Provinces push Liberals to honour mining tax credit promise

OTTAWA — Six provinces and territories are calling on the federal Liberals to fulfil a 2025 election promise to expand a mining exploration tax credit.

The Association for Mineral Exploration, which launched a campaign to hold the government to its promise, said it hopes the change is included in the upcoming budget.

Nova Scotia, Manitoba, Saskatchewan, Alberta, British Columbia and Yukon have all written letters in support of the campaign.

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They say expanding eligibility for the mineral exploration tax credit to include the costs of engineering and feasibility studies for critical mineral projects would help move projects from exploration to production.

"When you're a junior mining company, you're predominantly focused on proving your assets, right? Like, you're trying hard to move from discovery to ultimately development when it becomes a mine," said Todd Stone, president of the Association for Mineral Exploration.

Stone said there is a part of a mine's life cycle, which the industry calls the "valley of death," when exploration projects get stalled because companies cannot raise money to continue engineering, feasibility and technical studies.

A report from Ernst & Young, commissioned by Stone's group, found 2,052 projects in Canada are currently in their early stages.

Stone said that figure reflects the number of projects that have "stalled."

The report said expanding the tax credits to cover feasibility and economic viability studies could generate 14,000 to 34,000 jobs over 10 years, on top of a projected best-case scenario of 184,000 new jobs in the sector.

It also suggested increased spending in the mining sector is projected to generate $68 billion in GDP over the next 10 years, a figure that could increase by $5.2 billion to $12.2 billion if feasibility studies were covered by government tax breaks.

Provinces and territories largely use Ottawa's criteria to determine eligibility for their own mining tax credits.

"Major mining projects across B.C. continue to face financing challenges in the late stages of permitting as they prepare for development," B.C. Mining Minister Jagrup Brar wrote in an August letter to federal Natural Resources Minister Tim Hodgson and Finance Minister François-Philippe Champagne.

Brar said the "valley of death" is a particularly difficult period for companies to finance their projects, compounded by the breadth of technical studies required.

In a media statement, Champagne's press secretary pointed out that the government expanded eligibility for the Critical Mineral Exploration Tax Credit in its last budget to include 12 more critical minerals.

Champagne's office also said the new Productivity Mega Deduction, which has been praised by the mining sector, will help companies expand their operations and invest in new equipment.

"This adds to the myriad other measures and billions more in supports the government has invested in the mining sector," spokesperson John Fragos wrote, adding the government's new measures cover 65 per cent of a mine's assets.

Fragos also noted that the 2025 budget amended the Income Tax Act to state that expenses incurred to determine the quality of a mineral resource do not include expenses related to feasibility studies.

He said the mega deduction will still give junior mining companies significant breathing room in the early stages of development.

A spokesperson for Hodgson declined to comment.

"The Canadian exploration expenses don't allow for economic assessments and feasibility studies to be put through, and those are a critical part of the process leading up to actual project approval and construction of a project," said Pierre Hebert, CEO of the Nunavut and N.W.T. Chamber of Mines.

Hebert said while the mega deduction will help with construction costs for exploration camps, it will not help get companies through the "valley of death."

"The fact remains that those feasibility studies, in demonstrating the viability of a mining project that are absolutely a required part of the process, are not eligible," Hebert said.

The call comes as other sectors also seek tax changes, with the tech sector recently urging Ottawa to expand capital gains tax incentives for startups.

With files from The Canadian Press, Narcity and Toronto Star