The sale of a gold mine in Canada’s Arctic to a Chinese firm has been blocked by the federal government.
The $230 million deal was to sell all TMAC Resources shares and its Hope Bay gold mining project to Shandong Gold Mining Co. Ltd. It has now been blocked after a lengthy national security review under the terms of the Investment Canada Act. Shandong is a Chinese state-owned company.
A spokesperson for Innovation, Science and Economic Development Canada, the department which oversees investment, would not offer comment on the reasons for the rejection of the deal citing confidentiality provisions of the Investment Act.
Mark Warner, principal counsel with international business law firm MAAW Law said he was not surprised, telling CBC news. “Even if gold isn’t a critical mineral itself, the Arctic is a critical, objective, strategic objective of China”. Both he and other analysts also suggest that the blocked deal had undertones of the conflict between Canada and China over the Meng Wanzhou case. The Huawei executive was detained two years ago in Canada on a U.S. extradition case, and two Canadians in China were arrested on allegations of spying. Since then relations between Canada and China have been at all time lows.
Retired Canadian Major-General David Fraser quoted in the Globe and Mail last month had urged the government to reject the Chinese offer saying of the Hope Bay mine, “This thing has a port attached to it. [China has] written a paper saying they want to be a near-Arctic power. Well, this gives them actual Arctic access. If you look at what they have done on the South China Sea to extend their area of influence – what’s to stop them, once they get squatter’s rights and get into this port, of doing the same thing up there?
He also noted the proximity of the site to a sensitive military installation, the NORAD warning system radar at Cambridge Bay about 100 kilometres away, adding, “We don’t need an economic foe and a political foe sitting here in my country, near some of these sites”.
Richard Fadden, a former director of the Canadian Security Intelligence Service, was quoted in the Wall Street Journal in July saying, “This purchase should not go forward. They (China) are clearly adversaries, and I think we have to take that into account every time they seek to buy something”.
The Canadian non-partisan think tank, The Macdonald Laurier Institute noted in October in a report called, ‘Hard Choices: Why Canada needs a cohesive, consistent strategy towards Communist China‘ that, “In China’s stated plans to ‘create a new global power structure by 2049,’ Canada is seen as a soft target for Beijing’s ambitions in North America. It is therefore imperative for Canada to develop a strategy which takes seriously the threats posed by the PRC”.
China is already active in the Canadian Arctic with another state-owned firm MMG Resources controlling lead, copper and zinc deposits in western Nunavut along with other Chinese state-owned investments in Sabina Gold and Silver Corp which is also active in Nunavut.
Additional information sources
- TMAC: Dec 21/20: press release
- The Hill: J Bowden: Dec 22/20: Canada blocks Chinese takeover of Arctic gold mine citing national security
- Financial Post: G Friedman: Dec 22/20: Canadian government invokes national security to block Chinese takeover of Nunavut gold mine
- Reuters (Huffpost): Daly/Lewis: Dec 22/20: Canada rejects Chinese takeover of Arctic gold mine on national security grounds
- CBC: W Strong: Dec 22/20: Ottawa blocks Chinese takeover of Nunavut gold mine project after national security review
- Globe and Mail: Fife/Chase: Nov 30/20: Retired General urges rejection of Chinese takeover of Arctic gold mine
- WSJ: V Monga: Jul 26/20: China’s move to buy Arctic gold mine draws fire in Canada
- Canadian Global Affairs Institute: P Dolata: Oct 2018: A global Arctic? Chinese aspirations in the North
- Jamestown Foundation China Brief: R Martinson: Dec 20/19: The role of the Arctic in Chinese Naval Strategy