A C$199-million deal . . .
China state-owned Shandong Gold Mining Co.’s (SD Gold) bid to buy Toronto-based TMAC Resources, which operates a gold mine at Hope Bay, Nunavut, about 190 km north of the Arctic Circle, is causing a stir. Canadian opponents of the C$199-million deal argue that Ottawa should block it to slow China’s acquisition of strategic minerals and minimize Chinese influence in the Canadian Arctic. The Government of Canada is currently reviewing the transaction under the Investment Canada Act.
China’s Polar Silk Road in Canada?
In 2018, China announced the Polar Silk Road component of its Belt and Road Initiative, an ever-expanding idea backed by trillions of dollars in funding to link Asia and Europe through a variety of trade infrastructure projects. The most notable initiatives (i.e. LNG plants, rail lines, cargo shipments, and data cables) have been along the Northern Sea Route linking Beijing to Norway. Opponents of the SD Gold deal point out that Chinese state-owned enterprises have other investments in the Canadian North, many of which are looking to expand road and port infrastructure to access the mines more efficiently. This latest deal could be a sign that the Polar Silk Road is coming to Canada.
Balancing business, local, and national interests . . .
TMAC may have few alternatives to repay its debt and continue operations if the federal government blocks the deal – of the 76 companies that TMAC approached, SD Gold was the only bidder. The COVID pandemic has slowed the mine’s operations, and TMAC said it would have difficulty maintaining the mine past July, let alone expand the mine, as initially planned. The mine’s continued operation could contribute to Hope Bay and local communities through royalty and tax payments to the Inuit and territorial government, and through employment and skills training for Inuit employees. While these matters are front and centre for the Kitikmeot Inuit Association, the owner of the land on which Hope Bay sits, Ottawa’s review of the deal may get caught up in broader Canada-China tensions. The issue also points to the need for co-ordinated Arctic and Asia Pacific strategies.
READ MORE
- Policy Options: When it comes to Canada-China relations, it is time to look north
- TMAC Resources: TMAC provides regulatory update on previously announced plan of arrangement with Shandong Gold Mining Co., Ltd.
- The Wall Street Journal: China’s move to buy Arctic gold mine draws fire in Canada
