Canada Orders Chinese Companies To Divest From Critical Materials Operations

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The government of Canada has ordered three Chinese companies to divest their holdings in companies doing business in Canada. Here is the official statement from François-Philippe Champagne, Minister of Innovation, Science and 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. In accordance with the ICA, foreign investments are subject to review for national security concerns, and certain types of investment—such as those in the critical minerals sectors—receive enhanced scrutiny.

“Therefore, we reviewed a number of investments in Canadian companies engaged in the critical minerals sector, including lithium. These companies were reviewed via the multi-step national security review process, which involves rigorous scrutiny by Canada’s national security and intelligence community. As a result of that process, the Government of Canada has ordered the divestiture of the following investments by foreign investors in Canadian critical mineral companies:

    •  Sinomine (Hong Kong) Rare Metals Resources Co., Limited is required to divest itself of its investment in Power Metals Corp.
    • Chengze Lithium International Limited is required to divest itself of its investment in Lithium Chile Inc.
    • Zangge Mining Investment (Chengdu) Co., Ltd. is required to divest itself of its investment in Ultra Lithium Inc.

“The government’s decisions are based on facts and evidence and on the advice of critical minerals subject matter experts, Canada’s security and intelligence community, and other government partners.

“Transparency and certainty are core principles for the government’s modernization efforts where the ICA is concerned. Today we are announcing the outcome of final orders made under section 25.4(1) of the ICA. These new and strengthened efforts will improve the administration of Canada’s investment review regime. To ensure transparency, we will continue to announce outcomes of such orders going forward.

“The government will continue to work toward an ICA framework that is well calibrated to ensure Canada’s continued prosperity and to face evolving national security challenges.

“Critical minerals are essential to powering the green digital economy of tomorrow. Increasing demand for these all-important minerals are presenting Canada with a generational economic opportunity. We are committed to seizing that opportunity while delivering on the country’s ambitious climate goals.

“The federal government is determined to work with Canadian businesses to attract foreign direct investments from partners that share our interests and values. Canada’s critical minerals are key to the future prosperity of our country. We will continue to encourage and work with Canadian businesses that  require investment capital, by helping to identify and find partnerships that will serve in the best interest of Canadian businesses, workers, and the economy.

“Today’s direction comes as the Government of Canada finalizes its Critical Minerals Strategy, which will position Canada as the global supplier of choice for critical minerals.”

According to the Associated Press, the Chinese government has criticized the order as a violation of market principles and called on Canada to reverse its decision. “Canada stretched the concept of national security and placed barriers to normal investment and trade cooperation between Chinese and Canadian companies,” said foreign ministry spokesman Zhao Lijian. “We urge Canada to stop the undue suppression of Chinese companies and instead provide a fair, just and non-discriminatory environment for their operation.”

In a statement, Ultra Lithium said, “The Board of Directors and management of the Company are very surprised at Canada’s policy against Chinese investment in Canada’s lithium projects and believe that the announcement has been detrimental to the Company’s many Canadian shareholders. The Company is assessing its legal and other options to preserve value for its shareholders.”

The company has two lithium operations in Ontario and one in Nevada. It will be interesting to see how the US responds to Canada’s ultimatum.

Globalization Has Crashed

For more than four decades, globalization was the dominant thinking in financial and political circles. It presupposed that business was free to conduct its affairs wherever market conditions were most suitable. People dining beside the sea in Pismo Beach, California, could ask their waiter if the fish on the menu was caught locally and the waiter could look them in the eye and say, “Yes, it was caught right out there,” gesturing toward the Pacific Ocean, and not be lying.

What the waiter didn’t say is that it was caught by a Chinese factory ship, where it was frozen, then transported back to China for “processing” before being refrozen and shipped to markets all around the world. And all for less money than it would cost a local fisherman to buy a boat, catch the fish, and sell it fresh to local restaurants.

During that time, the United States was content to let many of its clean energy ideas gravitate to China. Let them worry about paying development costs. We will just buy what the have to offer when we need it.

For more on the joys of globalization and its impact on the workers involved in the process, please pick up a copy of Naomi Klein’s No Logo. And for more about the political underpinnings of globalization, her second book, The Shock Doctrine, lays it all out chapter and verse. Both are recommended reading for CleanTechnica followers who want to be fully informed.

China And The War For Lithium

More than a decade ago, some people made jokes about how the next round of wars would not be fought over oil but over lithium and other materials needed to make batteries. Since then, China has been — well, proactive is hardly a strong enough word — in securing the rights to those minerals in countries around the globe, from Chile, to Australia, and even Canada.

Not only has China locked up much of the world’s supply of those minerals, it has simultaneously made sure that virtually all the processing needed to make them ready for manufacturing batteries takes place in China or in other locations controlled by Chinese owned companies. Today, China is the gatekeeper for roughly 80% of the battery market. Keep in mind that Chinese corporations are instrumentalities of the Chinese Communist Party in a way that western corporations are not.

The whole fabric of globalization was ripped apart when Russia began its criminal invasion of Ukraine. For the past 20 years, Europeans allowed themselves to believe the fantasy that cheap Russian natural gas would always be there to fuel their economy. Boom! In a stroke, the myth was exploded and the chimera of globalization exploded.

The beginning of the end of fossil fuels started when Putin unleashed his poorly trained army led by generals whose thinking was stuck in the 1930s on Ukraine. Suddenly, the scales fell from the eyes of the world as spiraling energy costs ripped apart the global economy. Soon, it was no longer about saving the planet or the polar bears, it was about saving our own asses from reliance on an energy system that inflicted such economic shocks in the first place.

Forget all the environmental blather. Renewables are what the world needs to create a stable economy where energy prices can be predicted with reasonable certainty decades in advance. The end of oil is not about emissions. It is about freedom from manipulation of energy markets by tyrants, lunatics, and madmen. Sadly, Xi Jinping, the new leader for life in China, is shading more and more toward the madman category, raising fears around the world that China could become the new OPEC.

Suddenly, every nation is vitally aware of the need for energy security and seeing China as a threat to that independence. Such thinking is baked into the new Inflation Reduction Act in the United States, the latest energy policies of the European Union, and is now made manifest in this latest announcement by the government of Canada.

Globalization is dead. The world is grappling with how to fashion a new consensus based on access to reliable, affordable, and predictable renewable energy. We better not screw this up!

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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new." You can follow him on Substack and LinkedIn but not on Fakebook or any social media platforms controlled by narcissistic yahoos.

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