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Industry Minister François-Philippe Champagne has come under fire from the Conservative opposition, and several well-regarded security experts questioned not subjecting the deal to a formal security review.Adrian Wyld/The Canadian Press

Industry Minister François-Philippe Champagne would not say when he was notified of Chinese state-owned Zijin Mining Group Co. Ltd.’s ZIJMF plans to acquire Canadian lithium company Neo Lithium Corp. NLC-X , despite being repeatedly pressed in a parliamentary committee.

During a hearing called on Thursday by the industry and technology committee, Mr. Champagne was asked on multiple occasions when he became aware of Zijin’s plans to buy Neo Lithium, but he would not answer. Instead he repeatedly insisted the deal was subject to a rigorous security review.

When Mr. Champagne was asked if he got a briefing from his officials on the Neo Lithium transaction, he declined to answer, saying he wasn’t at liberty to give details because of confidentiality requirements under the Investment Canada Act, or ICA.

Zijin’s acquisition of Toronto-based Neo Lithium was announced in October, and approved in the shortest time frame possible under the ICA.

“The law states they have 45 days after announcement to start a [formal security] review, if they believe there is a specific concern,” Carlos Vicens, chief financial officer of Neo Lithium, wrote in an e-mail to The Globe and Mail this month. “The timeline passed in early December, and no review was done.”

The Industry Minister has come under fire from the Conservative opposition, and several well-regarded security experts questioned not subjecting the deal to a formal security review under Section 25.3 of the ICA, a process that would have taken many months, and necessitated a much more thorough drilling down on national security.

Federal Industry Minister defends lack of formal security review of state-owned Chinese company’s acquisition of Neo Lithium

Parliamentary hearing witnesses call for more scrutiny over China in Canadian critical minerals after state-owned Zijin Mining buys Canada’s Neo Lithium

The Neo Lithium deal was approved after updated ICA guidelines last year, at the behest of Mr. Champagne, that mandated all deals involving state-owned firms acquiring Canadian companies, as well as those involving critical minerals assets, be subject to “enhanced scrutiny.”

Canada and the United States pledged in 2020 to work closely together to ensure a reliable supply of critical minerals such as lithium. But Mr. Champagne would not answer in the Thursday hearing whether he discussed the Neo Lithium deal with the U.S., or any of Canada’s allies.

Neo Lithium plans to build a high-grade lithium mine in Argentina. Its 3Q project has enough reserves to produce battery-grade lithium for 50 years.

Lithium is widely used in electric cars and energy storage, and is one of several battery minerals that is key to the transition to a low-carbon economy. At the moment, Canada has no lithium mines, no lithium processing plants, and no lithium ion battery plants. The industry is dominated by China, which is among the biggest miners of the element, and commands a 60-per-cent global share of lithium refining.

The Neo Lithium deal was announced a few weeks after the federal election, during a period when Parliament was suspended, and before Prime Minister Justin Trudeau announced his cabinet, which saw Mr. Champagne continue in his role as Industry Minister.

On Thursday, Mr. Champagne testified in the committee hearing that the deal was “systematically and thoroughly reviewed and scrutinized,” by the government and national security experts. It was deemed to pose no risk to Canada’s national security, and determined it would have no impact on Canada’s lithium ambitions.

The Industry Minister said that since Neo Lithium’s project is located in Argentina, any future lithium production is unlikely to make it into the Canadian supply chain. He also maintained that the type of lithium that Neo is planning to produce, called carbonate, is not as highly valued to the North American supply chain as hydroxide, because batteries that use carbonate don’t last as long.

But several industry experts have disputed the thesis that lithium carbonate isn’t strategically valuable.

Caspar Rawles, chief data officer with Benchmark Mineral Intelligence in London, told The Globe that carbonate is more widely used than hydroxide in the electric-car industry and is trading at a premium. Because of a shortage, some companies are now converting hydroxide to carbonate.

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