Prime Minister Justin Trudeau’s government rejected a plan by China’s Shandong Gold Mining Co. to acquire a gold miner that operates in the Canadian Arctic, potentially inflaming a diplomatic feud.

TMAC Resources Inc. owns the Hope Bay gold mine in the northern territory of Nunavut, an operation that includes a port and air strips. Shandong, an acquisitive state-backed metal producer, agreed to buy the Toronto-based company for about $150 million in May. In October, TMAC received notice the government had ordered a national security review.

The Canadian miner said late Monday an order had been issued under the Investment Canada Act for Shandong not to proceed with the takeover. Shandong confirmed the rejection in a statement Tuesday, citing a decision made for the “purpose of safeguarding national security.”

Officials in Trudeau’s office declined to comment on the move, which comes amid badly frayed ties between Canada and China over the 2018 arrest of a top Huawei Technologies Co. executive on a U.S. extradition request.

Chinese Foreign Ministry spokesman Zhao Lijian told a briefing in Beijing on Wednesday that Canada “should provide an open and nondiscriminatory business environment for all companies operating in Canada, including the Chinese ones.”

The Chinese embassy in Ottawa sees any politicization of economic co-operation as wrong, a spokesperson said by email late Tuesday, calling on the Canadian government to foster a fair market for all foreign investors.

A spokesperson for the Canadian industry ministry said she was restricted in explaining why the Shandong deal was rejected, citing confidentiality provisions of the investment act. “Canada remains open to investments that create jobs, growth, access to global trade and value chains, and long-term prosperity for Canadians, while protecting Canada’s national security interests,” Sophy Lambert-Racine said by email Tuesday........