Increases scrutiny on investment by foreign State-owned enterprises in critical minerals sectors

28 Oct 2022

On 28 October 2022, the Government of Canada released a policy statement clarifying how the Investment Canada Act will be applied to investments in Canadian entities and assets in critical minerals sectors from foreign state-owned enterprises (SOEs).

The policy recognizes the strategic importance of critical minerals, as per the list of critical minerals defined on 11 March 2021, and states that SOEs investment in these sectors "carry a greater inherent risk to Canada’s growth, prosperity and security."

The policy sets out a framework for the review of such investments under the two main review powers of the Investment Canada Act: the net benefit review and the national security review.

The policy set that net benefit approval of acquisitions of control of a Canadian business involving Critical Minerals by a foreign SOE "will only be approved on an exceptional basis".

The policy also states that investment by SOEs in critical minerals sectors "will support a finding by the Minister that there are reasonable grounds to believe that the investment could be injurious to Canada’s national security as set out in Part IV.1 of the Investment Canada Act."

This policy applies to such investments regardless of value, whether direct or indirect, whether controlling or non-controlling, and across all stages of the value chain.