The Canadian Department of Industry announced that any major trade against Canadian key mineral producers by overseas companies can only be approved in the most special circumstances. On Thursday, the Department of Industry approved Jannko's acquisition of Tech's metallurgical coal business, but imposed several strict requirements on Jannko, including the retention of employment positions in Canada for that business.
The global mineral competition has entered a new stage, and many resource-rich countries have redefined their own mineral investment policies, including Canada.
On Thursday, Canadian Minister of Industry Francois-Philippe Champagne announced that in the future, overseas companies will only be approved for any major transactions with key Canadian mineral producers under the most special circumstances.
This is particularly important for foreign capital. Champagne emphasized that while foreign investment is crucial for further exploration and site development of small and medium-sized Canadian mining companies, the government's task is to safeguard national security and economic interests. Canada welcomes foreign investment, but must balance strategic interests while supporting resource development.
Tightening Spell
On the same day, the Canadian Ministry of Industry approved a acquisition transaction, namely Glencore's acquisition of Teck Resources' metallurgical coal business in Canada. Glencore will acquire 77% of the business for $6.9 billion in cash, with Japanese Nippon Steel getting 20% and South Korea's POSCO exchanging stakes in two other Canadian coal companies for the remaining 3% of the metallurgical coal business in Teck.
Teck Resources said it will use the funds generated from the transaction to buy back up to CAD 2.75 billion ($2 billion) of Class B subordinate voting shares, reduce up to $2 billion in debt, and provide funding for recent copper business growth. The transaction is expected to be completed on July 11.
The Canadian Ministry of Commerce pointed out that in order to obtain approval, Glencore has agreed to keep the headquarters of Elk Valley Resources' metallurgical coal business in Canada for at least 10 years, ensure that most of the directors of the department are Canadians, and retain most employees for at least five years.
Champagne pointed out that in the future, when Canada evaluates important mergers and acquisitions in the critical mineral sector, it will set high standards for net benefits evaluation. This high standard reflects Canada's recognition of the strategic importance of these critical mineral industries and the need for the government to take decisive action to protect these industries.
This is part of Canada's mineral strategy, aimed at controlling 31 critical minerals including copper, lithium, aluminum, tin, and nickel. The Canadian government has identified the strategic position of 31 minerals, believing that these minerals are crucial for modern technology and energy transformation.
Under Canadian investment law, the government can decide to approve or reject a transaction based on the net benefit it brings to the country. Given that most of Canada's large mining companies are copper producers, this means that most foreign transactions cannot avoid strict scrutiny by Canadian authorities.