By Richard Li
China Business Law Journal, September 2012
If you have been following past deals to determine where China’s pot of gold for mining and energy commodities is being spent, think again. As nations vie for the massive capital injections China can provide their often flagging economies through mining, energy and natural resources projects to feed ever hungry Chinese industry, the ground can move quickly. And while some savvy nations are liberalising and easing regulation to woo that pot of gold, others are finding themselves caught up in tangled reforms or a lack of political will to ensure continued favour.
The Canadian government, elected in May last year, has an open mind for foreign investment, says Christopher Murray, a partner at Osler, Hoskin & Harcourt in Toronto. “We have seen a steady and healthy growth of Chinese investments in Canada,” he says.
Compared to other resource-rich countries, “a well planned investment in Canada offers a great combination of return, security and political co-operation,” says Murray.
Perhaps the most significant legal development in the past 12 months that has these lawyers beating their drums has been the amendment of the Investment Canada Act. The amendment raises the threshold for the government or regulatory review of foreign investments to C$1 billion. Although Canada is open to acquisitions, “it is critical to ensure advance planning, not only for legal matters but also public relations and government relations,” says Murray. Larger investments from state-owned enterprises “can be subject to political and media considerations that require significant advance planning and specialised advice”.
In order to understand how and how long it may take to develop mining and energy assets, “advice on how resources can be regulated by both federal and provincial governments, and how that fits together legally and practically is important,” says Shawn Denstedt, a partner at Osler in Calgary. Aboriginal rights, protected by Canada’s constitution, are complex and should also receive investors’ attention. “Understanding the potential risks associated with aboriginal rights in the development of mining and energy assets and how to manage those risks is critical,” says Denstedt.
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