Question Period Note: INVESTMENT CANADA ACT CRITICAL MINERALS POLICY: ZIJIN MINING GROUP ACQUISITION OF PAN AMERICAN SILVER'S LA ARENA MINE

Given the government’s policy on foreign investment in the Canadian critical minerals sector, why did the government approve Pan American Silver’s sale of its La Arena mine and project in Peru to China’s Zijin Mining Group?

• The Government of Canada will act decisively when foreign investments in Canada’s critical mineral supply chains would harm national security, both at home and abroad.

• Zijin Mining Group’s acquisition of Pan American Silver’s La Arena mine and project in Peru was subject to the national security review provisions under the Investment Canada Act.

• Following a multi-step process including rigorous scrutiny by Canada’s national security and intelligence community, the government found that the investment would not be injurious to Canada’s national security because of undertakings by Pan American Silver and Zijin Mining Group.

In May 2024, Vancouver-based Pan American Silver Corp. announced an agreement to sell its stake in Peru’s La Arena gold mine to Jinteng (Singapore) Mining Pte. Ltd., a subsidiary of China’s Zijin Mining Group Co. Ltd.
In July 2024, Jinteng filed with the Federal Court two judicial reviews of the Minister of Innovation, Science and Industry’s decision to consider the proposed acquisition of Tahoe Resources Peru S.A.C., La Arena S.A. and Empresa de Energía Yamobamba S.A.C. subject to review under the Investment Canada Act., and argued Canada does not have jurisdiction over the mine located in Peru.
In November 2024, Pan America Silver announced that it had received approval from the Government of Canada on the sale of La Arena.
Policy framework
In October 2022, the Minister for Innovation, Science and Industry issued a policy to provide guidance with regard to the application of the Investment Canada Act to foreign state-owned enterprises (SOE) investment in critical minerals and critical mineral supply chains.
The policy clarifies that the Minister would approve a proposed transaction in Canadian critical mineral sectors, with such an investor only being of likely net benefit to Canada on an exceptional basis.
The policy clarifies the participation of an SOE in an investment or proposed investment involving a Canadian business or entity operating in a critical mineral sector in Canada will support a finding by the Minister that there are reasonable grounds to believe that the investment could be injurious to Canada’s national security as set out in Part IV.1 of the Investment Canada Act. This is applicable regardless of investment value, whether direct or indirect, whether controlling or non-controlling, and across all stages of the value chain (e.g. exploration, development and production, resource processing and refining, etc.). The policy builds on the March 2021 update of the Guidelines on National Security Review of Investments, which includes critical minerals as a category of foreign investment that would be subject to enhanced scrutiny under national security reviews.
On July 4, 2024, the Minister for Innovation, Science and Industry issued a policy to provide greater clarity about the Government of Canada’s views with respect to foreign capital in the Canadian mining sector, particularly when it comes to large Canadian-headquartered firms engaged in the critical minerals sector.
The policy clarifies that the Minister would only approve transactions involving Canadian mining companies engaged in significant critical minerals operations in the most exceptional of circumstances.

The ICA provides for a net benefit to Canada review within specified transaction value thresholds, and for national security review of all foreign investments (including acquisitions of control, minority investments, and the creation of new Canadian businesses) at any dollar value (except where an investment is captured by other, sector-specific legislation such as the Bank Act). The national security review process is undertaken in consultation with Canada’s national security and intelligence agencies.

If pressed on the undertakings:

• The undertakings submitted by the parties include ensuring that a majority of the prospective copper concentrate from the La Arena project will be available for sale or distribution into Canadian supply chains and supply chains of our allies.

• Due to the confidentiality provisions of the Investment Canada Act, the Government of Canada cannot comment further.
If pressed on national security reviews in the critical minerals sector:

• The Investment Canada Act provides for the review of foreign investments of any size for national security concerns.

• Each investment is considered on a case-by-case basis depending on its specific facts.

• While the Government of Canada continues to welcome foreign direct investment, investments in the critical minerals sector require enhanced scrutiny.

• Factors that may be considered in assessing whether a particular transaction involving critical minerals would be injurious to national security include:

o the size, scope and location of the critical mineral project;
o the nature and strategic value to Canada of the mineral assets or supply chain involved;
o the degree of control or influence a state-owned enterprise would likely exert on the supply chain and the industry;
o the effect the transaction may have on the ability of Canadian supply chains to exploit the asset or access alternative sources (including domestic supply); and
o the current geopolitical circumstances and potential impact on allied relations.