TORONTO - Shares of Canadian companies that mine critical minerals such as copper and uranium fell on the Toronto Stock Exchange (TSX) on Monday as investors assessed the potential impact of Canada's announcement last week that it would restrict large mergers and acquisitions in the sector.

Last Thursday, Industry Minister Francois-Philippe Champagne cleared London-listed Glencore's takeover of the coal unit of Teck Resources under strict conditions after taking into account the "net benefit" that the deal would carry for Canadians. But he added Canada in future would allow large mergers and acquisitions in the sector only under the "most exceptional circumstances."

Champagne said the ministry would set a high bar for clearing deals involving large Canadian companies in the critical minerals sector, reflecting the strategic importance of critical minerals and the need for Canada to protect its interests.

Dean McPherson, head of global mining at TSX, said the government's announcement was not a "positive development," describing the new policy as "concerning."

On Monday six critical mineral companies were among the top losers in opening trade on the Toronto Stock Exchange. Copper miners, including Capstone Copper, Hudbay Minerals, Teck Resources, First Quantum Minerals, Ivanhoe Mines were all down by over 3% around 1 p.m. Eastern Time, while uranium miner Cameco was down 2.13%.

"This updated policy significantly compresses M&A optionality and potentially restricts financing options for Canadian miners. As a result, we now anticipate most Canadian miners to trade at lower valuation multiples vs. global peers," said an analyst note led by Scotiabank analyst Orest Wowkodaw.

Canada has identified 31 minerals, including copper, uranium, lithium and nickel, that it considers critical for their strategic uses in modern technology and the transition from fossil fuels, such as in electric vehicle batteries.

"The door has not been closed but narrowed even further on investments in critical minerals," said Calvin Goldman, former head of Canada's Competition Bureau, who now runs an independent practice on advising clients in foreign investments. "So business community, get ready because you have to be fully prepared, as now they have to satisfy increasingly quiet strict criteria," Goldman added.

Under the Investment Canada Act, the government can reject a proposed acquisition or inbound foreign investment if the government believes the deal represents a threat to national security or if it fails to satisfy the criteria for bringing a "net benefit" to Canadians.

In the last two years, Canada has asked Chinese investors to divest from Canadian critical mining companies after a national security review, signaling that investments from certain countries such as China will come under tougher scrutiny.

Some of the largest investors in leading Canadian copper companies are Chinese. Teck Resources counts China Investment Corp as its biggest shareholder. First Quantum's largest shareholder is China's state-owned copper miner Jianxi Copper and Ivanhoe Mines has Hong Kong-headquartered CITC Metal Group has its leading shareholder.