A Chinese company is buying from and investing in a rare earth mining project in the N.W.T. — which, for years, had been marketed as a way for Canada to reduce its reliance on China for a material that’s crucial in types of low-carbon technology.
Vital Metals, an Australian company that owns the Nechalacho mine project, announced on Sunday that Shenghe Resources had become a “cornerstone investor” — having purchased a 9.9 per cent stake in the company for $5.9 million in Australian currency. Vital said it would also sell Nechalacho’s “stockpiled rare earth material” to Shenghe Resources for $2.6 million.
Bill Braden, a former N.W.T. MLA who for two years worked for Vital’s Canadian subsidiary, Cheetah Resources, as a communications assistant for Nechalacho, calls it a “betrayal.”
“They have abandoned what was the core ethos, I guess, of this whole thing,” he said.
“Here was a world class Canadian deposit that could be a serious player in breaking Chinese dominance of the rare earth market in the western world. And now sadly, so sadly for me, a Canadian resource is now simply part of the Chinese supply chain.”
Members of the Yellowknives Dene First Nation look at the first bastnaesite concentrate produced on July 21, 2021 at the Cheetah Resources’ Nechalacho project near Yellowknife. (Cheetah Resources/billbradenphoto/CP)
According to Natural Resources Canada, 60 per cent of the world’s supply of rare earth is produced in China. The Nechalacho project, where Vital started mining in 2021, offered an alternative. The company had said it would extract metals and minerals in the N.W.T., send it to Saskatchewan for processing, and then sell it to European, Canadian and American separation facilities.
Vital Metals opened a processing plant in Saskatoon in September 2022. The facility was still under construction when Prime Minister Justin Trudeau toured it in January. A few months later, Vital Metals paused construction, before dropping the plant and placing a separate Canadian subsidiary that had been building it into bankruptcy.
‘The Chinese have got money’
Tom Hoefer, the executive director of the Nunavut and NWT Chamber of Mines, told CBC News the move is confusing for some — but that Vital Metals has found a way to keep advancing an “exciting project.”
“The reality is the Chinese have got money. And the other reality is that companies that are exploring and trying to develop projects are having a very difficult time raising money from the West,” he said.
The stockpile sale is expected to be done by early 2024. According to a media statement from Vital Metals, Shenghe has “no preferential rights over future production from Nechalacho” — meaning they haven’t also struck a deal for any more of the ore mined there.
Prime Minister Justin Trudeau, right, speaks with Vincent Laniece, with Vital Metals, during a tour of the Vital Metals rare earths element processing plant in Saskatoon, in January of 2023. (Liam Richards/’The Canadian Press)
Shenghe could, however, acquire up to 18.1 per cent of Vital Metals in the future, the Australian company said back in October when the investment was announced. Hoefer said he is “not that concerned” about China having that size of stake in a company that is doing extraction in the N.W.T.
“Canada hasn’t said anything at this point, which one might presume then that this isn’t the problem for Canada at this percentage,” he pointed out.
Canada facing calls for a review
Braden is calling on the federal government to investigate the investment. The House of Commons Standing Committee on Industry and Technology voted in favour of asking for a review of the investment under the Canadian Investment Act as an issue of national security.
CBC News reached out to Canada’s minister of Innovation, Science and Economic Development about whether there will be such a review. In an emailed statement around noon Tuesday, a department spokesperson said the Canadian government is aware of the “proposed transaction” and confidentiality provisions under the Investment Canada Act mean it can’t comment on reviews.
“The Investment Canada Act provides for a national security review of any foreign investment into Canada, regardless of its value,” the statement reads. “The government has not hesitated and will not hesitate to take action on transactions that would be injurious to Canada’s national security.”
Heavy machinery clears brush at the Nechalacho mine project in April 2021. (Liny Lamberink/CBC)
Caitlin Cleveland, the N.W.T.’s minister of Industry, Tourism and Investment, said in an emailed statement Monday night the Canadian government could review the financing structure and agreement between Vital and Shenghe, but she was “unaware if this is being pursued at this time.”
“Generally, the [Government of the Northwest Territories] is supportive of the advancement of critical minerals projects in the N.W.T.,” she wrote. “Nechalacho is one of those N.W.T. critical minerals projects, and has the opportunity to contribute rare earth elements to global supply chains.”
Cleveland said the territorial government could not comment on Vital Metals’ decision to take investment from or sell material to a Chinese company.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
