Determined to hold its own in the global race to electrify transport and to stand out in sectors such as aerospace and information technology, the Canadian federal government is injecting $3.8 billion over eight years into its new budget to implement Canada’s first Critical Minerals Strategy.
“Canada has an abundance of valuable critical minerals, but significant investments are needed to make the most of these resources,” the budget document says.
Among other things, the budget envelope for this new strategy includes funding of $1.5 billion for infrastructure investments “that will support the development of critical mineral supply chains”.
Help for mining exploration
Ottawa is also creating a new “critical mineral exploration” tax credit of 30% for mineral exploration expenditures in Canada. This would apply to exploration expenditures targeting a list of minerals including nickel, lithium, cobalt and graphite – minerals essential for the production of batteries for electric vehicles. This measure is expected to cost the Government of Canada $400 million over the next five years.
Currently, the Government of Canada already offers a non-refundable tax credit of 15% on specified mineral exploration expenses incurred in Canada — for all minerals and not just critical ones — which will end on March 31, 2024, unless it is renewed. The new tax credit cannot be added to the existing one.
In addition, Ottawa will inject more than $10 million starting in 2024 to Natural Resources Canada to renew the Center of Excellence on Critical Minerals, which will assist operators of critical minerals by providing them “direct support” so that they can better navigate existing regulatory processes and support measures.
With Marco Belair-Cirino
Carbon capture
Ottawa is working hard to accelerate the adoption of electric vehicles by subsidizing the sector of strategic minerals, but it is also implementing other measures for the energy transition.
In particular, the new federal budget lays the foundation for the Canada Growth Fund. This “new public investment mechanism that will be operated independently of the federal government” aims to attract significant private investment to reduce greenhouse gas (GHG) emissions and foster the growth of not only low-emitting industries of carbon, but also others looking for “new technologies”.
Minister Freeland also wants to boost “technologies that capture carbon dioxide (CO2) resulting from the combustion of fuels, industrial processes or directly in the air to then store the CO2, usually deep underground, or use it in other industrial processes, such as permanent mineralization in concrete” using a refundable tax credit. This will lead to additional spending of $2.6 billion over five years, then $1.5 billion per year until 2030.
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