Tensions between China and Canada played out again in the last part of 2020 when the federal government killed takeover of a gold mine in Nunavut by a Chinese government corporation.
The deal between TMAC Resources and Shandong Gold for the Hope Bay area mine and infrastructure seems harmless enough. Mining gold, after all, is not a matter of national security.
The federal government turned down the $149 million deal with no reason made public.
Response to the continued imprisonment of the two Michaels — Kovrig and Spavor — in a Chinese jail could explain why.
More likely, the feds decided the deal would give China an unnecessary and strategic foothold in the Arctic.
In the process of developing the Doris Mine, TMAC built infrastructure for a port near the site.
One day changing climate will render the Northwest Passage through the Arctic viable to marine traffic. The port will have strategic value. A Chinese corporate owner could demand access and expand what is now the only port in the region.
China has long-term goals to become the dominant trading country on the planet with what has been labelled re-development of the ancient Silk Road.
The Silk Road was used by the explorer Marco Polo nearly 800 years ago to bring spices to Europe.
The new version of the Silk Road threads its way across Asia to Europe with a rail connection. Expansion of the concept involves seaports from Asia to Africa, financed by loans from the Chinese to local governments.
In future tough times, one can foresee China squeezing these governments for political and trade benefits from governments hard pressed to repay loans.
Not wanting China to get a foot in the door likely caused the federal decision.
TMAC built an underground mine on the isolated Nunavut tundra with commercial production around 70,000 ounces a year commencing in 2018.
The mine only produces a fraction of the rated capacity.
The company needed $683 million capital to develop a new mill and two other orebodies the 33 miles of ore trend. Controlling shareholders, American giant Newmont Mines and Resource Capital Fund, agreed to sell rather than develop.
Shandong offered $149 million, $1.75 a share.
Only weeks after the deal was nixed by the feds Agnico-Eagle Mines, an experienced large Canadian miner, exceeded the Chinese offer with a $2.20 a share bid. TMAC accepted.
Agnico Eagle already operates three mines in Nunavut and has the special skills to be successful in the harsh north.
And it has the clout to fund the $683 million further development of the Hope Bay “treasure chest’’ to produce 250,000 ounces a year.
Ron Walter can be reached at ronjoy@sasktel.net
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
