China’s Zijin clears Canadian national security review around Allied Gold acquisition

China’s Zijin Gold International Co.’s proposed $5.5-billion acquisition of Allied Gold Corp. AAUC-T has cleared a national security review from Canada, removing a major impediment to the deal closing.

Allied chief executive Peter Marrone said in an interview with The Globe and Mail that the initial 45-day window for the federal government to raise concerns about the transaction had passed, meaning it had been approved by default on national-security grounds.

“We’re clear on national security,” he said.

“Clearly it is another important milestone.”

Industry Minister Mélanie Joly’s office did not immediately provide a comment when approached.

Zijin did not immediately respond to a request for comment.

Zijin, which is indirectly owned by the Chinese government, in January reached a deal with Toronto-based Allied to acquire it for $44 a share in cash, an all-time high for the stock.

China’s Zijin Gold to acquire Canadian miner Allied Gold in $5.5-billion deal

Allied Gold operates mines in Mali and Côte d’Ivoire, producing about 375,000 ounces of gold a year. The company went public in 2023 with significant financial backing by Mr. Marrone.

The deal was being scrutinized on national security at a time when Canada’s business relations with China have been on the mend.

While Canada has mostly permitted Chinese investment in Canadian gold companies, there have been exceptions. In 2020, Ottawa blocked Shandong Gold Mining Co. Ltd.’s attempted acquisition of TMAC Resources Ltd. TMMFF The deal was rejected owing to national-security concerns stemming from TMAC’s mine being located in the Canadian Arctic.

Since taking office just over a year ago, Prime Minister Mark Carney has improved Canada’s relationship with China as part of his efforts to diversify trade away from the United States during the trade war.

During a visit to China in January, Mr. Carney announced he was reducing tariffs on Canadian imports of Chinese electric cars. He also made it clear that Canada is open to significantly more inbound investment from China.

And Finance Minister François-Philippe Champagne just last week led a delegation of Canadian business leaders to China, which included Canada’s big banks, and major institutional investors such as the Canada Pension Plan Investment Board, culminating in a bilateral pledge to deepen financial-sector ties.

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Ottawa still has the power to block the Zijin acquisition of Allied if it fails to clear a net economic benefit review.

Mr. Marrone, however, is highly confident of approval saying that Zijin should be able to satisfy any conditions that Ottawa may put on the deal.

“Based on discussions that have taken place so far, we understand the type of undertakings that are being asked, and they are, I would describe it as ordinary course,” he said.

Those undertakings would likely revolve around Zijin maintaining an office in Canada, and committing to hiring a certain number of Canadian officers, he added.

Mr. Marrone said Allied has around 65 employees who work out of its Toronto head office, while there are about 4,000 who work at its mines abroad.

The net benefit review is expected to continue for another 30 days, Mr. Marrone said.

Shareholders at Allied voted in favour of the deal last week.

Under former prime minister Justin Trudeau, Ottawa cracked down on Chinese ownership in the Canadian mining sector, in large part because of national security concerns about the Asian superpower controlling so much of the global critical minerals sector.