,” he said. “Outside the critical minerals space, there’s probably more opportunity.”

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