The Trump administration has acquired stakes in two Canadian critical mineral companies, a move that experts deem uncommon and potentially exceptional, sparking concerns about national security implications. Lawrence Herman, an international lawyer and senior fellow at the C.D. Howe Institute, highlighted the unprecedented nature of the U.S. government’s investments in Canadian companies, particularly in the critical minerals sector that encompasses vital resources like lithium, copper, and nickel crucial for advanced technologies.
In a recent announcement, the White House revealed a $35.6 million investment for a 10% stake in Trilogy Metals Inc., a Vancouver-based company with mining operations in Alaska. Additionally, the U.S. government is taking a minority stake in Lithium Americas, based in Vancouver, which is developing a large lithium mine in Nevada. These investments grant the U.S. government the option to increase its ownership and appoint a board member to each company.
According to Herman, these government-led investments raise red flags due to potential political influence and the risk of sensitive information being shared with foreign entities, which may not align with Canada’s interests. Given the U.S.’ existing policies that may clash with Canadian interests, Herman emphasized the need for vigilance and possibly subjecting these investments to national security reviews by the Canadian government.
Under the Investment Canada Act, Ottawa has the authority to review foreign government investments, with a focus on the critical minerals sector. Recent amendments require a clear “net benefit” to Canada for significant foreign state investments in this sector, with provisions for national security reviews if deemed necessary based on potential risks to Canada’s interests. Recent instances of the Canadian government ordering divestiture of investments by Chinese companies in critical minerals highlight the evolving regulatory landscape.
Sandy Walker, co-chair of Dentons Convocation and Foreign Investment Review Group, suggested that the non-controlling nature of the Trump administration’s investments may mitigate concerns. However, potential restrictions on mineral exports to the U.S. could be a point of contention for Canada. Despite the government’s assurance of reviewing foreign investments in critical minerals for the benefit of Canadians, specific comments on these investments remain confidential.
David Rosner, head of the Competition and Foreign Investment Group at Goodmans LLP, downplayed national security concerns regarding the U.S. government’s small stakes in Canadian companies, especially since the mining assets are in the U.S. Rosner also highlighted the importance of aligning Canadian policies with emerging trends of foreign government investments in critical mineral companies to address any arising challenges effectively.