Automotive News Canada - November 2022 - 11

* NOVEMBER 2022
11
Upon reflection, a new foreign policy: Mines are ours
AT THE BEGINNING OF 2022,
François-Philippe Champagne, the
federal minister of innovation, science
and industry, seemed confident
that a Canadian-owned lithium
mine in Argentina had little to
do with Canada's national security
or its automotive industry.
By the fall, he and the federal
government seemed to have
reconsidered.
DAVID
KENNEDY
TORONTO
BUREAU
CHIEF
On Oct. 28, Champagne
announced changes to the
Investment Canada Act (ICA) that
will put foreign state-owned companies
looking to invest in
Canada's critical-mineral sector
through the wringer. He followed
that up Nov. 2 by ordering a trio
of China-based companies to
divest their interests in three
Canadian lithium miners developing
projects in Argentina, Chile
and Canada, following national
security reviews.
Higher scrutiny
of foreign
ownership
of mines
auto industry.
" While Canada continues to
welcome foreign direct investment,
we will act decisively when
investments threaten our national
security and our critical-minerals
supply chains, both at home and
abroad, " he said in a release.
The comment was in stark
contrast to government inaction in
late 2021 when Zijin Mining
Group Co., a China-based miner
with state-owned investors, proposed
a takeover
of Torontobased
Neo
Lithium Corp.
That deal
will likely prove
positive for
Canada's
closed Jan. 26
without intervention
from
Ottawa but it
prompted parliamentary
hearings
to
investigate
whether the
acquisition
should have
been put through a more rigorous
review. In testimony at the time,
Champagne pointed to Neo
Lithium's mine being in Argentina,
and to EVs in North America relying
on a different form of lithium,
as reasons to not put the deal
under the microscope.
Yet the government has clearly
changed its stance on the file in
the intervening months. The
changes to the ICA will make all
such deals in the critical-mineral
sector subject to further review,
with approvals granted only on an
" exceptional basis. "
For the divestiture order handed
to the three companies,
Ottawa did not single out China.
With Chinese-state-owned firms
snapping up interests in global
mining projects, and the country
already controlling about twothirds
of global processing capacity
for lithium and many other battery
materials, it hardly had to.
Meanwhile, Champagne signaled
the intent to deepen ties
with " partners that share our
interests and values " to help get
François-Philippe Champagne intends
to deepen ties with " partners that share
our interests and values. " FILE PHOTO
costly mining developments off
the ground.
Canada is not alone in
enacting policy to deal more
closely with its allies, a trend
that U.S. Treasury Secretary
Janet Yellen dubbed
" friend-shoring. "
The United States took a
more subtle step this summer
to offset some of China's early
lead on batteries. To qualify for
the US $7,500 electric-vehicle
incentive offered under the
Inflation Reduction Act, automakers
must ensure that their
EVs use battery materials
sourced and processed in
friendly jurisdictions. Vehicles
with any battery materials from
state-owned China-based
companies are ineligible for
the credit under " foreign entity
of concern " restrictions.
The inclement geopolitical
climate and the Canadian government's
about-face on mine
ownership will likely prove positive
for the Canadian auto
industry and its battery supply
chain.
As opposed to Canadiancontrolled
mines at home and
abroad feeding China's lithium-ion
battery industry, investments
in local processing
plants will create Canadian
jobs, generate greater demand
for homegrown mines and
keep the current automotive
supply chain onshore.
" Increasing demand for
these all-important minerals are
presenting Canada with a generational
economic opportunity, "
Champagne said. " We are
committed to seizing that
opportunity. " - ANC
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Automotive News Canada - November 2022

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