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TORONTO, OTTAWA — While the energy sector is sifting through Ottawa’s new takeover rules, the mining industry is abuzz about paragraph No. 6.
That’s the line in the Industry Canada policy statement last week that revised guidelines for investments by state-owned enterprises (SOEs), showing it will monitor transactions by SOEs throughout the Canadian economy and not just in the oil sands.
“It is easy to see how they might expand this to mining under the rationale given in the sixth paragraph that they will be looking at SOE investment broadly in the Canadian economy,” said Sander Grieve, co-chair of the mining group at Toronto law firm Fraser Milner Casgrain LLP. “We’ll be watching very closely.”
Canada announced the changes on Friday as it gave the green light to two controversial acquisitions by Asian companies of domestic oil and gas producers, the $15.1-billion (U.S.) bid by China’s CNOOC Ltd. for Calgary-based Nexen Inc., and the $6-billion (Canadian) acquisition by Malaysia’s Petronas of Progress Energy Resources Corp.
It also warned that takeovers of Canadian oil sands business in particular would only be deemed of net benefit on an exceptional basis.
Asked about the message to industries beyond the oil and gas sector, Industry Minister Christian Paradis said on Monday that the government will enforce the new guidelines across the board.
“We are not for sale to foreign governments,” he said. “So when we deal with minority stakes, we are pleased but when we deal with control under the influence of a foreign government, this is where we put some clarification to say we have to make sure there is a commercial orientation.”
“The signal that we sent here is that we will watch everything,” he said.
To be sure, the Canadian mining industry does not have the number of major global mining companies of even a decade ago, when foreign takeovers saw the disappearance of such giants as Inco and Falconbridge and critics decried what they described as the “hollowing out” of Corporate Canada.
But there are a few majors left who might be cause for pause should a SOE express interest, like Barrick Gold Corp., the world’s largest gold producer, Teck Resources Ltd. and Potash Corp. of Saskatchewan Inc., the largest fertilizer maker that was nearly acquired by BHP Billiton Ltd. before the government stepped in two years ago.
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