Marshall Eidinger comments in Lexpert's
special edition on
Finance and M&A on Canada's Policy Regarding
Foreign Investments from State-Owned Enterprises in Critical
Minerals under the Investment Canada Act. In line with the
strategy to bolster domestic capabilities, the government of Canada
ordered three Chinese firms to pull their investments out of three
Canadian lithium companies in 2022.
Canada's protectionist measures might be unwelcome for Canadian
mining companies dealing in critical minerals, however. Marshall
says that, "First and foremost, right away, the pool of
potential capital available to them has been significantly reduced.
Any ability to finance now will require them to go to a shallower
or smaller pool of potential parties, which also means that how
they finance their projects may change."
Instead of a straight equity investment with associated governance
rights, issuers may have to use unique securities or royalty
financing, Marshall says. Or, rather than a financing transaction,
they may seek out an M&A transaction, so they are better
capitalized as a combined entity than alone.
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