In December 2009, Northwest Nonferrous International Investment Company Limited, a Chinese entity, abandoned its planned acquisition of Firstgold Corporation, a US gold mining company, as a result of a decision by the Committee on Foreign Investment in the United States (CFIUS) to recommend that President Obama block the transaction. At issue was a US$26 million purchase of a 51-percent stake in Firstgold, a Nevada-based entity engaged in gold mining, by Northwest Nonferrous, a Chinese government-controlled entity. According to information released by the parties, CFIUS conducted its standard 30-day review as well as an additional 45-day investigation before informing the parties that the Committee planned to recommend to President Obama that the transaction be blocked. CFIUS stated that the transaction presented significant national security concerns, particularly with regard to the proximity of certain Firstgold properties to Nevada’s Fallon Naval Air Station and other classified assets that were not identified to the parties. CFIUS told the parties that the Committee’s concerns were irresolvable, even if the transaction were restructured or mitigation agreements put in place to address national security concerns. Rather than see the President block the transaction, the Chinese buyer reportedly chose to withdraw from CFIUS review and abandon the deal. On December 21, 2009, the parties withdrew from the CFIUS process.
The Firstgold-Northwest Nonferrous transaction is noteworthy in that it nearly proceeded to the point of a formal recommendation of blockage, and also because the parties made public the details of their negotiations with CFIUS, information that is rarely disclosed. In addition, while CFIUS’s determination in this transaction does not likely signal a major shift in US policy, it shows that investments in operations and/or real property near sensitive locations will receive substantial scrutiny.