Chinese state ownership in a B.C. junior uranium exploration company and the Australia miner that wants to buy the company could complicate, delay and or even frustrate a $1.1 billion acquisition.
Fission Uranium (TSX: FCU, OTCQX: FCUUF), based in Kelowna, owns the PLS uranium project in Saskatchewan.
In June, Australia’s Paladin Energy Ltd (ASX:PDN OTCQX:PALAF) made a $1.1 billion bid for Fission Uranium. Under the deal, Fission Uranium shareholders would be bought out and end up owning 25 per cent of Paladin Energy.
But the proposed sale will now have to pass a national security review.
Fission Uranium shareholders include China’s CGN Mining Company Ltd., which opposed the plan of arrangement, according to Fission Uranium. The company announced in August it would delay a shareholder vote, because it would not have enough votes to approval the plan of arrangement.
Fission got an interim court order that allowed option holders to have the same weight as common shareholders, giving the company enough votes to approve the deal. The final plan of arrangement that was approved in a shareholder vote September 9 must still be approved by the B.C. Supreme Court.
CGN owns 11.26 per cent of the Fission Uranium’s outstanding common shares. It is a subsidiary of China General Nuclear Power Corp., which is a state-owned company controlled by China’s Assets Supervision and Administration Commission of the State Council (SASAC).
Another Chinese company -- CNNC Overseas Uranium Holding Ltd. – also owns a share of Paladin Energy's uranium assets, namely 25 per cent of the Langer Heinrich Mine in Namibia. CNNC is a subsidiary of the China National Nuclear Corporation, a state-owned enterprise.
Canada considers uranium a critical mineral, and foreign ownership in critical minerals by state owned enterprises can be considered a national security matter under the Investment Canada Act. And now Canada’s minister of Innovation, Science and Industry is weighing in on the planned sale.
On October 2, the minister ordered a national security review of the plan under the Investment Canada Act. These reviews are typically triggered by concerns over the foreign control of assets considered to be in the interest of national security.
“Paladin is considering the minister’s notice, exploring its available options and evaluating the prospects of obtaining ICA clearance in respect of the arrangement,” Paladin said in a release. “There can be no certainty that the court will grant the final order, or that ICA clearance will be forthcoming, or that the arrangement will be successfully completed.”
In 2022, a national security review resulted in the Canadian government ordering Chinese companies to divest from three Canadian lithium junior exploration companies.
