The mining industry is at a critical juncture in Canada. With global demand for critical minerals skyrocketing, particularly driven by industries like electric vehicles (EVs), the question is: How can we build more mines faster? According to Pierre Gratton, President and CEO of the Mining Association of Canada, there are several key factors at play that need urgent attention. From tax incentives to the declining reserves of key minerals, Gratton sheds light on the current state of Canada’s mining sector and offers insight into potential solutions.
In his recent address to the Vancouver Board of Trade, Gratton discussed pressing issues that are delaying mining projects and preventing Canada from seizing its rightful place as a global leader in the critical minerals space. Let’s break down the conversation and look at how Canada can overcome these challenges.
The Need for Speed: Why Building More Mines Faster is Crucial
As the world shifts towards renewable energy solutions and electric vehicles, Canada’s mining industry faces mounting pressure to ramp up production of critical minerals like lithium, nickel, and copper. These minerals are essential for the EV industry, batteries, and other high-tech applications. However, there are significant roadblocks in the way, which could prevent Canada from meeting this rising demand.
Gratton explains that building more mines faster isn’t just about expanding exploration; it’s about streamlining the permitting process and unlocking government support. Mining is a long-term, capital-intensive industry that requires careful planning and heavy investment, but timing is now more crucial than ever.
Critical Minerals Strategy: Delayed but Necessary
Canada’s Critical Minerals Strategy is a step in the right direction. However, Gratton points out that it has been slow to make tangible progress, especially in areas like tax incentives. The Canadian government has made moves to boost critical mineral production and positioning, but delays in policy development are hindering industry growth.
One specific area of concern is the tax credit system. While Parliament has introduced important tax credits to encourage investment in critical mineral projects, these have not been tabled effectively, causing companies to hesitate in pushing forward with new projects. The Mineral Exploration Tax Credit (METC), which supports junior mining exploration, has faced challenges due to changes in the capital gains tax system. This has led to a decline in exploration activity, leaving some projects stalled, particularly in the nickel and copper sectors.
Streamlining the Permitting Process: A Major Bottleneck
Another major issue faced by the Canadian mining industry is the slow permitting process. Permits are crucial for advancing any mining project, but the process can take years in Canada. With the increasing demand for minerals, speeding up the permitting process is essential if Canada wants to compete globally. Gratton argues that without more efficient systems in place, Canada will struggle to keep pace with international competitors.
A more flexible and responsive approach to permitting, while maintaining environmental and safety standards, is necessary for the industry to grow and evolve.
Tax Credits and Government Support: The Missing Incentives
Tax incentives are a major lever that can accelerate investment in mining projects. However, as Gratton notes, Canada’s focus has been more on downstream industries rather than on boosting mining itself. While it’s crucial to develop value-added industries like refining, the delay in tax incentives for mining is leaving companies stuck in limbo.
The 90 per cent threshold for critical minerals, which is part of the tax credit eligibility criteria, has created difficulties for some projects, particularly copper mining. Since copper often comes in mixed ores, meeting this threshold becomes challenging. Gratton explains that the government has promised to review and lower this threshold, but until that happens, many critical mineral projects will continue to face challenges.
Canada’s Declining Mineral Reserves: A Growing Concern
One of the most concerning issues in Canada’s mining industry is the declining reserves of key minerals. Gratton highlights that base metals are particularly affected, which is worrying given that Canada’s mining exports have traditionally been centred around these minerals.
To mitigate this, Gratton emphasizes the importance of brownfield projects—developments on existing mine sites where reserves can be replenished or expanded. Areas like Sudbury and British Columbia are potential hotspots for these brownfield projects, where existing infrastructure can help fast-track development.
Another potential game-changer is the Ring of Fire in Ontario, an under-explored resource area rich in minerals like chromium, nickel, and copper. If projects here can progress, it could help fill the gap left by declining mineral reserves.
Exploration and Investment: Rising Investment and Optimism
Gratton remains optimistic despite the challenges. Exploration spending is up across base metals and precious metals, and this increase in investment could lead to significant new discoveries. The mining sector is experiencing growth, especially with projects like lithium production gaining momentum in places like Quebec.
Investors should keep a close eye on these emerging opportunities. According to Gratton, Canada’s lithium potential is enormous. The recent investment by Rio Tinto in Quebec’s lithium sector is just one example of the growing interest in Canadian mining. Lithium is especially important due to its central role in battery manufacturing for electric vehicles and energy storage systems.
Canada’s Global Competitive Edge: Exports and Growing Interest
Despite the challenges, Canada remains a strong player in the global mining market. The country is well-positioned to take advantage of high commodity prices and growing demand for minerals. In addition to lithium, the demand for nickel and copper is also rising, with countries like the United States pushing for more domestic production of these critical minerals.
Canada’s mining exports remain resilient, and there is growing global interest in Canadian mining projects. As the world pivots to greener technologies, Canada could play a central role in meeting global mineral demand.
Advice for Investors: Patience Pays Off
For investors looking to capitalise on the potential of Canada’s mining industry, Gratton advises patience. Tax credits and government measures related to critical minerals are still in the pipeline, but once these come to fruition, Canada will become an even more attractive destination for investment. Investors should keep a long-term view and watch for key developments in policy and infrastructure, which will shape the future of the mining sector.
Conclusion: Building More Mines Faster in Canada
Canada has the potential to become a global powerhouse in critical mineral production, but it faces significant challenges in the form of delayed policies, slow permitting processes, and declining mineral reserves. By addressing these issues and offering more attractive incentives for mining companies, the Canadian government can help speed up the development of new mines and meet the rising global demand for minerals.
While the road ahead is complex, Gratton’s insights provide hope. With the right government support, tax incentives, and efficient exploration practices, Canada can build more mines faster and solidify its position as a leader in the mining industry.
Relevant Links for Further Reading
- Critical Minerals Strategy in Canada
- Mining Tax Incentives in Canada
- Investment in Canadian Lithium Projects
- Government Support for Mining Exploration
- Declining Reserves in Canadian Mining
Photo credit: The Shadow of Gold
