{"id":187061,"date":"2025-10-03T08:56:24","date_gmt":"2025-10-03T08:56:24","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/187061\/"},"modified":"2025-10-03T08:56:24","modified_gmt":"2025-10-03T08:56:24","slug":"this-raises-red-flags-feds-quiet-on-trump-stake-in-canadian-minerals-company","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/187061\/","title":{"rendered":"\u2018This raises red flags\u2019: Feds quiet on Trump stake in Canadian minerals company"},"content":{"rendered":"

The Canadian government won\u2019t say if it is reviewing the Trump administration\u2019s unusual deal with Canadian-based Lithium Americas, despite recent efforts to exclude foreign state-owned companies from the domestic critical minerals sector.<\/p>\n

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On Tuesday, the U.S. Department of Energy (DOE) announced it had reached an agreement with Lithium Americas, the Vancouver-based company that is developing one of the world\u2019s largest lithium mines in Nevada.<\/p>\n

The deal will see the DOE take a five per cent equity stake in the miner and the same percentage stake in Nevada\u2019s Thacker Pass lithium mining project, a joint venture with General Motors. The deal comes after administration officials renegotiated the terms of a $2.26 billion government loan for the mining project, which the U.S. considers a vital way to reduce its reliance on China for lithium, a critical mineral used in the production of batteries for electronics such as cellphones and electric vehicles.<\/p>\n

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\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tCritical mineral production can\u2019t be limited to one country: Joly\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

But it\u2019s believed to be one of the first, if not the first, examples of a U.S. Government entity purchasing a stake in a Canadian company \u2014 raising questions about economic independence at a time when a strained bilateral relationship has manifested in repeated jibes about the U.S.\u2019s annexation of Canada.<\/p>\n

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But Lithium Americas proves an interesting case study, for while it is a Canadian company, its main project, Thacker Pass, is based in the U.S., along with its asset, the largest lithium deposit in the country.<\/p>\n

Regardless, industry experts believe it\u2019s an \u201cunprecedented\u201d move from the Trump administration, and that it should be on Prime Minister Mark Carney\u2019s radar, while others say the stake is too small to warrant intervention from the Canadian government and the political blowback that would likely come with it.<\/p>\n

\u201cWe never thought in the past that we would have to be focused on the possibility of the U.S. government \u2026 buying into the Canadian critical mineral sector,\u201d says Lawrence Herman, an international lawyer with Herman & Associates.<\/p>\n

\u201cWe have to be concerned.\u201d<\/p>\n

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\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tForeign investors to face additional scrutiny under proposed changes to Investment Canada Act: Minister Champagne\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

In 2022, Canada\u2019s then Innovation minister, Fran\u00e7ois-Philippe Champagne, ordered three Chinese resource companies to divest their interests in Canadian critical mineral firms following a national security review and an announcement that Canada would limit the involvement of foreign state-owned companies in the sector.<\/p>\n

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But its stance on U.S. involvement in the sector is less clear, as the Trump administration sets about wresting equity holdings in producers of critical minerals to bolster supply chains deemed essential to national security.<\/p>\n

In July, the U.S. Department of Defense took a 15 per cent equity stake in MP Materials, a miner of rare earth minerals. The following month, U.S. President Donald Trump<\/a> announced that his government had acquired a 10 per cent stake in chipmaker Intel Corp.<\/p>\n

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Canada\u2019s resources have reportedly been on Trump\u2019s mind, too. In February, then prime minister Justin Trudeau<\/a> was caught in a hot-mic moment<\/a> saying the president\u2019s \u201c51st state\u201d rhetoric was likely due to his interest in Canada\u2019s critical minerals.<\/p>\n

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As such, the Canadian government could choose to review the Lithium-Americas deal under the Investment Canada Act, which vets large-scale deals to ensure benefits to the domestic economy, and includes provisions to account for national security concerns.<\/p>\n

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This would be a fitting scenario for those provisions to be tested, says Herman, given that \u201cwe are dealing with what the record shows to be an adversarial trade and geopolitical partner.\u201d<\/p>\n

\u201cThe acquisition of equity interests by a foreign government, directly or indirectly, is something that has to be reviewed and reviewed carefully to determine whether it crosses the national security threshold,\u201d said Herman, also a senior fellow at the C.D. Howe Institute in Toronto.<\/p>\n

\u201cThis will be a very important critical decision that the government will have to make.\u201c<\/p>\n

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But the Liberal government is cautious in signalling its intentions. A spokesperson for Innovation, Science and Economic Development (ISED) declined to answer all questions from Global News on the deal, and instead issued a statement saying it \u201cwelcomes foreign direct investment that benefits Canada\u2019s economy.\u201d<\/p>\n

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\u201cThe Investment Canada Act provides for the review of the most significant investments by non-Canadians to evaluate their likely net benefit to the Canadian economy, and for the review of foreign investments of any size for national security concerns,\u201d the statement said.<\/p>\n

\u201cAs part of this process, reviews of foreign investments in critical minerals will be conducted in the best interests of Canadians.\u201d<\/p>\n

The statement concluded by saying that the government would not comment on specific investments due to confidentiality provisions of the act.<\/p>\n

A spokesperson for Lithium Americas said the company has \u201cnot talked to the Canadian government about our loan or the new terms.\u201d<\/p>\n

\t\t\t\t\u2018The Trump administration sees Canada as a target\u2019\n\t\t\t\t\t\t<\/p>\n

As part of his tightening of the sector in 2022, Champagne spoke strongly about the fact that critical mineral investments would get \u201cenhanced scrutiny\u201d under the Investment Canada Act.<\/p>\n

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\u201cWhile Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical minerals supply chains, both at home and abroad,\u201d he wrote in a statement.<\/p>\n

And in March this year, Champagne announced that the government had expanded grounds for conducting national security reviews of foreign investments, adding investments that could undermine Canada\u2019s \u201ceconomic security\u201d to the Investment Canada Act.<\/p>\n

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U.S. government officials have made no secret about their desire to compete in the critical minerals sector.<\/p>\n

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In April, Trump\u2019s Interior Secretary Doug Burgum spoke about the administration\u2019s focus on considering equity stakes in miners and processors of critical minerals to help them compete against China. In a statement on the Lithium Americas deal, U.S. Energy Secretary Chris Wright said the move \u201chelps reduce our dependence on foreign adversaries for critical minerals.\u201d<\/p>\n

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But experts are split on whether the Lithium Americas deal meets the bar for intervention.<\/p>\n

\u201cThere had been a concern over the last number of years about state-owned enterprises from \u2026 adversarial and aggressive countries like China, Russia and others buying into our critical mineral sector. Now we have the prospect of the United States, through a variety of its agencies, buying into the sector, and that raises flags,\u201d Herman says.<\/p>\n

\u201cWe cannot ever discount the underlying policy of the United States under Mr. Trump is to weaken Canada so that the U.S. can increasingly take over more and more of our economy. The Trump administration sees Canada as a target.\u201d<\/p>\n

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\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u2018Trump is back at it again,\u2019 Ford says as U.S. president continues 51st state comments\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

On Wednesday, Trump returned to his talk of annexing Canada, after dialing down that rhetoric in recent months.<\/p>\n

The president was speaking about his \u201cGolden Dome\u201d missile defence plans in front of military officials in Quantico, near Washington.<\/p>\n

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\u201cCanada called me a couple of weeks ago, they want to be part of it, to which I said, \u2018Well, why don\u2019t you just join our country? You become 51 \u2014 become the 51st state \u2014 and you get it for free,\u201d Trump said.<\/p>\n

And if the government were to consider intervening in the Lithium Americas deal under the Investment Canada Act, any retaliation from the Trump administration would need to be carefully weighed, too \u2014 given the tenuous state of the bilateral relationship.<\/p>\n

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\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tHow will Canada respond to Trump\u2019s new lumber, cabinet and furniture tariffs?\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

That\u2019s where Sandy Walker, co-chair of the competition and foreign investment review group at Dentons Canada LLP, believes such a review, for a minor stake, might not be in the best interests of the Canadians.<\/p>\n

\u201cIt would be a fairly big political statement for the Canadian government to say that the U.S. government could not take a stake in a Canadian company whose major project is this project in the U.S.,\u201d Walker tells Global News.<\/p>\n

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While Walker agrees that the U.S. may no longer be seen as a \u201clike-minded\u201d country to the Canadian government, and that investments from there may be considered with more caution, she says that the stake is so small, and the potential blowback so great, that the Carney government would be unlikely to step in.<\/p>\n

\u201cThere might be some difficulty with the Canadian government taking the position that the U.S. government\u2019s taking a small minority stake in Lithium Americas would be challenged by the Canadian government as injurious to Canada\u2019s national security,\u201d she says.<\/p>\n

The Investment Canada Act, though used rarely, has blocked attempted U.S. deals before.<\/p>\n

One of its most high-profile utilizations was in 2008 when the federal government blocked the $1.3-billion sale of the space technology division of Vancouver-based MacDonald, Dettwiler and Associates to a U.S. firm. At the time, then Industry minister Jim Prentice said he was \u201cnot satisfied\u201d the sale would be a net benefit for Canada \u2014 the first time a foreign takeover was blocked in the act\u2019s 23-year history.<\/p>\n

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