Canada tightens takeover rules for critical minerals

·2 min read
FILE PHOTO: An electric car charging station is seen in Vancouver

(Reuters) - Canada has tightened foreign investment rules to protect the security of critical mineral supply chains, a government spokesperson said on Thursday, ahead of an expected surge in demand for metals used to make electric vehicles.

The move comes as the U.S. government works with Canada to boost regional supply chains to counter China's dominance in the sector.

The updated guidelines mean proposed takeovers of companies specializing in critical minerals and sensitive personal data, as well as investments by "state-owned or state-influenced investors", could trigger a national security review.

"Our government has updated these guidelines to provide increased certainty for Canadian businesses and investors," said John Power, spokesman for Minister of Innovation, Science and Industry François-Philippe Champagne.

"This update specifically addresses national security concerns relating to investments involving potentially sensitive technologies, sensitive personal data and the security of critical mineral supply chains."

Canada earlier this month published a list of 31 minerals deemed critical to its economy, among them aluminum, cobalt, copper and nickel.

Washington increasingly views Canada as a kind of "51st State" for mineral supply purposes and plans to deepen financial and logistical partnerships with the country's mining sector over time, a U.S. government source told Reuters last week.

Both countries are members of the Energy Resource Governance Initiative, a pact to share mining experience and resources.

However, Canada's tightened investment rules were not prompted by the U.S. government, a Canadian government source said.

"We see the exploitation of these resources as a real advantage for Canada and so we want to keep building on that,” the source said.

Canada in 2012 said it would block state-owned companies from taking controlling interests in the country's oil sands and more recently rejected Shandong Gold's bid for Arctic miner TMAC Resources on national security grounds.

(Reporting by Jeff Lewis in Toronto; Editing by Marguerita Choy)