American Tungsten Corp. (TSXV: TUNG, OTCQB: DEMRF)
Building America’s Defense Critical Metals Supply
In a sweeping move to position Canada as a global powerhouse in the critical minerals supply chain, the federal government unveiled a new budget on Tuesday that features a C$2 billion (US$1.4 billion) sovereign fund designed to make direct equity investments in the mining sector.
The budget outlines a comprehensive strategy combining substantial public investment, expanded tax credits, and a revised industrial emissions policy. The initiative aims to enhance the sector’s competitiveness, counter China’s dominance in the market, and attract private capital.
The cornerstone of the plan is the Critical Minerals Sovereign Fund, which will deploy capital over five years through equity stakes, loan guarantees, and offtake agreements for eligible projects and companies. Natural Resources Canada has been allocated C$50 million to establish the fund.
Complementing this, a new “First and Last Mile Fund” will receive C$372 million over four years, starting in 2026-27, to accelerate near-term projects toward production. The budget also consolidates the existing Critical Minerals Infrastructure Fund into the new sovereign fund framework, unlocking a further C$1.5 billion in infrastructure support through 2029-30. An additional C$585 million over four years is earmarked for critical minerals under a “Climate Competitiveness Strategy.”
To spur exploration, the government plans to significantly expand the Critical Mineral Exploration Tax Credit (CMETC). Eligibility will be extended to 12 additional minerals crucial for defense, semiconductors, and clean technology, including bismuth, cesium, germanium, and tungsten. This credit works in tandem with Canada’s flow-through share structure to channel investment from high-net-worth individuals into junior mining companies.
In a bid to reduce operational costs for miners, the budget proposes cutting the effective tax rate on certain capital expenditures—such as building processing facilities—to just 0.4%. This measure is seen as a direct competitive response to the United States, where a similar tax can reach 12%, and aims to stem the loss of an estimated 30,000 manufacturing jobs south of the border.
The budgetary push comes on the heels of Canada joining the G7’s critical minerals production alliance, a clear strategy to challenge China’s stranglehold on the market. China currently accounts for an average of 70% of the global market share for 19 out of 20 key minerals and a staggering 91% of rare earth elements refining.
Industry leaders hailed the budget as a transformative moment. Today’s budget promises to usher in a new era in mining investment, said Pierre Gratton, CEO of the Mining Association of Canada. These measures, taken together, send a powerful signal to the mining industry, global investors and Canada’s allies that Canada is very serious about improving the competitiveness of Canada’s mining industry.
The budget, which forecasts a C$78.3 billion deficit for the current fiscal year, still requires parliamentary approval. The minority government must secure support from opposition parties to pass the measures and avoid triggering a snap election.
