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Another deep-pocketed China-based buyer is attempting to invest in a Canadian critical-minerals company, even as Ottawa fires a warning shot that it is monitoring such deals closely, and prepared to intervene.

On Tuesday, Vancouver-based Lithium Americas Argentina Corp. (Lithium Argentina) LAAC-T said it had attracted a US$70-million investment from China-based Ganfeng Lithium, which would see it take a 15-per-cent stake in its Pastos Grandes project.

Ganfeng, one of the world’s biggest lithium producers, has the right to acquire up to 50 per cent of the Argentine lithium project for an additional US$330-million in the event of a change in control of Lithium Argentina.

This is the second time in the past few years that a China-based giant has attempted to grab control of Pastos Grandes. In 2021, China’s Contemporary Amperex Technology Co. Ltd., or CATL, one of the world’s biggest electric car battery makers, attempted to buy Canada’s Millennial Lithium Corp., which at that time owned Pastos Grandes. Lithium Americas, Lithium Argentina’s predecessor company, ended up topping CATL’s offer for Millennial.

Lithium Argentina said in its Tuesday release that the Ganfeng deal is subject to a review by China but did not mention that it would be subject to a probe by Ottawa.

Lithium Argentina declined a request for an interview.

The federal government under the Investment Canada Act has the power to review and ultimately block foreign investments into Canadian companies, if it believes it to be a threat to national security.

Andréa Daigle, a spokesperson for Innovation, Science and Economic Development Canada, wrote in an email to the Globe and Mail that the government is aware of Ganfeng Lithium’s tentative financing deal with Lithium Argentina.”The government has not hesitated and will not hesitate to take action on transactions that would be injurious to Canada’s national security,’ she said.

Canada has tightened its oversight over inbound Chinese investment significantly in recent years. In late 2022, Mr. Champagne said he would only allow investments in Canadian critical-minerals companies by entities tied to China-based state-owned enterprises under exceptional circumstances.

At that time, he also ordered three China-based companies with ties to Beijing to divest themselves immediately of their stakes in three Canadian lithium development companies.

SRG Mining Inc. earlier this week called off its financing deal with a privately held Chinese company after Mr. Champagne admonished the Montreal-based graphite company for trying to skirt a national-security review by attempting to redomicile to the Middle East. Mr. Champagne told The Globe that Ottawa is prepared to use “every tool” at its disposal to make sure Canadian law is respected.

The federal government has been cracking down on China because it has used its dominance in critical minerals against the West. Resources Minister Jonathan Wilkinson said in an interview with The Globe this week that he is concerned about the potential for China to manipulate the nickel market, owing to its growing control of supplies of the electric car battery metal coming out of Indonesia. China dominates the supply chains for many critical minerals, including lithium, cobalt and graphite.

Despite the hostile investment climate for inbound investment from China, the Asian superpower continues to pursue deals with Canadian critical-minerals companies.

Vancouver-based Solaris Resources Inc. in January announced that Zijin Mining Group Co. Ltd. planned to acquire a 15-per-cent stake worth $130-million. Solaris plans to use the funds raised from China-based Zijin to advance its Warintza copper project in Ecuador. That deal is currently under a national-security review by Ottawa.

Lithium Argentina was spun off late last year from Lithium Americas Corp., which is also based in Vancouver. Lithium Americas is building a massive new mine in Nevada called Thacker Pass and expects the U.S. government to fund up to 75 per cent of the construction cost.

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