On March 3, 2010, the federal government announced that it
intends to liberalize the foreign investment restrictions on
Canada's uranium mining sector. Specifically, the government
stated that it intends to "ensure that unnecessary regulation
does not inhibit the growth of Canada's uranium mining industry
by unduly restricting foreign investment." Canada is currently
the world's largest producer of uranium, and foreign investors
have shown significant interest in making investments in the
The existing Non-Resident Ownership Policy in the Uranium Mining
Sector prevents non-Canadian residents from acquiring more than a
49% ownership interest in a uranium-mining property unless the
property is in fact "Canadian-controlled." With federal
government approval, exemptions to this policy are available where
it can be demonstrated clearly that no Canadian partners can be
found. Uranium exploration properties are not subject to this
Although the government's announcement did not specify
whether it intends to abolish or simply relax the current ownership
policy, it seems to suggest that the government intends to treat
proposed acquisitions in the Canadian uranium mining sector as it
does all other proposed acquisitions under the Investment
Canada Act, as described below.
The announcement also seems to signal that Canada may be
prepared to unilaterally abolish the ownership policy. In the past,
recommendations to liberalize foreign ownership restrictions in the
uranium mining sector have been accompanied by statements that this
should only occur if Canada receives reciprocal benefits from the
foreign investor's country of origin (e.g., Canadian companies
being permitted to participate in the development of uranium
resources in the foreign country and uranium-processing
The proposed change is consistent with recent amendments to the
treatment of uranium investments under the Investment Canada Act.
Historically, a proposed direct acquisition of control of a
Canadian business operating in a "sensitive sector"
(e.g., uranium mining) was subject to a "net
benefit" review if the acquiror was not Canadian and the asset
value of the Canadian business exceeded a special lower threshold
of as little as C$5 million. In March 2009, this special lower
threshold for review of acquisitions in the uranium mining section
under the Investment Canada Act sector was repealed.
Today, a proposed direct acquisition of control of a Canadian
business that engages in the production of uranium or owns a
uranium producing property can be subject to two types of review
under the Investment Canada Act, which are not mutually
Net Benefit Review. If the asset value of the
Canadian business exceeds the current threshold of C$299 million,
the proposed acquisition will be reviewed to determine if it meets
a "net benefit to Canada" test.
National Security Review. Any investment
(regardless of the size of the target or of the investment) can be
reviewed by the Minister of Industry to determine if it could be
"injurious to national security."
The government's proposal to liberalize the restrictive
non-resident ownership policy in the uranium mining sector will
make the government's policy on foreign ownership in this
sector consistent with the recent amendments to the Investment
The announcement clarifies that Canada welcomes foreign
investment in the uranium mining sector and is committed to taking
steps to ensure that "unnecessary regulation" does not
prevent growth in this sector. We will continue to monitor and
report on developments in this area.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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