The federal government’s critical minerals strategy fails to attract investment in Canada’s north. This leaves the Arctic vulnerable to security risks from Beijing and other bad actors, as reported by the McDonald Laurier Institute. Chinese state-owned enterprises are turning to the acquisition of junior mining companies to dominate the earth’s supply of rare minerals. They exploit Canada’s minimal regulatory oversight of foreign investment and take advantage of gaps in responsibilities between Ottawa and provincial/territorial counterparts.
Former Assistant Deputy Minister of Northern Affairs Stephen Van Dine warns that Chinese state-owned enterprises are operating in Canada, with the potential to undermine Canada’s critical minerals strategy and leave the Arctic backdoor open. China recently acquired an 18.1 percent share in Vital Metals, the owner of Canada’s only operating rare earth mine, Nechalacho project.
The Investment Canada Act, administered by Industry, Science, and Economic Development Canada, regulates foreign investment in the country. However, the act does not allow provincial and territorial governments to address issues related to foreign investment or national security. Mr. Van Dine highlights the challenges faced by territorial governments in balancing demands for investment while protecting national interests.
China’s investments in projects like Fortune Minerals’ NICO critical minerals project raise concerns about the lack of a northern projects registry with foreign direct investment information. To safeguard national interests and address security risks, Canada must update its critical minerals strategy to improve access for junior mining companies, enhance investment oversight, and promote intergovernmental cooperation.
Without these changes, Canada risks losing control of its critical minerals and becoming overly dependent on Chinese products. Enhanced coordination between Ottawa and territorial/indigenous governments, alongside streamlined oversight and improved access to capital, are crucial steps for protecting Canada’s national security and critical minerals reserves.