Zijin Mining Group Ltd. logo is shown in this undated handout photo. The federal Liberals say the pending takeover of a Canadian lithium mining company by a Chinese state-owned company raises no national security concerns. THE CANADIAN PRESS/HO, Zijin Mining Group Ltd. *MANDATORY CREDIT*

OTTAWA - The pending takeover of a Canadian lithium mining company by a Chinese state-owned company raises no national security concerns, federal Liberals argued Thursday.

Liberal MP Andy Fillmore, parliamentary secretary to Industry Minister François-Philippe Champagne, told a House of Commons committee that the Industry Department reviewed last fall the proposed takeover of Neo Lithium Corp. by China's Zijin Mining Group Ltd.

That review concluded that Neo Lithium is "really not a Canadian company," he told the industry committee, describing it as an Argentine company with directors in the United Kingdom and only three Canadian employees "on paper."

He said the only reason Neo Lithium "had any Canadian toehold whatsoever," was to get on the Toronto Stock Exchange in a bid to raise money for what Fillmore called an "increasingly dubious appearing" mine development project in Argentina.

Moreover, he said that project involves lithium carbonate, not the lithium hydroxide used to manufacture batteries that are critical for electric vehicles.

For those reasons, Fillmore said a formal national security review of the takeover was deemed unnecessary.

"These are the things they found, right? That in fact it's not a relevant lithium to Canada's national security interests and it's not really a Canadian company."

However, Conservative MP Ed Fast, who had called for the emergency committee meeting to find out why no formal security review was done, said it's "just false" to say Neo Lithium is not a Canadian company.

And he noted that the company's own website touts the mine as "the pre-eminent lithium brine asset in the world" to meet surging global demand for electric vehicle batteries.

"It goes without saying but bears restating that critical minerals such as lithium are a strategic asset, not only for Canada but for the world, and will play a critical role in driving our future prosperity and in meeting our environmental objectives," Fast said.

While the mine in question is in Argentina, Fast argued that it is incumbent on Canada and other "free-trading, rules-following allies" to ensure the global critical minerals industry is not monopolized by one country, especially one whose interests "are sometimes hostile toward ours."

China currently dominates the world's supply of lithium and batteries.

Conservative MP Tracy Gray further argued that lithium carbonate can be converted into lithium hydroxide for use in batteries.

But Fillmore countered that the conversion process involves additional costs and "significant environmental implications," which is why lithium hydroxide is preferred.

"I could probably make a passable hat using my socks but I'd much rather wear a hat," he said.

Thursday's meeting was called to consider a motion by Fast, calling for the committee to hold six meetings to explore the Neo Lithium takeover and whether a formal national security review should have been conducted.

In the end, committee members unanimously agreed to a Bloc Quebecois compromise to hold two meetings on the subject next week. The steering subcommittee, which is also to meet next week to set the committee's agenda for the coming months, could decide to schedule more meetings on Neo Lithium.

This report by The Canadian Press was first published Jan. 20, 2022.

News from © The Canadian Press, 2022