Provinces Urge Federal Government to Expand Mining Exploration Tax Credit

📅 5 days ago

Nearly half of Canada’s provinces and territories are advocating for the federal government to expand tax credits that support mining exploration, a move aimed at aiding smaller mining companies during their critical development phases.

OTTAWA — A coalition of nearly half of Canada’s provinces and territories is urging the federal Liberal government to honor its election commitment to broaden the eligibility criteria for a mining exploration tax credit. This initiative aims to assist smaller mining companies as they navigate the crucial exploration phase of their projects. The Liberal Party’s platform for the 2025 election stated an intention to expand the range of activities that qualify for mineral exploration tax credits, specifically by including costs associated with engineering and feasibility studies for critical mineral projects.
The Association for Mineral Exploration has recently initiated a campaign to hold the government accountable for this promise, with hopes of seeing it included in the forthcoming budget. Provinces such as Nova Scotia, Manitoba, Saskatchewan, Alberta, British Columbia, and Yukon have sent supportive letters to the federal government. They assert that this measure could significantly facilitate the transition of mining projects from exploration to production.
Todd Stone, president of the Association for Mineral Exploration, emphasized the challenges faced by junior mining companies. These companies are primarily focused on validating their assets, striving to progress from discovery to development, which ultimately leads to the establishment of a mine. “In this phase, extensive drilling, engineering work, and technical analyses are required—activities that do not attract institutional investors,” Stone explained.
He highlighted a critical phase in the life cycle of mining projects, often referred to as the “valley of death,” where exploration efforts stagnate due to a lack of funding for necessary engineering, feasibility, and technical studies. A report by Ernst & Young, commissioned by Stone’s organization, identified 2,052 projects in Canada currently in their early stages, indicating a significant number of projects that have faced stagnation.
The report further posits that extending the tax credits to encompass feasibility and economic viability studies could lead to the creation of between 14,000 and 34,000 jobs over the next decade, in addition to the best-case projection of 184,000 new jobs within the sector. It forecasts that increased investment in the mining sector could contribute an estimated $68 billion to Canada’s GDP over the next ten years, with potential increases of $5.2 billion to $12.2 billion if the government supports feasibility and viability studies through tax breaks.
Provinces and territories largely rely on the federal criteria to determine eligibility for their own mining tax credits. British Columbia's Mining Minister, Jagrup Brar, pointed out in an August letter to federal officials that major mining projects in the province are encountering financing challenges during the late stages of permitting, a critical period marked by minimal news flow to investors.
In response to these concerns, a spokesperson for Finance Minister François-Philippe Champagne noted that the government had previously expanded the eligibility for the Critical Mineral Exploration Tax Credit in its latest budget to include 12 additional critical minerals. The spokesperson also referenced the new Productivity Mega Deduction, which has received acclaim from the mining sector, as a tool that will aid companies in expanding operations and investing in new equipment.
Champagne’s office highlighted that the new measures would cover 65% of a mine’s assets, suggesting a commitment to facilitating project approvals and encouraging early-stage investments. However, it was noted that the 2025 budget amended the Income Tax Act to clarify that expenses incurred for determining the quality of a mineral resource do not include feasibility studies.
Pierre Hebert, CEO of the Nunavut and N.W.T. Chamber of Mines, remarked on the limitations of the current tax framework, stating, “The Canadian exploration expenses don’t allow for economic assessments and feasibility studies, which are essential for moving towards actual project approval and construction.” Hebert acknowledged the potential benefits of the mega deduction for construction costs related to exploration camps but reiterated that it would not suffice to help companies navigate the “valley of death.” He concluded by stressing the necessity of including feasibility studies as eligible expenses to ensure project viability.

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