The government of Canada has ordered three Chinese firms to divest from lithium companies in the country, following the introduction of tighter rules on foreign investment in the critical minerals sector earlier.

Sinomine (Hong Kong) Rare Metals Resources must divest itself from its investment in Power Metals, Chengze Lithium International must sell its interest in Lithium Chile and Zangge Mining Investment (Chengdu) has to exit its investment in Ultra Lithium.

“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical minerals supply chains, both at home and abroad,” said Innovation, Science and Industry Minister François-Philippe Champagne.

In accordance with the Investment Canada Act (ICA), foreign investments are subject to review for national security concerns, and certain types of investment, such as those in the critical minerals sectors, receive enhanced scrutiny.

On Friday, Prime Minister Justin Trudeau’s government raised the bar that foreigners must clear to join Canada’s critical minerals industry, which makes it harder for foreign State-owned companies to pursue deals that target critical minerals, including lithium, nickel, copper and uranium.

Transactions by foreign State-owned firms will only be approved on “an exceptional basis”.

“We reviewed a number of investments in Canadian companies engaged in the critical minerals sector, including lithium. These companies were reviewed via the multi-step national security review process, which involves rigorous scrutiny by Canada’s national security and intelligence community,” said Champagne.

“The federal government is determined to work with Canadian businesses to attract foreign direct investments from partners that share our interests and values. Canada’s critical minerals are key to the future prosperity of our country. We will continue to encourage and work with Canadian businesses that require investment capital, by helping to identify and find partnerships that will serve in the best interest of Canadian businesses, workers, and the economy.

The government of Canada is busy finalising its critical minerals strategy, through which it seeks to position the country as a global supplier of choice for critical minerals.