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Canada Blocks Rare Earth Sale to China With Vital Metals Deal
June 17, 2024
Canada’s government has stepped in to purchase stockpiled rare earth materials from Vital Metals Ltd., preventing the small Australian firm from selling its production to a Chinese buyer, according to Bloomberg.
This deal is part of a concerted effort by Prime Minister Justin Trudeau’s administration to restrict Chinese firms from gaining further foothold in Canada’s critical minerals industry. The government has issued warnings that it will scrutinize transactions involving domestic mining companies and Chinese entities linked to the government, approving such deals only under exceptional circumstances. This stance was clearly demonstrated in 2022 when the Canadian government ordered three Chinese investors to divest their stakes in three Canadian lithium firms.
Vital Metals, which operates a rare earths mine in Canada’s Northwest Territories, will sell its stockpiled materials to the Saskatchewan Research Council for C$3 million ($2.2 million). This agreement supersedes a previous plan initiated in December to sell the same stockpile to China’s Shenghe Resources Holding Co. for C$2.4 million ($1.7 million). The Canadian federal government’s intervention underscores the strategic importance it places on the rare earths mine, which Vital Metals highlights as a significant asset contributing to the nation’s prosperity and critical mineral goals.
The materials purchased from Vital Metals will be utilized in a rare earths processing facility currently under construction by the Saskatchewan Research Council. The council, a government-run entity, has been actively involved in similar acquisitions to bolster Canada’s supply of rare earth materials. Previously, it signed an agreement to import rare earth carbonate from Hung Thinh Group, a minerals producer based in Vietnam.
In a related development earlier this year, Canadian copper miner Solaris Resources Inc. abandoned a financing arrangement with a Chinese firm after facing an extended national security review by the federal government. These actions indicate Canada’s increasing vigilance and protective measures concerning its critical mineral resources.
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