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Solaris Resources has scrapped plans to sell a minority stake to China’s Zijin Mining Group because it feared the deal was unlikely to meet Canada’s stringent foreign- investment standards in a timely manner, the Canadian company said on Tuesday.
In January, Solaris announced plans to sell a 15% stake in the company to state-owned Zijin for C$130 million ($95 million)to help develop its Warintza copper project in Ecuador. But the deal needed approval under the Investment Canada Act, which was revamped in late 2022 to bring additional scrutiny on foreign investments from state-owned enterprises in the critical minerals sector.
“That this transaction cannot be completed in a reasonable time frame signals that Canada’s critical minerals policy is counterproductive in relation to foreign assets,” said Solaris Resources’ CEO, Daniel Earle, in a statement.
The company’s share price had underperformed compared with its peers due to the overhang of Canadian regulatory uncertainty “in an environment of heightened domestic political sensitivity,” Earle added.
The stock was down 0.4% on the Toronto Stock Exchange late on Tuesday morning, compared with 0.3% rise in the benchmark Canadian share index.
In a research note, RBC Capital Markets said the scrapping of the deal removes regulatory uncertainty and the dilutive value of the transaction.
Canada’s government has taken a tough stance specifically on investments from China in critical minerals such as copper, graphite and lithium. Earlier this year, Canada asked SRG Mining, a graphite miner, to call off a planned investment from China’s Carbon One New Energy Group.
($1 = 1.3641 Canadian dollars)
(By Divya Rajagopal; Editing by Matthew Lewis)
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