The Trump administration has acquired ownership stakes in two Canadian critical mineral companies, a move deemed unusual by experts and sparking questions about potential national security implications that may warrant Ottawa’s intervention.
Lawrence Herman, an international lawyer and a senior fellow at the C.D. Howe Institute, noted the unprecedented nature of the U.S. government’s investment in Canadian companies, particularly in the critical minerals sector, which encompasses essential resources like lithium, copper, and nickel crucial for modern technology.
The White House recently disclosed a $35.6 million USD investment for a 10% stake in Vancouver-based Trilogy Metals Inc., holding mining interests in Alaska sought after by the U.S. government. Additionally, the U.S. government secured a minority stake in Lithium Americas, another Vancouver-headquartered firm developing a significant lithium mine in Nevada.
These investments by government entities rather than corporations raise concerns, according to Herman, especially given the strained relationship between the U.S. and Canada. Such foreign investments could potentially lead to political influence, the transfer of critical technologies, and sensitive information not aligning with Canadian interests.
Herman advised the Canadian government to monitor these investments closely and consider subjecting them to national security reviews, as per the Investment Canada Act. The act, updated in 2022 for the critical minerals sector, imposes stricter guidelines for foreign state investments, emphasizing the necessity of a clear “net benefit” to Canada and the possibility of triggering a national security review if deemed potentially harmful.
Sandy Walker, co-chair of Dentons Convocation and Foreign Investment Review Group, mentioned that as the U.S. government’s stakes are non-controlling, significant issues may not arise. She added that amid ongoing trade and security negotiations with the U.S., the Canadian government might avoid expressing concerns about these investments.
However, potential Canadian apprehension could arise if the U.S. government mandates that minerals from these mines exclusively serve U.S. interests, impacting domestic supply chains. Despite this, David Rosner from Goodmans LLP downplayed immediate national security concerns due to the small U.S. government stakes and the location of the companies’ mining assets in the U.S.
Rosner highlighted that past actions by Ottawa mainly targeted governments in opposition to Canada’s interests regarding critical mineral supply, suggesting that current tensions between Canada and the U.S. are not severe. Nevertheless, he emphasized the need for a new Canadian policy to address a potential surge in foreign government investments in critical mineral companies, anticipating emerging concerns from this evolving landscape.