After Chinese company divested from Calgary lithium firm, mystery firm stepped in

The federal government is going to court to force a Toronto company to sell a $34-million stake in a Calgary-based lithium miner that it bought off a Chinese firm.

The government had already deemed the previous Chinese owner’s investment in Lithium Chile Inc. to be harmful to national security, and it says in a Federal Court application that the new buyer has failed to co-operate with efforts to prove it isn’t owned or influenced by China’s government either.

Lithium is a critical mineral used in batteries and clean power. The application says it is at the heart of Canada’s “energy security in the transition to a low-carbon economy.”

The Attorney General of Canada filed the application in Federal Court this month for an order directing Gator Capital Ltd. to dispose of its shares in Lithium Chile, headquartered in Calgary with mining properties in Argentina and Chile.

The government claims that Gator’s owner, Wing Hong Chan, has not replied to any demands for information after it paid $34 million for the 20 per cent stake in Lithium Chile.

“Gator has repeatedly and deliberately failed to provide information in response to multiple requests for information, three ministerial demands, and … repeated attempts to obtain a response from Gator and/or Mr. Chan,” the application says.

It says Gator “has no known corporate presence or business at its registered corporate address or elsewhere in Canada,” and when investigators from Canada’s Investment Review Directorate finally contacted Chan it was on a Hong Kong phone number.

Gator is described as a Toronto-based investment consulting and management company, yet the application says its only apparent physical presence in Canada is a rented mailbox.

The industry minister declared that Gator is not a “Canadian-controlled” entity after it failed to comply with demands for information about its finances, ownership structure and any relationships with foreign governments or state-owned enterprises.

Gator had bought the Lithium Chile stake from Chengze Lithium International Ltd. after Industry Minister François-Philippe Champagne ordered the Chinese firm to divest in November 2022, citing national security concerns.

Chengze Lithium’s stake allowed it to nominate two board members and assign technical employees to help develop the firm’s mining lands in Argentina — before the Canadian government ordered it to divest.

The decision to order the divestment was made after “rigorous scrutiny by Canada’s national security and intelligence community,” Champagne said at the time.

Under the Investment Canada Act, the minister can order foreign actors to divest from Canadian businesses if their investments are found to be potentially “injurious to national security”

Chengze Lithium was given 90 days to sell, and one condition of the divestment order was that it couldn’t sell or assign them to a Chinese state-owned enterprise, or a company under the influence of the government of the People’s Republic of China.

Lithium Chile announced in February 2023 that Chengze’s shares had been sold to Gator, with the press release describing Gator as “a Canadian company that focuses on industrial investment; equity investment; asset management and investment consulting.”

When federal officials asked Chengze about Gator, the company said it received an “unsolicited phone call” in December 2022 from Chan, and he agreed a month later to buy Chengze’s stake in Lithium Chile for the same price it paid, even though their market value had dropped “substantially” by then.

The application sets out numerous efforts that federal officials made to contact Chan, whose country of residence is “unknown.”

The share transfer agreement gave a phone number with a California area code, but the call “could not be completed as dialed.”

Lithium Chile only had an email address for Chan’s assistant, and Gator’s incorporation documents list a Toronto mailbox rental service as its corporate address.

Emails to Chan’s assistant received no response, registered mail was returned and two phone numbers on Gator’s incorporation documents listing area codes in California and Alabama were not in service.

The application says when the Investment Review Directorate reached Chan in June 2024, it was via a Hong Kong phone number he submitted in an unrelated matter in 2017.

The application says Chan admitted to receiving the Canadian government’s emails, but he didn’t respond to the demands for information.

The Attorney General is seeking an order for Gator to hand over its shares to a trustee, or alternatively, to hand over information about its investment in Lithium Chile and pay an unspecified penalty for failing to comply with the government’s demands.

Lithium Chile’s chief operating officer Michelle DeCecco said in an interview she was unaware of the court application.

She said the order for Chengze to divest was “frustrating,” because it was a “strategic deal” with the Chinese firm, which is an experienced player in the lithium industry.

She said Lithium Chile didn’t get to choose who took Chengze’s place, and she said Gator’s owner had a Canadian passport, though she wasn’t aware Gator was incorporated at a mailbox.

DeCecco said she was “upset” by the government’s order for Chengze to divest because the critical mineral strategy is about protecting Canadian critical minerals.

“We don’t own Canadian critical minerals. All of our assets are outside of Canada,” she said.

She said Canada doesn’t import much lithium from South America, and she said she floated the idea of doing a deal with the Canadian government after Chengze was ordered to bow out.

DeCecco said she would be on board to work with the federal government to secure lithium, but Canada’s critical mineral strategy involves “potentially telling another country who can own their assets.”

“I don’t think that’s good for trade relationship or for long-term relationships,” she said. “There are different ways that they’re trying to do it, but it’s not securing lithium at the source and that’s the most important place.”

Chan, Gator Capital’s president and sole director, could not be reached for comment. The company is unrelated to Gator Capital Management, a firm based in Florida.

This report by The Canadian Press was first published Feb. 20, 2025.

Darryl Greer, The Canadian Press