China-Canada Relations with Leona Alleslev

To kick off our summer series, I sat down with Leona Alleslev, Member of Parliament for Aurora-Oak Ridges-Richmond Hill to discuss how COVID-19 will impact the federal government’s future attitude towards investing in the Arctic, and what dangers we risk ignoring while we wait. The Arctic is an important part of Alleslev’s portfolio; she currently sits on the Standing Committee on Foreign Affairs and International Development and was part of the 2019 study on Canada’s sovereignty in the Arctic: Nation-Building at Home, Vigilance Beyond: Preparing for the Coming Decades in the Arctic. Alleslev is also a member of the Special Committee on Canada-China relations.

In Conversation with Leona Alleslev

First a Little Background: a foreign acquisition during COVID-19

In 2019, the Trudeau government released Canada’s Arctic and Northern Policy Framework, hoping to lay an ambitious plan to provide much needed infrastructure in the Arctic. But the Framework has been criticized for not providing a structured budget, timeline, or broader strategy for investing to attract third party financing. COVID-19 has exposed the Arctic’s vulnerability to a public health and economic crisis, and exacerbated the urgency for federal attention. But while the federal government has been understandably preoccupied with multiple crises across the nation, other countries seem to have sensed an opportunity to invest.

In March 2020, as the world went into lockdown to prevent the spread of COVID-19, it was quietly announced that TMAC, a Canadian-owned gold mine in Northern Nunavut would be taken over by Shandong Gold, the second-largest gold producer in China. After months of struggling to pay for the additional infrastructure required to run a northern project, the company entered an agreement with a Chinese conglomerate who had the willpower to invest.

As shareholders in the TMAC project, the Inuit of the Kitikmeot region of Nunavut have limited choice but to hope that the existing partnership between KIA and TMAC will continue. That includes the Impact Benefits Agreement that was negotiated. Under the Agreement, KIA receives 1% of the value of all gold produced at Hope Bay, $1 million a year for costs and permitting relating to the implementation of the agreement, among other components.

Since Chinese foreign policy is centred around investment in under-developed places, the take-over has raised questions about a hidden agenda behind this move, what it means for economic development in Canada’s Northern Territories, and whether the sale poses a risk to national security. As China positions itself as a major player in the Arctic, the under-developed Canadian North may provide an entry point.

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The discussion below was not recorded and all questions and answers are paraphrased based on the notes taken during our call.

Erica Wallis: Why the Arctic? What made you first interested in Arctic issues?

MP Alleslev: Our next opportunity for nation-building is in the Arctic, and I believe we’re at that next stage of Canada’s history. Arctic infrastructure, particularly digital infrastructure is like a modern Canadian Railway that can be used to strengthen Canada’s sovereignty. Right now we are worried about the immediate future, but it’s the federal government’s job to be nation building for tomorrow. I believe the Arctic is critical not just for economic purposes, but for security as well.

What role should federal stimulus play in addressing some of the infrastructure gaps in the Canadian North?

In many respects, we’re going to have to pivot and open up new opportunities…I believe infrastructure is in the public’s interest, and it is the federal government’s responsibility to put that public interest in place.

Federal funding for basic infrastructure could encourage new enterprises up North, and make it easier for Arctic communities to access their own resources. There shouldn’t be access only for those who can pay.

You also sit on the special committee on Canada-China relations. Do you think rising Canada-China tensions require us to be strategic in the investments we approve?

We need to have a conversation about foreign takeovers being put on pause. We don’t want to wake up on the other side of the COVID-19 crisis and realize we didn’t have the ability to protect Canada’s interests. I’m not saying that we should ban all Chinese ownership. But perhaps a temporary suspension would let us ask ourselves how to be strategic.

What is your response to the TMAC acquisition specifically?

Concern. We have to look at everything holistically. There should be a comprehensive, strategic review.

What role do Canada’s mineral resources play in our competitiveness in the global economy? Do you think gold should be considered a strategic asset?

Gold is one of the best hedges against global volatility. This is a resource that Canada has a lot of, and it helps us to be competitive.

Do you believe the situation surrounding COVID-19 calls for a re-evaluation of the Investment Canada Act?

I am of the opinion that, based on this crisis, there should be a temporary threshold reduction. The valuation of companies has changed in the last few months, and we need to be fully aware of the impact that foreign companies from all countries will have on our communities.

We make a mistake to think that China operates in the same way that Canada does, with a separation of private and public business. You can’t look at other countries investing in Canada without considering the strategic and economic interests. We need to have a holistic strategy when it comes to China, not just in terms of the Arctic.