National Security in the Arctic: Ottawa Rejects Chinese Acquisition of Arctic Gold Mine
Isabelle Wallace, Online Staff Writer
February 8, 2020
Ottawa’s decision to block a Chinese company from acquiring a Nunavut Mine, a foothold on the NorthWest Passage, is a relief to Canadians who see China as an adversary and a threat to national security. Letting a foreign power exploit Canadian Arctic resources is not in line with the Liberal Government’s environmental mandate and has been concluded as too great a risk.
David Fraser, a retired Canadian major-general, has requested the federal government decline China’s offer to acquire TMAC Resources Inc., a Toronto based corporation. The corporation is responsible for a gold mine in Hope Bay, located on an inlet adjacent to the NorthWest Passage in the Kitikmeot region of northwestern Nunavut. The Chinese company to acquire the mine is called Shandong Gold Mining Co Ltd. They offered $207.4 million.
The main concern for Canada is national security. Xi Jingping’s Communist Party has extensive control over both state-owned and private businesses. Shandong Gold Mining Co Ltd. would likely be required to prove their loyalty to the Chinese Government by “maintaining high consistency” with the Communist Party’s political values and objectives. Under Chinese law, the company would be required to conduct espionage on behalf of the Chinese Government, if requested.
China already has a reputation of violating international law in the South China Sea, and has given no reason for Canada to trust that they would not be a repeat offender, this time within our borders. The location of the Hope Bay mine would give them access to both Canadian land, but more notably, access to newly accessible sea lanes for transit in an environmentally sensitive region. The mine is also close to a NORAD North Warning System radar station in Nunavut that transmits information to military operation centres.
China has been blunt in their interest in more Arctic influence, inducing a question of environmental protection versus lucrative natural resource trade for Canadian lawmakers. The Arctic region is becoming increasingly prevalent in state interests in the face of climate change. The shortened transit route for vessels, the abundance of resources including precious metals and oil/gas reserves, a newfound proximity to the West is all attractive to China. These incentives are all becoming more accessible and plausible as sea ice and permafrost is degraded by anthropogenic global warming.
The dialogue from academia and security officials in Canada has emphasized that the Canadian Government must seriously consider such acquisitions by Chinese companies in a full political and economic context. Having the Chinese operations on a sensitive part of Canadian land is especially hazardous because of inadequate Canadian presence in the Arctic, including infrastructure and militia.
TMAC Resources was hoping for the cash through the deal with Shandong Gold Mining LTD because initially, operation of the mine was not meeting capacity targets when production commenced in 2017. TMAC is hoping to recuperate costs by scaling up production to 4000 metric tonnes per day. The CEO of TMAC Resources, Jason Neal, said they are ‘considering options’ to manage their balance sheet in light of the rejected Chinese acquisition.