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Canada orders three Chinese firms to stop lithium mining

  • China says Canada is violating trade and market rules
  • Shares of Chinese companies are falling
  • Companies say they don’t expect a big impact on performance

OTTAWA/BEIJING, Nov 2 (Reuters) – Canada on Wednesday ordered three Chinese companies to sell their investments in Canadian critical minerals, citing national security concerns.

In response, China accused Ottawa of using national security as a pretext and said the divestment order violated international trade and market rules.

As countries compete to build up reserves of materials needed for a transition to a cleaner economy, the news pushed Chinese companies’ shares lower on Thursday, although they said in stock market filings that they did not expect a major impact on their results.

The three ordered to divest their investments are Sinomine (Hong Kong) Rare Metals Resources Co Ltd, Chengze Lithium International Ltd, also based in Hong Kong, and Zangge Mining Investment (Chengdu) Co Ltd.

The Canadian government ordered the divestment after “rigorous scrutiny” of foreign firms by Canada’s national security and intelligence community, Industry Minister Francois-Philippe Champagne said in a statement.

“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical mineral supply chains, both at home and abroad,” Champagne said.

Sinomine was asked to sell its investment in Power Metals Corp ( PWM.V ), Chengze Lithium was asked to sell its investment in Lithium Chile Inc ( LITH.V ) and Zange Mining was ordered to exit Ultra Lithium Inc ( ULT.V ) .


Chinese Foreign Ministry spokesperson Zhao Lijian said the Canadian government used national security as a pretext to block normal cooperation between Chinese and Canadian companies and damaged global supply chains.

“China urges Canada to stop the unreasonable targeting of Chinese companies (in Canada) and provide (them) with a fair, impartial and non-discriminatory business environment,” Zhao told a regular news briefing, adding that Beijing would resolutely defend the legitimate the rights and interests of Chinese companies

Spot lithium prices have risen more than 200% in the past year, driven by supply constraints that are expected to persist.

Rystad Energi estimates that the supply of primary lithium minerals will be 8.5% below total lithium demand in 2025, compared to around 10% below demand this year.

“The latest stance from Ottawa underscores the global competition of critical battery minerals in light of the projected boom in demand for electric vehicles,” Susan Zou, senior analyst at Rystad Energy, said of Canada’s decision.

Shares of Sinomine Resources fell 7.8% to 86.74 yuan ($11.86) on Thursday, while Chengxin shares fell as much as 4% but closed 0.7% higher at 45.65 yuan. Zange Mining’s share price fell 3.7% on the day before falling 1.1% to 28.96 yuan.

Last week, Ottawa said it must build a robust supply chain for critical minerals with like-minded partners as it outlined rules intended to protect the country’s critical minerals sectors from foreign state-owned companies.

“The federal government is committed to working with Canadian businesses to attract foreign direct investment from partners who share our interests and values,” said Champagne.

Canada has large deposits of critical minerals such as nickel and cobalt that are essential for cleaner energy and other technologies. Demand for the minerals is expected to increase in the coming decades.

Earlier this year, countries including the UK, Canada and the US established a partnership aimed at securing access to critical minerals as global demand for them increases.

($1 = 7.3163 Chinese Yuan Renminbi)

Reporting by Ismail Shakil in Ottawa and Siyi Liu in Beijing, additional reporting by Eduardo Baptista in Beijing Editing by Chris Reese, Sandra Maler and Barbara Lewis

Our standards: Thomson Reuters Trust Principles.

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