Canada will extend its mineral exploration tax credit for two more years to support investment in exploration projects and strengthen the mining sector, Natural Resources Minister Jonathan Wilkinson announced on Sunday. The tax credit, which offers investors a 15% incentive to invest in flow-through shares of smaller mining companies, was set to expire on March 31.
The extension, expected to provide 110million in support, aims to help junior exploration companies raise capital and reduce reliance on Chinese investment. Canada has taken a firm stance against investments from Chinese state-owned enterprises in its mining sector, requiring at least five companies to divest such holdings.
“There was some degree of anxiety on the part of the sector, especially the juniors, about whether it would be renewed,” Wilkinson said in an interview. The announcement was made at the annual Prospectors and Developers Association of Canada (PDAC) conference in Toronto, a major global gathering of mining companies and financiers.
The move comes as Canada seeks to position itself as a reliable supplier of critical minerals, such as germanium and gallium, to the United States amid China’s export restrictions. Wilkinson emphasized the importance of a mutually beneficial partnership with the U.S., particularly as the Biden administration prioritizes securing critical mineral supply chains.
However, the mining sector faces challenges, including potential trade tensions with the U.S. President Donald Trump has threatened to impose a 25% tariff on most Canadian goods, prompting Canada to prepare retaliatory measures. While an export tax on metals like zinc, copper, and nickel may not be implemented immediately, Wilkinson noted that such tools remain available if needed.
Meanwhile, mining executives have called for faster permitting processes and improved competitiveness to attract investment. BHP CEO Mike Henry, speaking at PDAC, highlighted that Canada’s competitiveness has declined compared to emerging mining destinations. Despite BHP’s positive experience in Canada, including its massive potash mine project in Saskatchewan, Henry cautioned that past success does not guarantee future growth.
The extension of the tax credit underscores Canada’s commitment to bolstering its mining sector, but industry leaders stress that more reforms are needed to maintain its global standing.