Net Benefit Assessment in Canada: The Investment Canada Act and the Future of Foreign Investment

The net benefit assessment is central to Canada’s foreign investment review framework. It’s the test through which large foreign investments—especially those involving control over Canadian businesses—are evaluated under the Investment Canada Act (ICA).

Under the ICA:

• Any acquisition of control of a Canadian business by a non-Canadian may be either notified or subject to a formal net benefit review, depending on thresholds and circumstances.
• The thresholds vary depending on whether the investor is from a WTO member state, whether it’s a state-owned enterprise (SOE), whether the transaction is direct or indirect, and whether the Canadian business is a “cultural business.”

Key Factors in the Net Benefit Assessment

When a deal is subject to a net benefit review, the investor must convince the Canadian government (specifically, the Minister of Innovation, Science and Industry) that the transaction will provide a net benefit to Canada. The assessment considers several dimensions, including:

• Impact on employment in Canada
• The extent to which Canadians participate in the business (management, operations, R&D, etc.)
• Effects on competition within Canada
• Impacts on productivity, innovation, technology
• How the investment aligns with Canada’s economic, cultural, or industrial policy goals
• Effects on Canadian resources, services, goods production, regional development

The government can impose undertakings (binding commitments) to secure certain benefits (e.g. job guarantees, headquarters location, R&D spending). If those commitments are broken, there can be penalties or, in some extreme cases, unwinding of the deal or forced divestiture.

Anglo American / Teck Merger & the Net Benefit Assessment in Canada

In September 2025, Anglo American plc and Teck Resources Ltd. announced a proposed merger (valued at about US$53 billion) that would combine into a new company to be called Anglo Teck.

• The merged entity would be headquartered in Vancouver (Canada), although its primary stock listing would be in London.
• The companies are making various commitments in Canada: spending in mining and mineral infrastructure, critical minerals exploration, and possible commitments to keep operations, HQ functions, etc.
• However, Canada’s Industry Minister (Mélanie Joly) has said that the proposals so far have not clearly demonstrated that the deal provides sufficient long-term net benefits to Canada. She has indicated that more binding and longer-term commitments will be needed.

Implications & What to Watch

The Anglo-Teck merger is likely to be one of the more high-profile cases of the net benefit assessment in Canada in recent years, given its size, the strategic nature (critical minerals, metals), and location of assets and HQ.

Because the deal needs approval via the Investment Canada Act, it is subject to the full net benefit review (pre-closing) since it clearly exceeds threshold values.

The government has leverage: it can demand specific undertakings, and it’s already signalling that what has been proposed so far (spending, location, etc.) isn’t sufficient to show a strong net benefit. It can set conditions (e.g. how long HQ remains in Vancouver, commitments to R&D, local content, environmental and community obligations, etc.).

There is a risk for the merging parties if they do not meet expectations, either being denied or being forced into burdensome conditions. Also, missing or breaking undertakings can have legal consequences.

The timing and clarity of commitments will matter. Since Melanie Joly has said more is required, if Anglo and Teck want to have a strong chance of approval, they’ll need to present a more detailed package of benefits, perhaps with stronger guarantees.

Public policy direction (especially on critical minerals, climate, ESG, and Indigenous issues) will likely shape what is considered a net benefit in this case. The government may also be sensitive to ensuring environmental, social, and Indigenous obligations are met.

Why This Matters

• Global competition for critical minerals is intensifying (for EVs, clean tech, etc.). Mergers like Anglo-Teck can potentially position Canada as more competitive, but only if net benefit frameworks ensure that the value (jobs, innovation, environmental stewardship) stays in Canada.
• The Investment Canada Act’s net benefit assessment helps ensure that foreign investment supports Canadian sovereignty over strategic resources, knowledge, and decision-making, rather than simply enabling capital extraction.
• As global investment flows become more politicized (e.g. national security, localization, supply chain resilience), having a robust, credible net benefit regime helps Canada manage these pressures and align investment with long-term economic goals.
• For investors, it means that size is not everything. How you commit, how you plan to operate in Canada (governance, HQ location, local spending, long-term R&D, environmental and social practices) will increasingly be part of whether deals are approved.