The other is Power Metals (TSX-V:PWM, OTCQB:PWRMF), which has lithium claims in Northeastern Ontario, and which the company says also contains cesium and tantalum, which are rare earth metals.
Last week, François-Philippe Champagne, minister of Innovation, Science and Industry, announced the Canadian government is ordering three Chinese companies to divest from Canadian companies involved in critical minerals exploration and development: Sinomine Rare Metals Co. Ltd., Zangge Mining Investment Co. Ltd., and Chengze Lithium International Ltd.
Earlier this year, Ultra Lithium announced Zangge Mining would invest in Ultra Lithium’s Laguna Verde Brine lithium project in Argentina. Under the agreement, Zangge would pay Ultra Lithium $10 million, and invest $40 million in the Laguna Verde project, which would give Zangge a 65% stake in the project.
In January, the Canadian government approved the sale of Canada’s Neo Lithium Corp. to Zijin Mining, a Chinese company, for C$960 million ($715m). In approving the sale, the Canadian government noted that Neo Lithium’s sole development project was in Argentina.
The Zangge investment in Ultra Lithium is also for a project in Argentina. Unlike Neo Lithium, however, Ultra Lithium also has lithium claims in Ontario and the U.S.
Ultra Lithium did not initially respond to BIV’s request for comment when the divestment order was announced last week. But the company has since issued a news release expressing surprise at the decision, and challenging the federal government to help find alternative financing.
“The board of directors and management of the company are very surprised at Canada’s policy against Chinese investment in Canada’s lithium projects and believe that the announcement has been detrimental to the company’s many Canadian shareholders,” Ultra Lithium said. “The company is assessing its legal and other options to preserve value for its shareholders.
“Ultra Lithium is in full support of Canada’s push toward clean energy and has been committed to lithium and green energy since 2009. As a junior exploration company Ultra Lithium and many of its peers will require significant capital to bring their projects to production and build Canada’s critical minerals supply chain.
“Ultra Lithium encourages the federal government to actively follow through on its commitment to Canadian businesses to identify and find alternative sources of capital and to retain Canada’s status as a stable and top tier mining destination.”
Power Metals (TSX-V:PWM, OTCQB:PWRMF) said it is also reviewing its legal position with respect to the federal government divestment order. Sinomine Rare Earths had earlier this year made a $1.5 million equity investment in Power Metals.
“While we are surprised by Canada’s stance towards Chinese investment into Canada’s critical minerals industry, it clearly shows that they see the opportunity and assets of Power Metals as too valuable for such foreign investment,” Power Metals CEO Johnathan More said in a press release.
“Power Metals has made a substantial discovery of cesium, lithium and tantalum and this political gamesmanship demonstrates the extreme value of Power Metals assets. Sinomine will respond to the Canadian government shortly as they look at the appeal process.”
The third Chinese company ordered to divest its equity stakes in Canadian companies is Chengze Lithium International Ltd., which has investments in Lithium Chile Inc.(TSX-V: LITH), headquartered in Calgary.
The Chinese government has also responded to the Canadian divestment order, through China’s Commerce ministry.
According to the Xinhua News Agency, the Chinese Commerce ministry has accused Canada of “politicizing economic and trade relations.”
(This article first appeared in Business in Vancouver)