Canada is changing how it screens foreign investment in critical minerals. The new rules extend beyond outright acquisitions. They reach minority stakes. And they require government approval before a deal can close — not after.
For mining companies, developers and foreign investors active in Canada, the timeline and structure of capital raises may need to change.
What Is the Investment Canada Act?
The Investment Canada Act (ICA) is Canada’s primary mechanism for reviewing foreign investment. It has two functions. First, it assesses whether significant foreign acquisitions provide a net benefit to Canada. Second, it allows the federal government to conduct national security reviews of foreign investments across any sector.
Critical minerals have been a specific focus of ICA policy since 2022. That year, Ottawa issued a policy placing investments by state-owned enterprises — and private investors with close ties to foreign governments — under heightened scrutiny across the critical minerals value chain.
The new amendments go further. They restructure the timing and scope of the review process itself.
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What Is Changing
Under the current ICA framework, notifications can be submitted up to 30 days after a deal closes. The new regime eliminates that option for investments in prescribed sensitive sectors. Filing must happen before closing. The transaction cannot proceed until the statutory review period has lapsed or been terminated.
The new rules also expand what types of transactions trigger mandatory filing. Previously, mandatory pre-investment filings under the ICA applied primarily when control of a Canadian business was acquired. The amendments bring in a broader category: minority investments where the foreign investor gains access to material non-public technical information or material assets, and also obtains governance rights — such as the ability to appoint directors or senior management.
Critical minerals are expected to be among the prescribed sectors. So are artificial intelligence, semiconductors, quantum computing and defence. The full list of prescribed sectors will be set out in regulations. Those regulations are expected to be published for public consultation in fall 2026. The regime is expected to come into force in early 2027.
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Why Minority Stakes Now
The change reflects a problem Canada has encountered in practice. Minority investments have been used to gain access to sensitive technical data, project knowledge and board-level influence — without triggering the control thresholds that previously required review.
The 2022 divestiture orders illustrated the risk. Canada ordered Sinomine Rare Metals Resources to sell its shares in Power Metals. It ordered Chengze Lithium International to exit Lithium Chile. It ordered Zangge Mining Investment to divest its 14.17% minority stake in Ultra Lithium. Those were post-closing interventions. They created commercial uncertainty for all parties involved.
The new pre-closing regime is designed to prevent that outcome. Transactions caught by the new rules will be reviewed before they are implemented. That creates more certainty — but it also creates more time between signing and closing.
What the Timeline Looks Like
A national security review under the ICA can take up to 200 days. In some cases, it can take longer.
The standard process gives the Minister of Innovation, Science and Industry an initial 45-day window to determine whether to pursue a national security review. That window can be extended by a further 45 days. If a full review is initiated, the timeline extends significantly.
For critical minerals companies accustomed to closing strategic investments relatively quickly — in weeks, not months — that timeline is a material change. Financing schedules will need to account for the regulatory process.
Chris Hersh, a Toronto-based partner in Cassels’ Competition and Foreign Investment Group, described the practical impact plainly. The more pressing issue for critical minerals companies may be financing pace, not whether foreign capital remains available. Companies doing deals caught by the new mandatory pre-close notification process will have to give themselves enough time to complete the ICA process — or design transactions that do not trigger the new filing requirement.
Who Is Affected
The new regime applies to foreign investors — defined as non-Canadian investors — seeking to invest in Canadian entities engaged in prescribed business activities. The reach of the rules extends beyond Canada’s borders in one important respect: they may apply even where the primary assets or operations of the Canadian entity are located outside Canada, as long as there is a sufficient Canadian nexus.
That scope matters for how multinational mining companies structure their Canadian holding entities and how they route investment into projects with cross-border asset bases.
The rules are not targeted specifically at Chinese investors or state-owned enterprises. They apply across nationalities. However, the policy history — and the 2022 divestiture orders — makes clear that investments with connections to Chinese state capital or government-linked entities will receive the most intensive scrutiny.
The Capital Access Question
Canada’s critical minerals sector relies heavily on foreign capital. Domestic equity markets have financing capacity, but the scale of capital required for advanced-stage development and mine construction often requires strategic investors — including international industrial buyers, sovereign funds and state-backed entities.
The new screening regime does not prohibit that capital. It subjects it to a government review process. Hersh described the balance carefully: the rules will not necessarily undermine investment in the Canadian critical minerals sector, but the trade-off is that covered transactions can no longer close as quickly.
One structural response is staged financing. A company could design an initial investment that does not trigger the mandatory notification threshold — below the level that grants the foreign investor board representation or access to material technical data — and structure follow-on investment separately, with full disclosure and review.
That approach adds complexity. It also adds cost. For junior mining companies with limited financial and legal resources, the burden of navigating a 200-day review process is heavier than it is for large producers or well-capitalised developers.
The Broader Policy Direction
The ICA amendments are part of a wider pattern. Canada has been tightening the conditions under which foreign capital — particularly capital from state-linked investors — can enter its strategic industrial base.
In July 2025, the Canadian government announced that proposed acquisitions of important Canadian mining companies engaged in significant critical minerals operations would only be approved in the most exceptional circumstances, regardless of the nationality of the acquirer. That language set a high bar for full acquisitions.
The new minority-investment rules extend that logic down the ownership spectrum. Canada is not closing its doors to foreign investment in critical minerals. It is ensuring that any investment with access to sensitive assets or governance influence goes through a formal review before it takes effect.
What to Watch
The regulations defining the prescribed sectors and the specific triggering investor rights have not yet been published. Their scope will determine how many transactions in the critical minerals sector are captured by the new mandatory filing regime. Companies structuring deals now should monitor that consultation process closely.
The timing of the regime’s implementation — expected in early 2027 — gives deal teams a short window to close transactions under the existing framework. Transactions that are not yet structured should be assessed against what the new regulations are likely to require.
For investors from jurisdictions that have faced heightened ICA scrutiny, the practical question is not just whether a deal can be approved. It is whether a review that could last up to 200 days — and could result in conditions or a divestiture order — is compatible with their investment timeline and commercial objectives.
What the Rules Do Not Change
The new regime adds process. It does not change the fundamental attractiveness of Canadian critical minerals assets. Canada holds significant reserves of lithium, cobalt, nickel, copper, rare earths and other minerals central to clean-energy and defence supply chains.
The policy objective is not to restrict capital. It is to ensure that investment in sensitive sectors is transparent, reviewable and — where necessary — subject to conditions before the transaction becomes legally effective.
Whether that balance works in practice will be tested when the first significant minority investment in a Canadian critical minerals company runs through the new pre-closing process. That test is likely to come before the end of 2027.
Sources:
- Canada’s new foreign investment rules: What critical minerals miners need to know — Mining.com
- New Critical Path for Critical Minerals Deals — Cassels / Canadian Mining Journal
- Investment Canada Act — Government of Canada
- Critical Minerals Face New Foreign-Funding Hurdle in Canada — NAI500
- ICA Changes Reshaping Private M&A in Canada — Global Law Experts
