Canada’s Industry Minister says Neo Lithium takeover was “thoroughly reviewed and scrutinized”

Minister of Innovation, Science and Industry François-Philippe Champagne says Zijin Mining’s proposed takeover of Neo Lithium (TSXV: NLC; US-OTC: NTTHF) is not “injurious to Canada’s national security.”  

Speaking to the House of Commons industry committee on January 27, Champagne said the proposed acquisition went through a review under the Investment Canada Act (ICA), which involved scrutiny from the industries ministry and Canada’s national security and intelligence agencies.  

“Transactions involving critical minerals are systematically and thoroughly reviewed and scrutinized — Neo Lithium  was no exception,” said Champagne. “Let me be very clear. Neo Lithium was reviewed by the government and national security experts, full stop.” 

If security and intelligence agencies find that a transaction may be injurious to national security, it is referred to the governor in council, who may order an extended review, Champagne said. But if there are no threats, the process ends.  

“Those who claim that a national security review was not done in [Neo Lithium’s] case … are cherry picking and jumping ahead to another step in the process further down the chain of verifications under the ICA,” said Champagne, adding that there was sufficient information to conclude that the transaction would not be harmful to Canada’s security.  

Neo Lithium’s Tres Quebradas lithium brine project (known as the 3Q project) is located in the Argentine province of Catamarca. It has measured and indicated resources of 5.3 million tonnes lithium carbonate equivalent at an average grade of 636 mg/l lithium. 

In October, Zijin Mining said it would acquire Neo Lithium for $6.50 per share in cash. Neo Lithium’s shareholders approved the acquisition in December.  

On January 11, Neo Lithium received clearance from Argentina’s environment and mining authority for the construction and operation of the 3Q project — one of the final conditions Zijin Mining needed to acquire the junior exploration company, and the Chinese miner “is in the process of obtaining approval for the transaction from relevant authorities in the People’s Republic of China,” Neo Lithium said. 

On January 17, Conservative party leader Erin O’Toole asked the federal government to conduct a national security review of the proposed takeover.  

He said that the review was critical for Canada to safeguard its supply and access to critical minerals to protect its economy and ensure that Canadian mining companies stay ahead of competitors under “autocratic, non-democratic rule like the Chinese Communist Party.”   

Champagne said Neo Lithium’s 3Q project would not be mined for lithium hydroxide but lithium carbonate, a form of lithium that Canada will not be relying on for electric battery production.  

The government considers factors such as Canada’s ability to exploit the asset, the global commodity price, the country’s ability to produce the commodity, while determining a national security concern, the minister said.  

“It is irresponsible to brush them aside for a headline,” he said.  

Champagne also reminded the committee that the Federal government had blocked a $230 million proposal to sell TMAC Resources and its Hope Bay gold project in Nunavut, Canada, to China’s Shandong Gold mining in 2020.