Chinese takeover of Neo Lithium “irrelevant to national security interests” says Liberal MP

The proposed takeover of Canadian-based Neo Lithium (TSXV: NLC; US-OTC: NTTHF) by China’s Zijin Mining is not a concern, Liberal MP Andy Fillmore said.  

Speaking to a House of Commons committee on January 20, Fillmore said that Neo Lithium is “not really a Canadian company.” He added that the company’s “increasingly dubious” project in Argentina would not produce the kind of lithium required to meet the increasing demand for electric vehicles. 

“This really is not a Canadian company. It’s an Argentinian company. It’s got its directors in [the] UK. It had…what might have been three Canadian employees on paper…the only reason it had any Canadian toehold… was to have its presence in the TSX in hopes of raising money,” said Fillmore, adding that the transaction was “irrelevant to Canada’s national security interests.”  

Furthermore, he said that Neo Lithium’s Tres Quebradas lithium brine project (known as the 3Q project) in Catamarca, Argentina, would not be mined for lithium hydroxide but lithium carbonate, which is “irrelevant” to the kind of manufacturing needed for autos, batteries and semiconductors.”  

“Far from there not having been a review [on the transaction] as has been reported, the department actually did do a review, and these are the things they found,” he said.    

When conservative MPs pointed out that lithium carbonate could be converted to lithium hydroxide and highlighted Neo Lithium’s claims of meeting the world’s increasing lithium demand through the 3Q project, Fillmore said: “I could probably make a passable hat using my socks, but I would much rather wear a hat.”  

“As it turns out, lithium hydroxide is better suited in production of batteries when compared to its alternative lithium carbonate…the conversion comes with additional costs and additional steps,” the Liberal MP responded, which can also harm the environment.  

Neo Lithium’s 3Q project has measured and indicated resources of 5.3 million tonnes lithium carbonate equivalent at an average grade of 636 mg/l lithium. 

China’s Zijin Mining announced its plans to acquire Neo Lithium for $6.50 per share in cash in October, and Neo Lithium’s shareholders approved the transaction in December.   

On January 11, Neo Lithium said that it received clearance from Argentina’s environment and mining authority for the construction and operation of its 3Q project — one of the final conditions Zijin Mining needed to acquire the junior exploration company. 

“Zijin is in the process of obtaining approval for the transaction from relevant authorities in the People’s Republic of China,” Neo Lithium stated in a press release on January 11. 

Canada’s opposition Conservative party leader, Erin O’Toole, asked the federal government to conduct a national security review of the proposed takeover on January 17.  

He said that the review was critical for Canada to safeguard its supply and access to critical minerals to protect its economy and ensure that Canadian mining companies stay ahead of competitors under “autocratic, non-democratic rule like the Chinese Communist Party.”  

Lithium is used to make batteries that power electric vehicles, the demand for which has increased globally as the world looks to meet its decarbonization goals. 

A feasibility study of the 3Q project completed in October forecast a mine life of 50 years with average annual production in the first 20 years of 20,000 tonnes of battery-grade lithium carbonate.  

At an 8% discount rate, the 35,000-hectare project would generate a post-tax net present value (NPV) of US$1.13 billion and a post-tax internal rate of return (IRR) of 39.5%.