China’s Sinomines Eyes Strategic Metals Assets in Canada

On Sep­tem­ber 8, the Cana­di­an min­ing com­pa­ny, Pow­er Met­als Cor­po­ra­tion (PWM), report­ed­ly signed a let­ter of intent with Chi­na’s state-owned Sinomine Resource Group to explore and devel­op Pow­er Met­als’ min­er­al prop­er­ties in Cana­da. Per the press release, Sinomine is specif­i­cal­ly inter­est­ed in PWM’s Case Lake, Pater­son Lake, and Gull­wing-Tot Lakes prop­er­ties, which have prospec­tive reserves of cesium, lithi­um, and tan­ta­lum.  All three ele­ments have strate­gic indus­tri­al and defense applications.

Cesium, in par­tic­u­lar, is cru­cial to the devel­op­ment of 5G tech­nolo­gies. In 2018, it was among a list of 35 min­er­als cat­e­go­rized by the U.S. gov­ern­ment as crit­i­cal to nation­al secu­ri­ty inter­ests. Sub­se­quent­ly, in Decem­ber 2019, Wash­ing­ton and Ottawa final­ized a U.S.-Canada Crit­i­cal Min­er­als Action Plan, intend­ed to coop­er­ate on secur­ing sup­plies of vital min­er­als resources. Media reports, sug­gest that the pri­ma­ry moti­va­tion for coop­er­a­tion in this sphere has been Chi­na’s con­sid­er­able monop­oly of sev­er­al crit­i­cal rare earths, includ­ing cesium.

Per the let­ter of intent, Sinomine is look­ing at financ­ing PWM’s min­ing explo­rations, either through direct invest­ment in the com­pa­ny or a joint ven­ture.  The let­ter also stip­u­lates pos­si­ble terms of a part­ner­ship between the two com­pa­nies that would allow them to estab­lish an oper­at­ing com­mit­tee, give Sinomine a place in PWM’s board of direc­tors, offer the Chi­nese firm a right to par­tic­i­pate in “future financ­ing” under­tak­en by PWM, and give the Chi­nese com­pa­ny a right of refusal to match any unso­licit­ed third par­ty offers to acquire shares in PWM.

Ear­li­er, in April 2020, Pow­er Met­als’ resources were char­ac­ter­ized by RWR as a poten­tial­ly crit­i­cal strate­gic coun­ter­point to Chi­na’s present monop­oly over glob­al cesium sup­plies.  Chi­nese firms cur­rent­ly main­tain a monop­oly on the world’s sup­ply of cesium, hav­ing cor­nered the mar­ket through strate­gic acqui­si­tions and off­take agree­ments.  These include the acqui­si­tion in Feb­ru­ary 2019 by Sinomine Rare Met­als (Hong Kong) Resources (a sub­sidiary of Bei­jing-based Sinomine Resource Group) of the “Spe­cial­ty Flu­ids” unit (Cabot SF) of Boston-based chem­i­cals com­pa­ny, Cabot Cor­po­ra­tion (sub­se­quent­ly renamed Sinomine Spe­cial­ty Flu­ids Lim­it­ed), through which the Chi­nese state-owned enter­prise would assume own­er­ship of the Amer­i­can com­pa­ny’s Tan­co mine project in Man­i­to­ba, Cana­da.  The Tan­co mine con­tained one of the three known deposits of cesium in the world, along­side Zim­bab­we’s Biki­ta mine and Aus­trali­a’s Sin­clair min­ing project.  Although the Biki­ta and Sin­clair mines are not direct­ly oper­at­ed by a Chi­nese com­pa­ny, their entire reserves thus far have been stock­piled by Chi­na through dis­creet off­take agree­ments

In April 2020, PWM announced plans to shift the com­pa­ny’s resources to pri­or­i­tize the extrac­tion of cesium from its whol­ly-owned Cana­di­an min­ing assets.