Provinces Urge Ottawa to Expand Mining Tax Credits to Save Stalled Projects
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Junior mining firms are facing a 'valley of death' as they struggle to fund the feasibility studies required to move from discovery to production.
Nearly half of Canada's provinces and territories are calling on the federal Liberal government to fulfill a 2025 election promise to expand eligibility for mining exploration tax credits, as CityNews Toronto first reported.
In support of a campaign by the Association for Mineral Exploration, letters have been written by British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, and Yukon. The group is seeking the inclusion of engineering and feasibility study costs for critical mineral projects in the upcoming budget. Todd Stone, president of the Association for Mineral Exploration, notes that junior companies often hit a "valley of death" where they cannot raise the capital necessary for technical analysis and feasibility assessments, as institutional investors are often reluctant to fund these stages.
An Ernst & Young report commissioned by Stone's group indicates that 2,052 projects in Canada are currently stalled in their early stages. The report suggests that covering feasibility and economic viability studies could add $5.2 billion to $12.2 billion to the projected $68 billion in GDP generated by the sector over the next decade, while potentially creating 14,000 to 34,000 additional jobs.
B.C. Mining Minister Jagrup Brar highlighted the difficulty single-asset companies face during late-stage permitting in a letter to Finance Minister François-Philippe Champagne and Natural Resources Minister Tim Hodgson. Similarly, Pierre Hebert, CEO of the Nunavut and N.W.T. Chamber of Mines, stated that drilling programs alone cannot demonstrate project viability and that costly feasibility studies are essential for project approval.
In response, spokesperson John Fragos, representing Minister Champagne, pointed to the Productivity Mega Deduction and the expansion of the Critical Mineral Exploration Tax Credit to include 12 more minerals. Fragos noted that the 2025 budget amended the Income Tax Act to exclude feasibility studies from expenses used to determine mineral quality, but argued the mega deduction provides junior companies with significant breathing room.