Mysterious Company Takes Over Calgary Lithium Firm After Chinese Company Pulls Out
The federal government is taking legal action to compel a Toronto company to divest a $34-million stake in a Calgary-based lithium firm that it acquired from a Chinese company.
Having previously determined that the Chinese owner’s investment in Lithium Chile Inc. posed a threat to national security, the government alleges in a Federal Court application that the new purchaser has failed to cooperate in proving that it is not owned or influenced by the Chinese government.
Lithium is a crucial mineral in batteries and clean energy and is essential for Canada’s energy security as it transitions to a low-carbon economy.
In a filing made this month, the Attorney General of Canada is seeking a court order directing Gator Capital Ltd. to sell its shares in Lithium Chile, a company based in Calgary with mining interests in Argentina and Chile.
The government contends that Gator’s owner, Wing Hong Chan, has not responded to requests for information after acquiring a 20 percent stake in Lithium Chile for $34 million.
“Gator has deliberately refused to provide information despite multiple requests, ministerial demands, and repeated attempts to elicit a response,” the application states.
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Gator is reported to have no visible business presence in Canada besides a rented mailbox at its corporate address in Toronto.
Following Gator’s noncompliance with requests for financial, ownership, and foreign government relationship information, the industry minister ruled that Gator is not “Canadian-controlled.”
Having acquired the stake from Chengze Lithium International Ltd. after government order to divest in November 2022, Gator enabled the Chinese firm to nominate board members and deploy technical employees before being mandated to divest.
After a rigorous security assessment, Minister François-Philippe Champagne cited national security concerns for the divestment action.
Under the Investment Canada Act, the minister can direct foreign entities to divest if their investments pose potential national security threats.
Chengze Lithium was given 90 days to sell its shares, with a stipulation that they could not be transferred to a Chinese state-owned entity or one influenced by the Chinese government.
Following Chengze’s divestment, Lithium Chile announced that Gator had acquired the shares, describing Gator as a Canadian company specializing in industrial investment, equity investment, and asset management.
When questioned about Gator, Chengze claimed that the purchase was a result of an unsolicited call from Chan, who agreed to acquire the stake despite its diminished market value.
Efforts to contact Chan, whose residence is unknown, yielded no results as emails, mail, and phone calls went unanswered.
The application seeks an order for Gator to transfer its shares to a trustee or provide information on its investment in Lithium Chile, along with a penalty for noncompliance.
Lithium Chile’s COO expressed frustration at the divestment order, emphasizing the importance of protecting Canadian critical minerals.
She highlighted challenges in sourcing lithium from South America and voiced willingness to collaborate with the government while cautioning against interventions in asset ownership.
Attempts to reach Chan, President and Sole Director of Gator Capital, for comment were unsuccessful.
