ARCHIVED - Non-Resident Ownership Policy in the Uranium Mining Sector

Dear:

You will be aware that the federal government's policy on non-resident ownership of uranium properties has been under review. Because of your interest in this matter, I am writing to inform you of the government's recent decision to modify the policy in order to encourage more foreign investment in Canada's uranium industry.

Previous Canadian government policy in this area limited non-resident ownership in individual uranium mining properties to a maximum of 33 per cent at the production stage, although exceptions involving control or significant benefit determinations provided an effective limit of 50 per cent. The existing ownership arrangements of certain uranium mining properties were excluded (grandfathered) from these provisions.

Following a review of this policy, in the context of the government's objectives for economic development, Ministers have decided that:

1. The basic policy objective will be modified to ensure a minimum level of resident ownership in individual uranium-mining properties of 51 per cent, at the stage of first production;
2. Resident ownership levels for individual production projects of less than 51 per cent will be permitted, if it can be clearly established that the project is in fact Canadian-controlled, as defined in the Investment Canada Act; and
3. Exemptions to the policy will be granted, subject to Cabinet approval, only in cases where it can be demonstrated clearly that Canadian partners cannot be found.

These three policy elements should provide significant incentives for further investment in uranium development. The basic limit for non-resident ownership has been increased from 33 to 49 per cent, with provision for still higher non-resident ownership levels in cases where the project in question is Canadian-controlled. Under previous policy, there was an absolute limit to non-resident participation of 50 per cent, and there was no provision for exemptions.

The government has also agreed that those uranium-mining properties that were excluded (grandfathered) from the requirements of the foreign ownership policy will continue to be excluded. In the case of future equity divestments associated with these properties, no increase in non-resident ownership will be permitted, and sales to Canadians will be encouraged to the point where the objectives of the new policy are satisfied. This will provide greater flexibility to investors, since under the previous policy it was mandatory that such divestments be to Canadians.

Finally, in order to expedite the transition to the new guidelines, a three-year period of grace beyond first production will continue to be available to companies before they must meet the resident ownership requirement, but only for agreements reached within twelve months of the date of this letter. Properties covered under such agreements would have to be brought into production within seven years of signing the agreements.

The policy on foreign ownership in the uranium-mining industry is, as outlined in this letter, designed to provide increased flexibility for investors in uranium producing projects. It is consistent with the thrust of the Investment Canada Act and with recent initiatives the government has taken with respect to the oil and gas, coal and non-fuel mineral areas. In taking this initiative, the government has recognized the continuing advantages of foreign investment in the uranium industry as a stimulus to economic growth and the creation of employment. At the same time, the new policy protects the legitimate interests of the people of Canada.

In its review of the policy, the government emphasized that control of sensitive materials in the nuclear fuel cycle will continue to be enforced and closely monitored through the licensing and permit systems operated by the Atomic Energy Control Board and the Department of External Affairs, in accordance with Canada's nuclear non-proliferation objectives.

Please do not hesitate to contact me or my officials if you have any questions about the application of the policy.