Madam Speaker, it is my privilege to address the House today on Bill C-34, an act to amend the Investment Canada Act.
There are some positive advancements in this bill. Notably, there is the move to give the minister more time and authority to assess foreign transactions that might compromise national security. These are important considerations in an increasingly less secure world where foreign actors are using several means, through asset acquisition, technology transfers and theft, to advance their economic interests, often to the detriment of others, including trade partners and allies. It is important that Canada represents itself well in this regard, and does not always arrive as the only boy scout at the negotiating table.
I will keep the rest of my comments today to the parts of this bill which, at this stage, seem to overlook key principles on which we, the people of Canada, govern ourselves, and to how some of the proposed amendments would affect business in the manner it transpires in an interconnected world, which is becoming more and more scarce of resources.
In March 2021, the current Minister of Innovation, Science and Industry, and let us say the industry minister going forward, updated and enhanced guidelines for national security reviews for transactions involving critical minerals and state-owned enterprises. They were just words on paper it seems because in January 2022, the same minister failed to follow these guidelines when he fast-tracked the takeover of Neo Lithium mining by Chinese state-owned Zijin Mining without a national security review.
It is an important illustrative case. Neo Lithium was a Canadian-listed company with assets in Argentina. None of the assets were in Canada, but in a country whose critical mineral assets were far from any supply chain that might emerge in Canada. Why was Neo Lithium a Canadian company? It is because it is registered in Canada and is listed for trading on the Toronto Stock Exchange, notably, the world's foremost exchange for listing mining properties in every jurisdiction.
About 43% of the world's publicly listed mining companies are hosted on Canadian exchanges, with an estimated market capitalization of over $560 billion. An understanding of this strength is critical to grasp what Canada and Canadians bring to the world wide mining landscape.
National instrument 43-101 is a Canadian regulatory reporting instrument that provides clarity on a company's resource plays and is world-renowned. This instrument is one of the ways in which our resource industry and our financial markets have become internationally renowned as being best in class. Investors around the world count on our standards to understand the prospects of mineralization in resource opportunities. This is an international advantage that we would let go of at our peril. Negligence of this understanding is not an excuse for decades of hard-won international repute.
Co-existent with this regulatory standard is pricing. No international miner is going to list their prospect in a jurisdiction where they cannot raise funds to advance their project. Gaining so-called liquidity on these markets means that there is an active and broad array of buyers and sellers following the industry.
Funds are raised for mineral developments of all types, including critical minerals, at what is called a “multiple”. For simplicity, let us use the price-to-earnings multiple in Canada, which is currently around 13.8 times. Concurrently, broad market multiples in the U.S. are 22 times. Comparing apples to apples, the market in the U.S. values their companies at a rate about 60% higher than in Canada.
There is more to consider in that analysis, as that is frankly too simplistic, and the resource industry has more sway in the Canadian market, so its discount is more like 15% to its U.S. counterparts, but we have more small and micro exploration companies. Any entrance of political interference in this very transparent process will move investment funds, prospects, jobs and money from Canadian oversight to foreign oversight. The loss to our economy and our reputation will be significant. Let us ensure we have these considerations in mind as we develop policies that are meant to restrict foreign investment in Canadian-listed companies with foreign assets.
As an example, Australia is Canada's main competition for listing mining properties. Its disclosure regime is not considered as robust as Canada's, so we win on the basis of reputation.
Fifty per cent of the world's lithium supply currently comes from mines in Australia. Ninety per cent of the lithium extracted in Australia ends up in China. That is what is meant by a “critical mineral supply chain”, at which China has performed so adeptly. In order to develop Canadian mines for the world's growing critical mineral needs, we will need the invested funds from around the world for development and financing at a multiple where it makes sense here as much as it does elsewhere, particularly in regimes with much lower regulatory oversight.
In the case of Neo Lithium, the industry minister approved the takeover, ignoring his own guidelines. Because no one could find the rationale, transparently, the Standing Committee on Industry and Technology undertook a study specifically on the acquisition. The committee received significant input and made three recommendations, the most important of which is “That the government create a formalized and transparent process” for these reviews. Members will note from my previous analysis that I do not disagree with the outcome at which the minister arrived. However, I am dismayed that it arose in direct contravention to his previously stated guidelines.
Canadian companies working in exploration and development opportunities globally need to continue to lead their peers in developing the minerals the world needs more of going forward. I agree with the committee that there should be a transparent process, and it seems that the minister and his department are only learning the inputs to these decisions on the fly. If they need help, there is an excess of industry expertise in Canada that can advise outside the halls of the industry department, and the minister should not be averse to seeking this input.
Now, I contrast the minister's decision on Neo Lithium with his decision this past November, where he ordered the divestment of Chinese state-controlled shareholdings in three Canadian-listed mining companies: Ultra Lithium, which has five mineral prospects, two of which are in Canada, two in Argentina and one in Nevada; Lithium Chile, which has three mineral prospects in Chile; and Power Metals Corp, which has three Canadian exploration properties. I cannot find the consistencies. Arguably, Lithium Chile should be treated in the same manner as the minister treated Neo Lithium. However, something changed, or something is not transparent, as the committee recommended it should be.
There are dozens of Canadian-listed mining companies with foreign investors, including in critical minerals, that were not addressed by the minister. At the same time, here in Canada, our only producing lithium mine is the Tanco mine in Manitoba. Tanco was taken over by Sinomine Resource Group, a Chinese state-controlled company, in June 2019. Notably, all the minerals it extracts are exported directly to China, which is a unique approach to our strategic supply chain in critical minerals. To add confusion to the mix, Sinomine was also the shareholder of Power Metals, which the minister ordered to divest its shares in the previous example I gave. It is a twisted plot with no apparent consistency.
This brings me to a significant concern with the proposed amendments to the Investment Canada Act in the bill. The legislation proposes to remove Governor in Council oversight from the process of assessing foreign transactions for national security consideration. This would effectively dilute the government's role and place it directly in the hands of one minister. Let me remind members that this very minister has already acted with absolute inconsistency on this file, in direct contravention of his own guidelines. Now this amendment seeks to move this decision further from the transparent process that the industry committee recommended; he has stated that he agrees with the recommendation, yet he is not acting that way.
I say that words and actions need to align. Unfortunately, with the bill before us, as with so many of the government's initiatives, they do not.