Canada’s new foreign investment rules: What critical minerals miners need to know

New Investment Canada Act rules will require certain types of minority investments into a mandatory pre-closing filing regime.

Canadian critical minerals companies will need to consider how they raise foreign capital as Ottawa prepares to implement new Investment Canada Act rules that will require certain types of minority investments into a mandatory pre-closing filing regime.

The changes could have particular consequences for miners and developers that rely on strategic investors to finance exploration, feasibility work, and project development, Toronto- based partner in Cassels’ Competition & Foreign Investment Group Chris Hersh told MINING.COM in an interview.

The legislation underpinning the new regime was enacted in 2024, but key provisions requiring regulations are set to take effect in early 2027.

Under the coming rules, certain investments by non-Canadians in businesses operating in prescribed sensitive sectors will require notification before the transaction can be completed — and will target investments that do not involve an acquisition of control of a Canadian business.

Currently, acquisitions of control of Canadian businesses that fall below the applicable net-benefit review threshold generally require a notification that can be submitted up to 30 days after implementation, while minority investments that do not trigger a mandatory filing can be voluntarily notified to obtain greater certainty under national security review provisions of the law.

This is because the Investment Canada Act allows the government to review foreign investments on national security grounds regardless of their value or whether control is acquired.

The 2024 amendments will expand mandatory filings to certain non-control investments where the Canadian entity conducts a prescribed business activity and the foreign investor obtains rights including, those relating to access to material non-public technical information or material assets, together with certain governance or other special rights.

For mining companies, this means that a range of minority investments by foreign investors may be caught by the new regime and they will need to proactively consider how to factor this into their business planning.

“The new mandatory notification regime is not going to apply to every single transaction,” Hersh said.

“But companies now need to consider how the Investment Canada Act applies not only to control transactions, but also minority interest transactions,” where the investment meets the conditions established by the new regime.

Exactly which businesses will be covered remains one of the biggest outstanding questions.

Ottawa has yet to finalize the “prescribed business activities” that will trigger the requirement.

The federal government has said those activities will target sensitive sectors and will be informed partly by existing government policy statements and guidelines, including Canada’s Sensitive Technology List, as well as those relating to the application of the national security regime Critical minerals are already treated as a national security priority under Canada’s foreign investment policy.

Hersh expects critical minerals to be among the sectors affected, while emphasizing that the regime is considerably broader than mining.

“It’s not directed specifically at critical minerals, it’s directed at a range of sensitive sectors that includes critical minerals,” he said.

“In short, investments across a broad range of sectors will be potentially affected by the new law.” For critical minerals companies, the immediate issue may be less whether foreign capital remains available than how quickly companies can access it.