The Trump administration has acquired stakes in two Canadian critical mineral companies, a move that experts find highly unusual and potentially concerning for national security. Lawrence Herman, an international lawyer and senior fellow at the C.D. Howe Institute, noted that it is unprecedented for the U.S. government to invest in a Canadian company, especially in the critical minerals sector encompassing essential resources like lithium, copper, and nickel.
Recently, the White House disclosed a $35.6 million investment for a 10% share in Vancouver-based Trilogy Metals Inc., which holds mining interests in Alaska. Additionally, the U.S. government is securing a minority stake in Lithium Americas, a Vancouver-headquartered company developing a major lithium mine in Nevada. These investments come with the right to appoint a board member and options to increase ownership.
Herman emphasized that these government investments, rather than standard corporate acquisitions, could potentially influence company operations, raising concerns about political interests and information security. Given the strained relations between the U.S. and Canada, Herman urged vigilance and suggested subjecting these investments to national security scrutiny.
Under the Investment Canada Act, Ottawa has the authority to review foreign government investments, particularly in critical sectors like minerals. The tightened guidelines now require a clear “net benefit” to Canada for significant foreign state investments. Any potential national security risks would trigger a review, evaluating impacts on supply chains, geopolitical circumstances, and allied relations.
While the Trump administration’s non-controlling stakes in Canadian companies may not pose significant issues, Sandy Walker of Dentons Convocation and Foreign Investment Review Group highlighted the importance of monitoring potential restrictions on mineral exports to the U.S. The Canadian government, amidst ongoing trade negotiations with the U.S., may tread carefully in expressing concerns about these investments.
Although specific comments on these investments were not provided due to confidentiality provisions, the Ministry of Innovation, Science and Economic Development Canada assured that critical mineral investments will be reviewed in the best interests of Canadians. Legal experts like David Rosner from Goodmans LLP indicated that the current deals may not raise substantial national security concerns, given the small U.S. government stakes and the location of mining assets in the United States.
Rosner also pointed out that past government interventions typically involved non-aligned foreign governments, suggesting that despite recent tensions, the investment scenario with the U.S. may not indicate significant misalignment. However, a trend of foreign governments investing in critical mineral companies may necessitate the development of new Canadian policies to address emerging concerns in the sector.
