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First Quantum Minerals Ltd. reached an agreement with Jiangxi Copper Co Ltd., its second-largest shareholder, that limits the Chinese firm’s ownership of the Canadian copper producer.
First Quantum said Tuesday that the shareholder rights agreement prevents Jiangxi from buying more stock in t company or selling a shares block of 5% or larger without First Quantum’s consent. The three-year agreement also gives Jiangxi the right to nominate one person for consideration by First Quantum’s governance committee to the board of directors.
The agreement follows efforts by Canada’s government to crack down on Chinese investment in the critical minerals sector. The government said earlier this month it would only approve foreign acquisitions of Canadian critical mineral firms in “the most exceptional of circumstances.”
Canada and its Western allies have become increasingly concerned about securing critical minerals needed for goods ranging from electric vehicle batteries to electronics, prompting them to push to develop supply chains to loosen China’s global dominance over the industry.
The new agreement doesn’t restrict the Chinese company’s capacity to purchase assets from First Quantum, according to a representative from Jiangxi. Acquiring and investing in overseas mining assets is a major task of the company, and it will evaluate projects based on factors including price and government policy headwinds toward China, the representative said.
One of the largest copper smelting companies in the world, Jiangxi has an 18.5% stake in First Quantum and bought an additional $212 million in shares in January.
First Quantum is among several Canadian-headquartered firms that count Chinese firms among their largest shareholders. The company has also received financial support from the Chinese company after it was forced to shutter its flagship copper mine in Panama in 2023.
“It marks yet another step in Canada’s push to contain Chinese investment in its minerals and mining sector,” Bloomberg Intelligence analysts including Michelle Leung wrote in a note. The move may intensify competition for copper resources, delivering a setback to Jiangxi’s efforts to cut costs and boost its concentrate self-sufficiency ratio, they said.
First Quantum said in its earnings report on Tuesday that it has begun a hedging program to protect from downside price movements in the copper market. More than half of planned production remains exposed to spot copper prices until the end of 2025, it said.
(By Jacob Lorinc)
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