Canadian Government blocks China’s Shandong Gold from major mine purchase

• The Canadian Government has snuffed out a major takeover deal between Toronto-based TMAC Resources and Chinese state-owned Shandong Gold
• Shandong was set to buy TMAC out for C$230 million (roughly A$237 million), but the government got involved in the form of a national security review
• Today, TMAC confirmed the deal has been blocked by the Trudeau government, though the reason for the block is unknown
• Shandong shed some light on the issue, however, confirming Canada blocked the deal “for the purpose of safeguarding national security”
• Canada’s relationship with China took a sour turn in late-2018 when Canadian police arrested a Huawei official at the request of the U.S.
• Beijing retaliated by arresting two Canadians on espionage charges and freezing billions of dollars worth of agricultural imports
• As such, this week’s Canadian blocking of the TMAC-Shandong takeover deal seems to be a politically strategic move from Canada

The Canadian Government has snuffed out a major takeover deal between Toronto-based TMAC Resources and Chinese state-owned Shandong Gold.

In May, Shandong lobbed a C$230 million (roughly A$237 million) bid for full control of TMAC — a bid which was overwhelmingly accepted by TMAC shareholders.

However, in October, TMAC told investors the Trudeau government was getting involved in the deal in the form of a national security review.

Today, TMAC confirmed that the government has blocked the detail.

“The transaction whereby Shandong would acquire 100 per cent of TMAC, as announced on May 8, 2020, and approved by 9 per cent of our shareholders on June 26, 2020, did not receive Canadian regulatory approval and will not proceed,” TMAC CEO Jason Neal said.

While the Canadian government has not commented on the reason for the blocked deal, Shandong shed a sliver of light on the issue in its own media release, wherein it confirmed Canada stepped in “for the purpose of safeguarding national security”.

Strained relations

Canada’s relationship with China took a sour turn in early December 2018 after Canadian police arrested Huawei Chief Financial Officer Meng Wanzhou at Vancouver Airport. She was detained at the request of the U.S. on accusations of fraud and conspiracy to commit fraud in the States.

In early 2019, the U.S. officially charged her with banking fraud.

However, Canada’s role in the arrest infuriated Beijing to the point of jailing two Canadians on espionage charges and freezing billions of dollars worth of agricultural imports just days after the Huawei executive’s detainment.

Since then, China has taken several swipes at Canada and its alliance with the U.S., often through state-run tabloid The Global Times.

Through the online paper, Beijing has frequently accused the “Five Eyes” alliance — made up of the U.S., the U.K., Canada, Australia, and New Zealand — of being increasingly anti-China in their dealings.

Just this week, the global times accused the alliance of conducting “large-scale indiscriminate cyber espionage” and violating international law in an attempt to become a new anti-China axis.

Thus, as China’s international relations continue to take a turn for the worse, this week’s Canadian blocking of the TMAC-Shandong takeover deal seems to come more from a place of political strategy than from trade or competition concerns.

According to Bloomberg, the Chinese Embassy in Ottawa called on the Canadian government to foster a fair market for foreign investors and avoid politicising economic cooperation.