Six Canadian provinces and territories are urging the federal government to expand eligibility for a mining exploration tax credit, arguing that the change could help smaller mining companies secure funding and advance critical mineral projects towards production.
Nova Scotia, Manitoba, Saskatchewan, Alberta, British Columbia and Yukon have written letters supporting the campaign led by the Association for Mineral Exploration (AME). The group wants Prime Minister Mark Carney’s Liberal government to fulfil its 2025 election promise to broaden the tax incentive to cover engineering work and feasibility studies for critical mineral projects.
The campaign comes as Canada seeks to strengthen its mining industry, attract investment and develop domestic supplies of minerals essential to modern technology, clean energy and manufacturing.
According to the Canadian Press, the association hopes the proposed expansion will be included in the federal government’s upcoming budget.
Mining Industry Seeks Wider Tax Incentives
The Liberal Party’s 2025 election platform promised to expand the activities eligible for mineral exploration tax incentives, including engineering and feasibility studies for critical mineral projects.
However, changes introduced in the federal government’s 2025 budget explicitly excluded feasibility studies from eligible Canadian exploration expenses used to determine the tax benefit.
The Association for Mineral Exploration argues that this restriction creates a significant funding gap for junior mining companies, particularly those attempting to move beyond the discovery stage.
Todd Stone, president of the association, explained that smaller companies must spend substantial amounts on drilling, engineering, technical assessments and feasibility studies before determining whether a mineral discovery can become a commercially viable mine.
These expenses can be difficult to finance because investors may hesitate to commit money until a project’s economic potential has been established.
The association believes expanding the tax credit would make it easier for companies to raise capital and complete the studies required to advance their projects.
Thousands of Mining Projects Face Development Challenges
A report commissioned by the Association for Mineral Exploration from professional services firm Ernst & Young identified 2,052 mining projects in Canada at early stages of development.
The industry describes the difficult transition between discovering a mineral deposit and securing the financing needed to develop it as the “valley of death.”
During this period, companies must demonstrate that their projects are technically feasible and economically viable while covering costly studies and regulatory requirements.
The association argues that expanding eligible exploration expenses could help projects overcome this financing challenge and move closer to construction.
The Ernst & Young report estimated that the proposed tax changes could generate between 14,000 and 34,000 additional jobs over 10 years, beyond a projected best-case scenario of 184,000 new jobs in the sector.
It also estimated that increased mining investment could contribute $68 billion to Canada’s gross domestic product over the next decade. Expanding the tax incentives could potentially add another $5.2 billion to $12.2 billion, according to the report. These figures are projections rather than guaranteed outcomes.
Provinces Highlight Investment and Financing Concerns
Provincial support reflects concerns that mining projects face considerable financial and technical obstacles before reaching production.
In an August letter to federal ministers, British Columbia Mining Minister Jagrup Brar highlighted the financing difficulties projects encounter during the later stages of permitting and preparation for development.
He noted that companies can struggle to attract investors during periods when they are conducting technical studies but have not yet reached major construction milestones.
Pierre Hebert, chief executive of the Nunavut and N.W.T. Chamber of Mines, also stressed that drilling alone cannot establish whether a project is viable. Engineering assessments and feasibility studies are essential, but they can be expensive.
Although provinces and territories generally align their own mining tax-credit rules with federal eligibility criteria, supporters say Ottawa’s decision to expand the rules could help improve access to investment across the country.
Federal Government Points to Existing Support
The federal government maintains that it has introduced other measures to support mineral exploration and development.
A spokesperson for Finance Minister François-Philippe Champagne said the previous budget expanded eligibility for the Critical Mineral Exploration Tax Credit to include 12 additional critical minerals.
The government also highlighted its Productivity Mega Deduction, which is intended to encourage businesses to invest in equipment and expand operations.
However, mining industry representatives argue that these measures do not fully address the costs of engineering and feasibility studies.
The debate is likely to continue as Ottawa considers its next budget and weighs the potential economic benefits of expanding mining incentives against the associated tax costs.
Swifteradio.com
