In a first, Canada has blocked the sale of stockpiled rare earth elements mined in the far north to a Chinese corporation that dominates the field, a senior government official divulged Tuesday.

However, more similar interventions may follow as Ottawa "cracks down on Chinese investment in Canada's mining sector," according to an official who spoke to AFP on condition of anonymity, because they were not authorized to talk publicly about the topic.

Australia's Vital Metals had planned to sell the minerals to China's Shenghe Resources, but Resources Minister Jonathan Wilkinson "stepped in to facilitate a deal so that the materials could stay in Canada," according to the source.

The stockpile was instead sold for Can$3 million (US$2.2 million) to the Saskatchewan Research Council, which is building processing facilities.

Canada claims the minerals are a national security issue critical to its economic decarbonization agenda.

Rare earth elements and other key minerals, such as lithium, cadmium, nickel, and cobalt, are critical components in electric car batteries, wind turbines, and other applications.

Investment and export limitations were put mostly on China, which controls the crucial minerals sector, while billions of dollars in government incentives have been provided to accelerate local mining and the development of new battery factories, for example.

Wilkinson's office stated that Canada is "taking steps to develop secure domestic critical minerals value chains to reduce foreign reliance."

"When it comes to financing questions from mining companies operating in Canada, the answer cannot simply be investment from Chinese state-owned industries," it stated.

Following the tightening of investment regulations in 2022, Industry Minister François-Philippe Champagne ordered three Chinese resource corporations to surrender their shares in Canadian key mineral enterprises.

Earlier this year, Montreal-based SRG Mining announced plans to relocate to the United Arab Emirates to evade a Canadian investigation of a proposal to sell a roughly 20% share in the company to a Chinese entity.

However, it pulled out of the arrangement with Carbon One New Energy Group in March after Champagne warned against attempting to dodge Canadian regulations.

Vital Metals' stockpile from its Nechalacho mine in the Northwest Territories was to be processed in its facility in Saskatchewan, but work was suspended after the company's Canadian unit declared bankruptcy.

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