Chinese Gov’t official appointment to Teck Resources board raises questions

The recent appointment of a Chinese government official to the board Teck Resources (TSX:TCK.A & TCK.B) (NYSE:TCK), Canada’s largest diversified miner, has some worried about sovereignty issues in the country’s resource sector.

Canada has no regulations regarding members of foreign governments sitting on local companies' boards, but it does require at least 25% of the members to be Canadian citizens.

"You have an official with a foreign government who is sitting on the board of a public company in Canada," Dermod Travis, executive director of Integrity BC, told The Tyee.ca. "[It] should set off alarm bells."

But a foreign affairs expert at The University of British Columbia (UBC) says the appointment of Quan Chong, an international trade expert and sitting member of the National People's Congress of China, is nothing to worry about.

"A lot of people are appointed to the [National People's Congress] as an honorary token of respect," Yves Tiberghien, director of UBC's Institute of Asian Research, told CBC News. "It's not like a Parliament of Canada that actually governs."

According to Tiberghien, it is common practice in countries such as Japan and France to have retired foreign officials on company boards.

Chinese Gov’t official appointment to Teck Resources board raises questions

Quan Chong was appointed to Teck’s 14-member board earlier this year. (Image courtesy of Teck Resources)

"It's tremendous intelligence, especially for market access," he told CBC News.

In 2012, Canada’s then Conservative government imposed restrictions on foreign state-owned companies' ability to purchase Canadian firms. But Travis told The Tyee such regulations are focused mostly on the energy industry, including the oil sands, rather than the mining sector.

Currently, the country has no regulations regarding members of foreign governments sitting on the boards of directors of Canadian companies, but it does require at least 25% of the members of any board to be Canadian citizens.

Protectionism?

The results of a survey conducted by Abacus Data shows Canadians are rather protectionists, with 63% of the respondents opposing foreign ownership of a domestic natural resource company (compared to 53% of Americans respondents in the U.S.).

Additionally, a majority of Canadians strongly resist Chinese, Indian or Russian control of their natural resources, but are less bothered by the idea of Norwegian or American owners.

Respondents said they would support Norway over the U.S. controlling a resource firm, followed by Germany (31%), Brazil (24%) and then China (20%).

Chinese Gov’t official appointment to Teck Resources board raises questions

The same research company recently conducted a Canada-wide survey on behalf of Teck Resources to find out what locals think of the country’s current and future relationship with China, with an emphasis on trade.

The study concluded a tight majority (56%) considers Canada’s economic ties with the Asian giant to be very important (11%), or one of the most important (45%) relationships. Another 39% say it is important but not more than Ottawa’s deals with other countries.

Chinese Gov’t official appointment to Teck Resources board raises question

It also found that Canadians, as it’s normally the case with public opinion about trade relationships, are more enthusiastic about increasing exports to China (69% would like to see a growth) than about hiking imports from China (24% would like to see an increase).