Vancouver-based miner Alpha Lithium is suspending a deal to sell a stake in its lithium mine to a company owned by Russia’s state nuclear energy corporation.

The decision comes after The Logic reported security experts’ concerns about the deal, which would see Uranium One—part of a network of companies owned by Russia’s State Atomic Energy Corporation (ROSATOM)—take a 15 per cent stake in Alpha’s Tolillar Salar mine in Argentina for US$30 million with the right to acquire another 35 per cent of the mine for an additional US$185 million.

Deals with Russian companies are under increasing threat of sanctions and national security reviews as Canada looks to punish President Vladimir Putin’s government for its ongoing invasion of Ukraine. Canada also considers lithium a “critical mineral,” and the federal government said last year it would begin applying greater scrutiny under the national security provisions of the Investment Canada Act to business deals involving minerals that were either essential to Canada’s economic security, required for reducing carbon emissions, or that provide a sustainable mineral resource for trade partners.

Wesley Wark, a senior fellow at the Centre for International Governance Innovation, previously told The Logic “there is absolutely no way” the government should let the Uranium One investment in Alpha Lithium proceed.

In a statement Tuesday announcing the decision to “provisionally suspend” the deal, Alpha Lithium said it has no knowledge of any sanctions against Uranium One’s subsidiaries, affiliates or executives. Neither company responded immediately to a request for comment.

Alpha Lithium announced the deal in November 2021. Prior to Russia’s invasion of Ukraine, the company had said its closing, originally slated for the end of January 2022, would be delayed because of “regulatory office closures caused by the COVID-19 pandemic and an extended holiday season in Argentina.”

In the release Tuesday, it said suspending the deal’s closing is in “the best interest of shareholders” given Uranium One’s “recent challenges,” but did not elaborate on the nature of those challenges. Alpha Lithium’s shares whipsawed on the TSX Venture Exchange, closing up more than seven per cent.

Innovation, Science and Economic Development Canada has refused to tell The Logic whether it is already reviewing the Alpha Lithium deal under the national security provisions of the Investment Canada Act, but in a statement released on March 8, the department said it would consider Russian foreign investments to be potentially injurious to national security, regardless of value.

In an interview Tuesday, Wark said Alpha Lithium made the right call in suspending the deal, but could have been stronger in both its due diligence process and its reaction. 

“Just say that in the context of the Russian invasion of Ukraine, it was felt this was an inappropriate investment, so they stopped it. Why not just say that? Why dance around the issue?” said Wark, noting that the announcement used vague phrases such as “provisionally suspended” and Uranium One’s “recent challenges.”  

“I think the corporate world and private sector needs to be a bit more transparent and straightforward on the kinds of reasons that it will apply to investments in the context of the Russian invasion of Ukraine.”

In a statement after The Logic reported criticism of the deal, Greg McLean, Conservative Party shadow minister for natural resources, said while his party supported the sanctions the Liberal government had imposed to date on Russian leaders and companies, “there is always more that can be done. We also believe it is vitally important [that] all foreign transactions be given a full national-security review to ensure that they are not only in the best interests of Canada, but in the best interests of our national security, and that of our NATO allies.”

Alpha Lithium said in Tuesday’s release that prior to announcing the deal’s suspension, it had received numerous unsolicited “expressions of interest” in the Tolillar Salar project from “multibillion-dollar, experienced electric-vehicle supply chain-related companies.” It also has enough cash reserves to operate Tolillar Salar independently, Alpha Lithium president and CEO Brad Nichol said in the release, and would only consider bringing in a partner if the terms were “highly favourable and accretive” to shareholders.

The company plans to proceed with seeking bids from lithium engineering firms for a feasibility study, and is almost finished designing a pilot plant to test different production technologies. It is expanding a camp for 400 workers after discovering a fresh water well, which it says is “a rare and critical requirement for lithium production.” Alpha Lithium is also buying more land in an area nearby major lithium companies like Livent and POSCO.

“While we’re disappointed after working so hard on the Uranium One transaction for several months, we have also enhanced the asset while the market conditions have significantly improved,” Nichol said in the release.

Last week La Presse reported that Uranium One, which remains registered in British Columbia, paid the equivalent of $373 million in dividends to its shareholders in 2020, but has a highly complex corporate structure that minimizes its taxes and has previously had to revise its tax bills at the direction of Canadian tax authorities. 

An updated sanctions list Canada issued Tuesday did not list any of the 11 executives listed as management on the websites of Uranium One and ROSATOM Overseas. Two individuals on ROSATOM’s supervisory board bear the same name of sanctioned individuals: an individual named Yuri Ushakov has been sanctioned since 2014, and is also listed on the board as assistant to the president of Russia; and an individual named Yuri Trutnev was added to the sanctions list on Feb. 26. The name is also listed on ROSATOM’s supervisory board as deputy chairman of the Government of the Russian Federation. 

Global Affairs Canada refused to confirm the identities of the two sanctioned individuals beyond the information in its database.