CANADA Law and Practice Contributed by: Darrell Podowski, Brian Dominique, Joel Matson and Christa Alvernaz, Cassels Brock & Blackwell LLP
Recent Developments In October 2022, the Canadian government issued its Policy Regarding Foreign Investments from State-Owned Enterprises in Critical Min - erals under the ICA (Critical Minerals Policy), under which investments by SOEs and foreign- influenced private investors in Canada’s critical minerals sectors (eg, cobalt, copper, lithium, graphite and rare earth elements) at any stage of the critical minerals value chain are subject to special rules, including that the direct or indi - rect participation of such foreign SOE or foreign- influenced private investor will support a finding that there are reasonable grounds to believe the investment could be injurious to Canada’s national security. In June 2024, the Canadian government updated its Critical Minerals List to add three more minerals: high-purity iron, phos - phorous and silicon metal, for a total of 34 criti - cal minerals. SOEs include: • enterprises that are directly or indirectly owned or controlled by a foreign government; and • enterprises that are “influenced directly or indirectly” by a foreign government. Foreign-influenced investors are private inves - tors closely tied to, subject to influence from or who could be compelled to comply with extra - judicial direction from foreign governments, par - ticularly non-likeminded governments such as China (Hong Kong), Russia and Iran. In 2022, pursuant to the Critical Minerals Policy, the federal government ordered the divestiture by certain Chinese entities of their investments in Canadian companies with critical mineral pro - jects. Notably, divestiture was not ordered for an operational lithium property in Manitoba, which
prior to the investment, controlled by a WTO investor; and • CAD5 million and CAD50 million in asset value for a non-WTO investor for direct and indirect investments, respectively. The ICA currently requires post-closing notifi - cation of all other foreign acquisitions of con - trol (within the meaning of the ICA) of Canadian businesses and of certain new foreign invest - ment. However, there is no provincial or territorial mining legislation that restricts the ownership or development of mineral rights based on citizen - ship. Where an investment is subject to a pre-closing review under the ICA, the foreign investor must demonstrate that the investment is of “net ben - efit” to Canada. Typically, this requires investors to provide binding undertakings to the federal government regarding their intended operation of the Canadian business. In addition, the ICA allows the federal govern - ment to review any level of investment in or related to a Canadian business by foreign com - panies where it believes the investment may be “injurious to national security”. Foreign mining companies are generally free to hold mineral rights directly or through Canadian subsidiaries. However, the federal government does limit non-resident ownership of uranium mines to 49% at the first stage of production. Exemptions may be granted in cases where it can be demonstrated that the project remains under Canadian control, or where Canadian partners cannot be found. There are no restric - tions on uranium exploration by foreign persons or companies.
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