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.