(Bloomberg) — Canada is making it harder for foreign firms to acquire domestic mining companies by imposing measures that could protect top takeover targets from large global rivals.

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The Canadian government will only approve foreign takeovers of Canadian mining companies “in the most exceptional of circumstances,” according to the latest guidelines from Industry Minister Francois-Philippe Champagne. The directive issued on Thursday is part of a sweeping effort by Prime Minister Justin Trudeau’s government to protect Canada’s critical minerals sector and national security interests.

The move appears to insulate domestic companies from takeovers when the world’s biggest mining firms are hunting for metals that underpin the global transition away from fossil fuels. Industry giants such as Glencore Plc, BHP Group Ltd. and Rio Tinto Plc have been seeking to boost exposure to metals like copper as the appetite for large, transformational deals returns across the industry.

Canadian mining firms, in turn, have become appealing targets. Teck Resources Ltd. spent much of last year fending off Glencore’s $23 billion takeover attempt before the Swiss company opted instead to just buy the company’s steelmaking coal business. The federal government approved the $6.9 billion deal on Thursday, while also setting new criteria for future foreign mining deals.

“This high bar is reflective of the strategic importance of Canada’s critical minerals sector and how important it is that we take decisive action to protect it,” Champagne said in a statement.

Foreign takeovers of mining companies have been a touchy topic in Canada ever since a wave of deals 18 years ago took out some of the country’s biggest players, including nickel miner Inco Ltd. and aluminum producer Alcan Inc. When BHP proposed a takeover of Potash Corp. of Saskatchewan Inc. in 2010, then-Prime Minister Stephen Harper’s government blocked the deal on the grounds it wouldn’t be of “net benefit” to the country.

Teck is one of the few large Canadian metals producers that survived a wave of industry takeovers, even though it has long been coveted by foreign competitors for its copper and zinc assets spread across the Americas. The Vancouver-based company is widely expected to become an acquisition target when founder and top investor Norman Keevil gives up control of the company in the coming years.

“Essentially they are saying to Glencore, don’t bother coming back for the other half of Teck,” said Canadian mining financier Pierre Lassonde, who launched a competing bid for Teck’s coal assets last year. “It looks to me like Ottawa is prepared to ring-fence the Canadian critical metals industry with this new directive.”

The new directives go even further than a crackdown on foreign takeovers from state-owned entities that began in October 2022. Champagne’s ministry has thwarted several recent attempts by Chinese companies to make inroads in Canada’s critical minerals sector through takeovers or major investments. But Thursday’s comments signal that the federal government is weary of foreign takeovers even from companies in friendly nations.

Canada’s crackdown could also constrict access to capital for companies that rely on foreign investment to fund exploration and mining projects. The government is “limiting” funding to the industry with their “more aggressive statements,” said Shane Nagle, a metals and mining analyst with National Bank of Canada. “If that’s going to be challenging to do, they’ll just go elsewhere.”

–With assistance from Laura Dhillon Kane.

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