Niall McGee, mining reporter at the Globe & Mail, discusses the evolution of the Canadian government’s approach to foreign investment in the critical minerals sector under the Investment Canada Act with host Ian Macdonald. Niall broke several of the key stories in this area.
The government’s approach to foreign investment in the critical minerals sector, including in circumstances where the target minerals are located outside of Canada, has evolved significantly over the last three years. Niall McGee shares his perspectives based on first hand experience reporting on key developments in this area, including, among others: the government’s October 2022 Policy Regarding Foreign Investments from State-Owned Enterprises in Critical Minerals and the circumstances that led up to it; the government’s November 2022 announcement that it had required three Chinese companies to divest critical minerals investments; some Canadian companies with mineral projects outside of Canada redomiciling to other jurisdictions, in one case prompting the then ICA Minister to warn “it’s never smart to try to circumvent the rules”; the government’s Statement on Net Benefit Reviews of Canadian Critical Minerals Companies on the same day in July 2024 that it announced its approval of Glencore’s Acquisition of Teck’s Coal Assets; the addition in March 2025, the day after some US tariffs took effect, of economic security as a risk factor in the National Security Review Guidelines; and the cumulative potential implications of these developments for the financing of Canadian mining companies and the development of critical minerals projects in Canada.
00:00
Counterfactual Podcast
Welcome to Counterfactual: the podcast brought to you by the Competition Law and Foreign Investment Review section of the Canadian Bar Association. Counterfactual takes a fresh look at issues relevant to business, competition, and related areas of regulation, and explores the real and hypothetical world to gain practical insights and debate policy. Hope you enjoy the show!
00:29
Ian Macdonald
Hello and welcome to Counterfactual, the podcast produced by the Competition Law and Foreign Investment Review section of the Canadian Bar Association. My name is Ian Macdonald and, in this episode, I'll be speaking with Niall McGee, the Globe and Mail's mining reporter, about the evolution of the Canadian government's approach to foreign investment in the critical mineral sector under the Investment Canada Act.
Niall reported on the transactions and developments we'll be discussing as they happened. Niall, hello and welcome to Counterfactual. We're so glad to discuss your perspective on this important topic.
01:05
Niall McGee
Well, Ian, it's great to be here. Thanks so much for the invitation.
01:08
Ian Macdonald
So today is March 31st, 2025. And before we dive into the discussion, allow me to provide a very brief overview of the Investment Canada Act or ICA for short.
The ICA regulates foreign investment in Canada. The acquisition of control of a Canadian business by a non-Canadian is subject to either pre-closing net benefit review and approval or simple notification, depending on whether the applicable monetary threshold is exceeded. The threshold applicable to most investments is so high that pre-closing net benefit approval is rarely required. For example, in the government's last fiscal year, it was only required half a dozen times. Where simple notification is required, it can be done up to 30 days after closing or before closing.
The government screens all notifications for national security review risk and has broad discretionary powers to impose remedies such as blocking a transaction pre-closing, imposing conditions on its completion, or requiring divestiture post-closing. The government has 45 days to invoke its powers after receiving a notification. So investors who want pre-certainty, pre-closing certainty often elect to notify at least 45 days before closing.
Importantly, the National Security Review powers apply more broadly than to the acquisition of control of a Canadian business. They also apply to minority investments and to investments in businesses that have tenuous links to Canada.
02:32
Ian Macdonald
Investors in these transactions may choose to submit a voluntary ICA notice at least 45 days before closing to obtain pre-closing certainty on national security risk.
02:43
Ian Macdonald
So now with that out of the way, let's start in January 2022 when it became public that the Canadian government did not conduct a full-scale national security review on the Neo Lithium and Zijin transaction.
02:56
Niall McGee
Yeah. I mean, it's interesting that you start there because yeah, I've covered mining for, for something like six or seven years, but this national security mine beat, has really, that's kind of when it started. So yeah, I remember that really well.
03:08
Niall McGee
I broke that story. And I think the Neo Lithium person that revealed, revealed it to me was kind of kicking himself that the news got out, but yeah.
03:20
Niall McGee
Basically, it kicked off a firestorm of controversy because that was really the time when it was clear that, you know, Canada had this supremely weak position in critical minerals. And here was a Canadian company with a promising lithium discovery, albeit overseas, that the Minister, Mr. Champagne at the time, basically said, yeah, no problem. The Chinese can buy can buy this, and there you go. And I think a lot of people were upset by it, that there wasn't a more thorough review and it did put the Minister in a very tough spot. You remember there were parliamentary hearings. The Minister had to defend why he did what he did. And yeah, I think it got really tricky politically for him for a while. And then later in the year, there was a sort of big development that I think sprang from the Neo Lithium experience which, yeah, well it was a really controversial time for Mr. Champagne.
04:16
Ian Macdonald
Indeed. And tell us a little bit about that development later in the year. You're speaking to the critical minerals policy for foreign investments by state-owned enterprises.
04:25
Niall McGee
That's right. So basically, by allowing the Neo Lithium transaction and facing a lot of backlash there really were calls at the time for Canada to be a lot tougher on scrutinizing Chinese ownership or Chinese trying to buy Canadian critical minerals companies. I remember writing actually a huge piece in the middle of summer. I spent months on it basically talking about this subject matter - that Canada is weak in critical minerals and China is very strong. And part of the reason that China is very strong is Canada has kind of allowed that to happen in terms of buying a lot of critical mineral assets. So late in the year, I think it was October, November timeframe, Minister Champagne came out a very hawkish statement, and basically said he was not going to allow any more, except under exceptional circumstances, state owned players or companies close to the state to buy Canadian mineral companies. Now, he didn't specifically say China, but China clearly is one of the countries that was being targeted, Russia as well.
05:29
Niall McGee
Other countries that have sort of interests that are not in line with Canada's thinking, but it really was seen as a direct response to the backlash he faced and the recognition that really Canada had to do something to stop the rot, essentially.
05:46
Ian Macdonald
I remember some of the rhetoric and the statements around the introduction of that policy. The term friend-shoring was used, and in the context it was used just two and a half years ago, October 2022, that was a reference to the United States and other allies. And the world has, I guess, changed quite a bit, which maybe we'll want to pick up on later in our in our discussion. Just on the lithium deal and the policy that resulted from it. The minerals there were outside of Canada, correct?
06:17
Niall McGee
Yeah, that's right. It was a project, so it wasn't a mine yet. And this is kind of so typical of the mining industry, promising projects we don't know if they'll actually produce minerals one day or not, but it was located outside of Canada. It was a potential lithium project. Minister Champagne in defending why he allowed the deal at the time. So I'm pointing to this, you know, this is not, it's not as critical or not as big a deal for Canada if the project is located abroad. Now, subsequently, he essentially backtracked on this policy because he referenced those three companies that were targeted later the same year.
06:54
Niall McGee
They all had projects abroad. So, either he made a mistake the first time or he changed his mind. But currently we're in an environment where it doesn't matter where the resource is located. You're a Canadian company domiciled in Canada and if you have a critical minerals project in Canada or Guinea or Argentina or wherever the government kind of treats it treats it in the same way. And their policies have definitely evolved since 2022 on that.
07:24
Ian Macdonald
Yeah, and the month after they implemented the October 2022 policy, in November they did order three Chinese companies to divest investments in critical minerals policies, again, in a context where minerals were outside or largely outside of Canada. So, the government's experience from sort of early 2022 the to the policy later in 2022, forces me to ask the question, to what extent are we talking about pure national security issues versus political issues? Or to what extent are those two fundamentally intertwined and inseparable?
08:00
Niall McGee
I mean, I think they're completely inseparable and completely intertwined and there's all always politics going on. I don't know exactly why Mr. Champagne changed track from arguing earlier in the year that it kind of doesn't matter or it doesn't matter as much if the project is abroad. And then six months, eight months later, basically saying the opposite - that actually, yes, it doesn't matter. It can be Canada or abroad.
I mean, I think politics is, we'll probably talk about the ring of fire at some point. The ring fire is a sort mythical, undeveloped mining project up in Northern Ontario. Undeveloped, but the politics of that project and why it has or hasn't moved forward, you know it's kind of, a huge portion of it is about politics. Bickering between the Ontario government, the federal government, and now the Poilievre Conservatives have a different view on it. So politics is, yeah, it's always, I think, a big part of it.
09:04
Ian Macdonald
All right. Well, yeah, we'll certainly get to the ring of fire in a few minutes. I'd just like to jump ahead to late 2023, early 2024 now, and the controversy surrounding the SRG and C-One deal and the Minister's statements sort of during the 2024 PDAC conference about attempting to evade the ICA.
09:26
Niall McGee
Yeah, that's right. I’m glad to you picked up on that one because that was another one that I broke the story on, in the regards to the Minister's statement. So yeah, I had reported a few months earlier that this deal was in the works. And, you know, this is this is a really small deal. It was a financing. It wasn't a lot of lot of money. I think it was $16 million dollars or so. This Montreal-based graphite development company wanted to raise for its project - which was located overseas - but they were wanting to raise it from a Chinese investor. The Chinese investor was very opaque, private, really not a lot and not a lot known about it. So on paper, it seemed like something the government really should say no to, per their own policies.
10:09
Niall McGee
The company, SRG, was very confident that this deal was actually going to work and go through. I'm not exactly sure why. But we wrote about the story and sort of watched, with interest, and the security review really dragged on. So it was, it seemed like something, something was slowing it up.
10:31
Niall McGee
So then out of nowhere, the company puts out a release saying, you know, we're going to move overseas. And they don't directly say it's because they're not getting approval from the government for their financing with the Chinese, but it seemed pretty clear that was the motivation. And then it's sort of like, well, is Canada just going allow this? What's going to happen now? So I had the good fortune, maybe, to have Minister Champagne literally in front of me and asked him directly. And, you know, politicians don't often ask direct - answer direct - questions, almost never.
11:00
Niall McGee
But he did, he was in the mood where he really wanted to clamp back. And he made it very clear, sort of saying, you know we're not happy with this, they seem to be skirting the rules. And then you know it was a strong condemnation, basically, what they were doing.
11:13
Niall McGee
And if I remember correctly, about 24 hours later, the company announced the financing was off. So the Minister was upset. The company did something that he didn't approve of. And they also tried to skirt the rules by moving the headquarters out, which I think they thought that would negate the need for view, move the Minister out of the decision-making process.
11:36
Niall McGee
But evidently, that's not how it panned out. They announced the next day or the day after that the deal was off. So yeah, it's kind of shocking. The addendum or the follow on from that was the company did actually end up moving overseas.
11:49
Niall McGee
I don't think they did that specific deal with the Chinese investor, but they moved they moved out of the country. And they're not the first company to have done that since. But yeah, it was a really interesting case study.
12:00
Ian Macdonald
Yeah, continuances outside of Canada is something I’d like to focus on for a second. There was one other, I think, public example. Zijin and Solaris had a deal, an attempted deal, that did not work out. And then after that deal, I understand Solaris has also continued to another jurisdiction. So to what extent is Canada being effective with its with its policies in terms of, you know, preventing certain deals that it doesn't want from happening, from actually happening, versus just cutting itself out as a jurisdiction of mine financing through these policies?
12:37
Niall McGee
Yeah, I mean, I think that's an excellent question. In a way, it's difficult to answer because we don't know how many deals in the background have been kiboshed without anyone knowing about them in terms of companies thinking about raising money from China, but just not bothering to even go through with them because they're anticipating the deals are going to be blocked.
12:59
Niall McGee
However, I think to give the government, to be fair to the government, give the government some credit, I think it was a move that's not been popular for the company, for the CEOs of these small companies that just want every option to maximize shareholder value and get exits, you know, exit out of a situation when they just can't develop it on their own.
13:21
Niall McGee
But I think most people understand why the government had to make this move. You could say that the effect of these companies moving out is something to look at and something to be critical of.
13:36
Niall McGee
So far, to my knowledge, we've only seen a couple of small companies do it. And while those are stark examples, we haven't really seen a big company do it yet. I think if a major mining company did it because of this impediment to raising Chinese money, I think it would be a much bigger conversation.
13:55
Niall McGee
But yeah, I think overall people get why the government had, did it. And the government also is stepping in to help with funding, which I think is a big, it's a big vacuum that that was being left by the Chinese not being available anymore to fund or buy these companies. And we've certainly seen a lot of funding from the Canadian government into small mining companies. So, they're also helping to address the central problem of funding.
14:23
Ian Macdonald
One frustration or comment I often hear from people in the mining industry is the Canadian government spent a fair bit of time and attention exercising jurisdiction over minerals that are outside of Canada. Yet, Canada has an abundance of its own minerals that are very difficult to actually, including critical minerals, that are very difficult to develop for a whole variety of reasons. And you mentioned earlier about the ring of fire and whatnot. I mean, that's something that's been talked about since I remember when I started my career about a quarter century ago, people were talking about it with great enthusiasm and we're still talking. So, you know, what about, what about that, you know, developing Canada's own critical and other minerals?
115:03
Niall McGee
Look, if you want to talk about the ring of fire, specifically, it’s a story that kind of drives me crazy, quite frankly. And I’ve been covering it for, I don’t know, five or six years. I actually find it a very frustrating story to cover because it doesn’t seem like much is happening and there is a huge amount of hype. And there is a political drive from the Ontario government to develop. But there’s so much tension there. I think with any mining project, you know, ultimately a lot of it does come down to the money and whether something is economical to develop. And I don’t know if we’re there yet on ring of fire, I think a lot of people make assumptions, make statements about the unbelievable treasure trove of mineral wealth in the ring of fire and stuff like that and rhetoric like that. But very little has actually been proven in terms of mineable resources.
15:56
Niall McGee
So, it’s a particular case study. I think it attracts a lot of attention. On the surface, it does make sense. If there is this potential there in Ontario, why isn’t it being developed? I think a good part of the reason why it hasn’t been developed is the economics are just not secure enough while the funding seems to be potentially more secure now with Poilievre saying that if he’s voted in he’ll pay half the expense for the road alongside Ontario.
16:29
Niall McGee
But I would wonder that even if that does happen, whether the Australian company at the centre of it all moves forward with the project. I saw the CEO a few weeks ago and he pointed out that there’s still lots of impediments. There’s First nations, they have to finish their feasibility study. So mining is really tricky. There’s so many stakeholders and every project is different. And I think people look at ring of fire and they simplify it a little. But it’s truly a really difficult project to move forward with.
17:00
Ian Macdonald
And do you think that the trade war and Canada's reaction and sort of desire to reduce dependence on the U.S. and find other sources of economic strength may help break through that? I mean, senior politicians at both the federal and Canadian and provincial level in Ontario have been discussing the ring of fire since the trade war broke out. What kind of a catalyst might that be?
17:25
Niall McGee
I mean I think we’re seeing a little bit of evidence that yes, because Poilievre said if he gets in that he would fund the infrastructure of the ring of fire, the roads alongside the Ontario government. That does make it much more feasible for the Australian companies. I think we’re already seeing evidence specific to the ring of fire that the politics of the moment that the threat from Trump is influencing specific situations. So, yes. Absolutely. It’s a big factor and ring of fire is a great example.
17:56
Ian Macdonald
So let’s move to a discussion of net benefit reviews and approvals and the Glencore/Teck coal business approval in July of 2024, and on the same day, the government policy on net benefit review of Canadian critical minerals companies.
18:13
Niall McGee
Yeah, I mean, there were there was actually two very interesting developments so simultaneously. But they were kind of linked when you really think about the psychology behind it. So, I don't think anyone was surprised to see the government say yes to the Glencore acquisition of Teck’s met coal business, because met coal isn't a critical mineral, even though, you know, a lot of people would say, well why isn't it? Because it's part, you know, it's important to steelmaking and everything else. But technically, it wasn't. So it was easy that way for the government to say yes to the deal because it’s not a critical minerals acquisition.
18:50
Niall McGee
It would have been really interesting, I think, had Teck and Glencore reached a deal for Glencore to buy all of Teck, which, of course, was originally what Glencore wanted, and seeing if that deal would have been allowed or not under Canada. So, we really have to wait for that to happen. But the second part of the announcement that day, when the government said yes to the Teck deal, was this new policy. So yeah, very interesting. They said basically, from now on, we won't allow only under exceptional circumstances, the acquisition of large scale critical minerals companies, essentially, by anyone.
And this wasn't just cracking down on China, cracking down on potential Russia investments, any company. So, American company, Australian company. So we're still waiting to see a big test case there because you have to have a big deal for this to be tested. But it'll be really interesting when this is finally tested. And, you know, maybe we'll get lucky in a way because this would be very exciting to cover as a journalist, that Glencore does decide to go back and try and buy all the Teck and then we'll get our example and our test case to see what will happen.
20:03
Niall McGee
I think it's made a lot of CEOs nervous that the huge exit plan may not be there anymore. Like the idea that, you know, BHP can't buy you if you're a sizable Canadian mining company. I'm just using BHP as an example. And then I think that really, you know, makes people feel a bit weird or any other large acquire, Anglo-American, you name it. So, I guess we'll have to wait and see what happens on that one. But it’s certainly going to be interesting when there is a big test case.
20:31
Ian Macdonald
What I found interesting about that July 2024 policy was they used the language the “most exceptional of circumstances,” whereas a number of the other policies had just used a more vanilla “exceptional circumstances.” So it looks like it's a very, very, high bar indeed.
20:49
Niall McGee
I mean, yeah, it's sort of like, I mean, was it really even necessary to say the most exceptional instead of exceptional before? They're both very, you know, you've got a general idea that this is going to be, you know, a very rare case. But I guess they want to interject extra strict language to show how tough they're being.
21:09
Niall McGee
And I think the fact that they did it, they rolled this out on the same day that they said yes to the Teck deal. You know, it was really something that served them politically. Because for anyone that was against the Teck acquisition, the Glencore acquisition of Teck’s coal business, and there certainly were still people that didn't want to see that happen, this was kind of like politically a smart thing to do, I think, because it sort of said, “well, we allowed Teck’s coal, but we're not going to allow all of Teck,” is kind of how people were interpreting it. I mean, you know, the other sort of interesting thing about Teck too, in its isolation, is it's one of these companies that has these dual class shares and they actually have the family controlling A shares, which still for another couple of years, gives them the ability to say no to an acquisition.
21:59
Niall McGee
So they're both potentially a very fascinating test case. But if there if there is an acquisition in the next couple of years of Teck, the Keevil family, essentially, which has been involved in Teck for generations, could still say no to a deal, even without the government stepping in.
22:16
Ian Macdonald
I don't think anyone thinks it's a coincidence that they those two developments occurred on the same day, and in July of 2024, indeed.You mentioned sort of lucrative exit strategies. Let's talk about sort of the opposite now, sort of opportunistic or predatory, potential predatory acquisitions in the current, you know, trade war economic climate. What are you hearing or what are your thoughts about that topic? The government did amend the National Security Review Guidelines earlier this month to try and address that in economic security more generally. But please share your perspectives on that.
22:56
Niall McGee
Yeah, I mean, I was recently at Algoma Steel up in Sault Ste. Marie. I did a big story on the impact on the tariffs for Algoma. But it sort of struck me, and I did raise it with the CEO of Algoma, Michael Garcia, the idea of an opportunistic takeover. And he said, yeah, we're vulnerable because our share price has gotten really low and it's actually gone below book value. So technically, an opportunistic acquirer could come in and get Algoma on the cheap. Now, I think if this was a year ago or so, and there was no tariff situation going on with Trump. If an American acquirer wanted to buy Algoma Steel a year ago, I'm not sure that many people would get too bent out of shape about it. Because essentially, that happened with Cleveland-Cliffs buying Stelco last year, and that deal went through because Trump wasn't President yet. I think it would be really interesting if an American steel company tried to buy Algoma steel in this environment.
23:56
Niall McGee
Would the government allow it? I don't know what the answer to that is, but they're sending signals that they would be very reluctant to allow it. And I mean, just to go to one step further, if tariff the tariff-loving CEO of Cleveland-Cliffs made a move on Algoma Steel, it would be interesting because he's very pro-Trump, but he's running an American company. Would they allow that? And would politics be a big part of that? And I know we're getting in the realm of speculation here, but I think these are interesting things to wonder about. And it's interesting to wonder about what Canada will or won't do when Americans make acquisition attempts on Canadian companies over the months and years ahead, as long as we have Trump in power.
24:40
Ian Macdonald
Canada's had and sort of a lot of priorities over the last number of years. The October 2022 policy directed at foreign state enterprises, then the 2024 policy on net benefits, and now economic security. Does it sort of, at some point, run out of options if it also wants to develop minerals within Canada and, you know, allow for robust financing of Canadian companies?
25:04
Niall McGee
Yeah, I mean, that's a really interesting question because the idea of shutting out the Americans, I mean, that's pretty radical. And I don't know, just another example, Freeport-McMoRan, a big US copper company, would they be prevented from buying a Canadian copper company? I mean, they're a huge acquirer and they've done a lot of M&A. So yeah, at some point, if you keep closing doors, that the Chinese are more or less off limits. The Americans, we don't know yet, but there's definitely caution there. So, if they build up the barriers, it's absolutely going to and to result in less options for CEOs and companies to get taken out.
25:43
Niall McGee
I think the other side of that is Canada is, I guess, trying to build up relations with Europe and other countries and places where the relations are friendly. So maybe that becomes more of an option in the future. But yeah, absolutely cracking down on vast tracts of lands and huge acquirers in the industry, the Americans, the Chinese, reduces the options. There's no getting around that.
26:10
Ian Macdonald
And one last question - you know Canada's vast Northern territory. Back in 2020, and it wasn't a critical mineral, but we had the TMAC Shandong deal that was blocked for reasons unrelated to critical minerals. But what are your perspectives on that and that how that theme may play out in in the future?
26:31
Niall McGee
Yeah, that was a really interesting deal too, because of course, as you pointed out, it wasn't a critical minerals company. It was a gold company and not a critical mineral. Although it's interesting within the gold industry, there's a kind of mini push to try and get gold classified as a critical mineral, which I think most people would agree that's in probably never going to happen, but who knows?
Yeah, so TMAC was interesting because it wasn't critical minerals, but it was strategically a mine that was located in the Arctic. So, it had direct defense implications. So, a rare example of the government having problem with the gold acquisition.
27:09
Niall McGee
I think the gold companies in general can breathe pretty easily that those acquisitions will continue to be allowed for the most part, especially if their assets are overseas. So we have to wait to see Canadian asset getting blocked, maybe for people to go, oh, wow, now the gold industry is also at risk of you know capital constraints.
27:31
Niall McGee
But yeah, gold's a massive part of the Canadian mining infrastructure ecosystem, the biggest part really, I think, still. And so, it's interesting that you have this subset where a lot of these rules more or less don't apply.
27:47
Ian Macdonald
Very interesting. Well, Niall, thank you. This has been very interesting. And there are so many more issues that we'd love to discuss and more deeply. And we could go on for hours, I'm sure. But also, I'm also sure that we've taken up of enough of your time. So thank you for sharing your knowledge and insights. And we look forward to continuing to follow your reporting with interest. Thank you.
28:09
Niall McGee
Well, thanks very much again, and thanks for the very thoughtful and smart questions.
28:14
Counterfactual Podcast
Thank you for listening. Counterfactual is produced and distributed by the Competition Law and Foreign Review Section of the Canadian Bar Association. The opinions expressed by the participants in this podcast are their own and do not necessarily represent those of their employer or other organizations. If you enjoyed this podcast or would like to join the Canadian Bar Association, please visit www.cba.org/sections/competition-law.