Canada is a significant producer and exporter of mineral resources in the world, possessing abundant oil and gas resources, as well as being an important site for various metal minerals. However, a recent survey by KPMG found that mining leaders believe Canada has the potential to become a key mineral resource powerhouse globally, but to realize this potential, the country needs to “stay on the right track” and increase support for this sector.
Let’s first take a look at this KPMG survey. The survey results show that 91% of respondents are optimistic about Canada becoming a key mineral resource powerhouse, but at the same time, a high 98% of respondents believe that for this vision to become a reality, Canada needs to put in considerable effort. Specifically, they hope for more investments, government commitments, and favorable tax policies in this area.
Speaking of critical minerals, Canada has already taken steps. As a longstanding mining powerhouse, Canada’s related industry development faces challenges. Therefore, in December 2022, the Canadian federal government launched its first critical minerals strategy, a significant eight-year strategic plan worth up to 3.8 billion Canadian dollars aiming to attract more overseas investments to revitalize the local mining industry and achieve key policy goals such as establishing battery and electric vehicle supply chains.
Lithium, graphite, cobalt, vanadium, scandium, copper, nickel, and rare earth elements are essential raw materials for producing low-emission products such as solar panels, wind turbines, and power batteries, hence being termed “critical minerals.” Among the 31 critical minerals identified in Canada’s strategy, six are considered “priority considerations” — lithium, graphite, nickel, cobalt, copper, and rare earth elements.
So far, this strategy has achieved significant milestones, including the establishment of the Critical Minerals Infrastructure Fund (CMIF) earlier this year. The CMIF aims to address critical infrastructure deficiencies facing sustainable production of critical minerals, with the goal of creating a link between resources and markets. It will provide up to 1.5 billion Canadian dollars over the next 7 years to support clean energy and transportation projects and drive critical mineral development. Two critical mineral projects have already received funding of 249 million Canadian dollars.
In addition to critical minerals, Canada is also a significant producer of potash fertilizers globally, as well as one of the top five producers of bulk commodities like diamonds, gemstones, gold, titanium concentrates, and uranium.
KPMG’s survey also indicates that Canadian miners commonly point out that a major challenge facing the industry is decarbonization, with reducing carbon emissions being a key factor in attracting investors in the future. However, at present, only 23% of surveyed companies have made formal commitments to reduce carbon emissions, with a significant reason being the lack of refining capacity domestically in Canada.
Lastly, concerning tax incentives policies, although Canada’s Critical Mineral Exploration Tax Credit (CMETC) facilitates financing for critical mineral exploration, mining leaders mention that the complexity of regulations and the limited scope of application have raised doubts among industry professionals regarding the actual benefits of these policies. For instance, among the 31 critical minerals listed in Canada, CMETC applies to only 15 of them.
Furthermore, the extension of 15% of the federal Mineral Exploration Tax Credit (METC) in the 2024 budget also raised concerns among respondents. This tax credit incentive policy is aimed at non-critical minerals outside of CMETC, such as gold and silver.
