Worry in Ottawa at Chinese investment in strategic natural resources

PUBLISHED : Friday, 07 December, 2012, 12:00am
UPDATED : Friday, 07 December, 2012, 4:33am

China Investment Corporation's reported plan to buy a stake in logging firm Island Timberlands comes amid a debate about the extent of Chinese strategic investment in Canada.

The key deal is an attempt by the China National Offshore Oil Corporation (CNOOC) to buy Calgary-based oil firm Nexen for C$15.1 billion (HK$117.9 billion). The federal government is expected to rule next week on whether to allow the purchase.

A ruling on Nexen's fate is expected to coincide with a new set of foreign investment rules, with provinces and businesses demanding more clarity. Many want clearer guidelines on a key benchmark for foreign investment, that it be of "net benefit" to Canada.

Another big energy deal is also in the works, with Malaysia's Petronas looking to buy another Calgary firm, the natural gas producer Progress Energy Resources. The C$6 billion bid has already been rejected once by Ottawa, but Petronas made changes to the deal and resubmitted it.

The Calgary deals, and the Nexen bid in particular, have triggered intense debate about the wisdom of allowing such major foreign investment in strategic natural resources.

Although the CIC's reported US$100 million bid for a 12.5 per cent slice of Island Timberlands is on a far smaller scale, it also plays on concerns that Canada is marginalising itself by selling off its resource sector.

Cortes Island activist Zoe Miles said there was also a fear that investors in China were detached from any negative impact of their activities. She said if the CIC goes ahead with its purchase of a stake in Island Timberlands, activists from Cortes would be in touch. "We would reach out to them. It's important for them to know the nature of their investment," she said on Wednesday.