China's UDC says Canada flags Argentina lithium deal for national security review

Chinese real estate company China Union Holdings' $175 million acquisition of an Argentine lithium project has come under scrutiny from Canadian regulators, highlighting growing obstacles for Chinese companies seeking overseas lithium assets, the company said in a stock exchange filing Aug. 17.

UDC said it had received a notice dated Aug. 14 from the Canadian government's Foreign Investment Review and Economic Security agency, which stated the company's proposed investment in the Arizaro lithium brine project in Argentina could affect Canada's national security.

FIRES might decide within 45 days to initiate a formal review under Canada's Investment Canada Act, according to the notice.

The company said it was currently unable to assess the potential impact of the notice.

The review centers on UDC's proposed acquisition of 100% of Argentum Lithium, a project company developing the Arizaro lithium brine asset in Salta province, Argentina.

UDC announced the transaction in December 2025 as part of its strategic expansion into the energy transition materials sector. Upon completion of a planned restructuring by the seller, UDC would indirectly obtain an 80% interest in the Arizaro project.

The project comprises six mining concessions covering approximately 205 sq km in Argentina's lithium-rich region. A technical report published in July 2024 estimated measured and indicated lithium carbonate equivalent resources at 2.5 million metric tons.

UDC said the acquisition remains subject to China's outbound direct investment approval process and other regulatory requirements. The company warned that the transaction could face delays or ultimately fail to close if approvals are not obtained.

The sellers had previously argued to Canadian authorities that Argentum Lithium did not qualify for review under the relevant provisions of the Investment Canada Act because it is not a Canadian company, does not own Canadian assets and has no employees or operating locations in Canada, according to the filing. The sellers said they did not receive a response before FIRES issued the latest notice.

UDC and the sellers have since amended and extended the share purchase agreement over May-June and said they would actively engage with FIRES regarding the review process.

Growing scrutiny of Chinese lithium investments

The latest development came as Chinese investments in critical minerals faced increasing geopolitical scrutiny, while elevated spodumene prices continued to reinforce the strategic importance of securing upstream lithium resources.

In 2022, Canada ordered three Chinese companies — Sinomine Resource Group, Chengxin Lithium Group and Zangge Mining — to divest their interests in Canadian-listed lithium companies on national security grounds.

China is the world's largest producer and consumer of lithium chemicals. China produced 980,000 mt of lithium carbonate in 2025, accounting for 72% of global output, Ge Honglin, president of the China Nonferrous Metals Industry Association, said in July.

However, limited domestic lithium resources mean local production cannot fully meet rapidly growing demand from the new energy sector, particularly for electric vehicle batteries and energy storage systems, leaving the country heavily reliant on overseas supply, Chinese market participants said.

Platts, part of S&P Global Energy, assessed SpodIX CIF China at $2,235/mt on a 6% lithium oxide basis Aug. 17, unchanged day over day but $130/mt higher week over week.