① Industry Canada announced that any major transaction by an overseas company against a key Canadian mineral producer can only be approved under the most special circumstances; ② On Thursday, the Ministry of Industry approved Glencore's acquisition of Tektronix's metallurgical coal business, but put forward a number of strict requirements for Glencore, including retaining jobs in the business in Canada.
Financial Services Association, July 5 (Editor: Malan) The global competition for minerals has entered a new stage. Many resource-rich countries have re-formulated their mineral investment policies to this end. Canada is one of them.
On Thursday, Canada's Minister of Industry Francois-Philippe Champagne announced that any major transactions by overseas companies against key Canadian mineral producers will only be approved under the most exceptional circumstances in the future.
This is particularly critical for overseas capital. Champagne emphasized that while foreign investment is critical to further exploration and site development for small Canadian mining companies, the government's task is to protect national security and economic interests. Canada welcomes overseas investment, but strategic interests must be balanced while supporting resource development.
Clamped mantra
On the same day, Industry Canada approved an acquisition deal where Swiss Glencore acquires Canada's Tec Resources' metallurgical coal business. Glencore can obtain 77% of the shares in the business through a cash transaction of 6.9 billion dollars, Japan's Nippon Steel will acquire 20% of the shares, and Korea's POSCO will use shares in two other Tec coal companies in exchange for the remaining 3% shares in the metallurgical coal business.
Tektronix Resources said it will use the capital generated from the transaction to buy back up to 2.75 billion Canadian dollars (2 billion US dollars) of Class B sub-voting shares, reduce debt by up to 2 billion US dollars, and fund the recent growth of the copper business. The deal is expected to close on July 11th.
The Canadian Department of Commerce stated that in order to obtain approval, Glencore agreed to keep the headquarters of Tektronix's metallurgical coal business Elk Valley Resources in Canada for at least 10 years, ensure that most directors of the department are Canadians, and that most employees work for at least 5 years.
Champagne pointed out that in the future, Canada will set a high standard for evaluating net benefits (net benefits) when evaluating important mergers and acquisitions in key mineral sectors. This high standard reflects Canada's recognition of the strategic importance of these key mining industries and the need for the government to take decisive action to protect these industries.
This is part of Canada's mining strategy to control 31 key minerals, including copper, lithium, aluminum, tin, and nickel. The Government of Canada has established a strategic position for 31 minerals that it believes are critical to modern technology and the energy transition.
Under the Canadian Investment Act, the government can decide to approve or reject transactions based on the net benefits that mergers and acquisitions bring to the country. And since almost all of Canada's large mining companies are copper producers, this means that most foreign-funded transactions cannot avoid strict scrutiny by the Canadian authorities.