The federal government is going to court to force a Toronto company to sell a $34-million stake in a Calgary-based lithium firm that it bought off a Chinese company.

The government had already deemed the previous Chinese owner’s investment in Lithium Chile Inc. to be harmful to national security, and it says in a Federal Court application that the new buyer has failed to co-operate with efforts to prove it isn’t owned or influenced by China’s government either.

Lithium is a critical mineral used in batteries and clean power. The application says it is at the heart of Canada’s “energy security in the transition to a low-carbon economy.”

The Attorney General of Canada filed the application in Federal Court this month for an order directing Gator Capital Ltd. to dispose of its shares in Lithium Chile, headquartered in Calgary with mining properties in Argentina and Chile.

The government claims that Gator’s owner, Wing Hong Chan, has not replied to any demands for information after it paid $34 million for the 20 per cent stake in Lithium Chile.

“Gator has repeatedly and deliberately failed to provide information in response to multiple requests for information, three ministerial demands, and repeated attempts to obtain a response from Gator and/or Mr. Chan,” the application says.

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Under the Investment Canada Act, the minister can order foreign actors to divest from Canadian businesses if their investments are found to be potentially “injurious to national security”

Chengze Lithium was given 90 days to sell, and one condition of the divestment order was that it couldn’t sell or assign them to a Chinese state-owned enterprise, or a company under the influence of the government of the People’s Republic of China.

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