The Trump administration has acquired stakes in two Canadian critical mineral companies, a move that industry experts find highly unusual and possibly unprecedented, raising questions about potential national security implications that may prompt Ottawa to intervene.
Lawrence Herman, an international lawyer and senior fellow at the C.D. Howe Institute, highlighted the significance of the U.S. government directly investing in Canadian companies, especially in the sensitive critical minerals sector. These minerals, such as lithium, copper, and nickel, are crucial for modern technology.
Recently, the White House announced a $35.6 million investment for a 10% ownership in Trilogy Metals Inc., a Vancouver-based company with mining operations in Alaska. The U.S. government also secured a minority stake in Lithium Americas, another Vancouver-headquartered firm developing a major lithium mine in Nevada.
Herman emphasized that these government-backed investments could have implications beyond typical market transactions, potentially influencing company activities and access to critical technologies. Given existing tensions between the U.S. and Canada, Herman urged caution and suggested that the federal government should consider subjecting these investments to a national security review.
Under the Investment Canada Act, Ottawa has the authority to review foreign government investments, especially in critical sectors like minerals. The guidelines were reinforced in 2022, requiring a clear “net benefit” to Canada for significant foreign state investments, with provisions for national security scrutiny triggered by potential risks.
Sandy Walker, from Dentons Convocation and Foreign Investment Review Group, noted that since the U.S. investments are non-controlling, they may not pose significant concerns. However, potential restrictions on mineral exports to the U.S. could raise issues for Canada’s domestic supply chains.
While the Canadian government reviews foreign investments in critical minerals for the country’s best interests, specific comments on individual deals are withheld due to confidentiality rules. David Rosner of Goodmans LLP downplayed immediate national security concerns due to the small U.S. government stakes and the location of the mining assets within the United States.
Rosner also pointed out that past government interventions in critical mineral investments typically involved non-aligned countries, suggesting that despite recent tensions, Canada’s alignment with the U.S. may mitigate potential conflicts. However, if a trend of foreign government investments in critical mineral companies emerges, Canada may need to develop new policies to address resulting concerns.
