Canada’s government will buy stockpiled rare earth materials from the Australian company Vital Metals in a deal that will prevent the company from selling its production to China.
The small Australian company mines rare earths in Canada’s Northwest Territories and will sell its stockpiled rare earth ore to the Saskatchewan Research Council for C$3 million (A$3.3 million).
This amount is nearly half the company’s market value on Monday on the ASX of A$8.4 million.
The shares fell 25% on Monday to 3 cents after news of the deal was made public, and investors realized the chances of sales to China, the major buyer globally, had been frustrated.
The deal stops Vital from moving forward on a plan it started in December to sell that stockpile to China’s Shenghe Resources Holding Co. for C$2.4 million.
Canada recognizes the rare earths mine as a “strategic asset that contributes to the country’s prosperity and critical mineral goals,” Vital Metals said in Monday’s statement.
The intervention is part of a wider push to block Chinese firms from delving further into Canada’s critical minerals sector.
Australia has done the same with rare earths and control of Northern Minerals, where the government has ordered Chinese shareholders to reduce their holdings. Northern has a project in WA and agreed to sell output to Iluka and its Eneabba rare earths processing plant, which is now being built near Perth.
Shenghe Resources was involved in attempts to gain control of Northern Minerals and earlier this month was told by the Australian government to reduce its holding in Northern, along with other Chinese entities.
Shortly after, both companies reported their computer systems had been subjected to intense cyberattacks.
The Canadian move comes after Prime Minister Justin Trudeau’s government warned it will closely examine all transactions between domestic Canadian mining companies and Chinese government-linked groups and only approve deals “on an exceptional basis.”
In 2022, it ordered three Chinese investors to sell their stakes in a trio of Canadian lithium firms. Last month, Canadian copper miner Solaris Resources dropped a financing deal with a Chinese firm after the arrangement was subject to a lengthy national security review by the federal government.
Vital’s stockpiled material will go toward a rare earths processing facility being built by the Saskatchewan Research Council, which has made similar purchases. The government-run council previously signed an agreement to import rare earth carbonate from Hung Thinh Group, a Vietnamese minerals producer.