federal budget shows willingness to counter u.s., china critical mineral strategies: b.c. expert
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teck resources' highland valley copper mine is seen in an aerial view near logan lake on sept. 11.
darryl dyck
/
the canadian press
the suite of supports for canada’s mining sector in prime minister mark carney’s budget this week showed canada’s willingness to secure critical minerals and counter the more protectionist policies of china and the u.s., according to a university of b.c. mining expert.
measures included tax credits to canada’s producers of minerals essential to renewable energy production, such as copper and rare earth elements, increased funding for first nations to participate in project reviews, and a $2 billion “sovereign fund” for the federal government to make its own strategic investments in projects.
“if you had said to someone five years ago that the government would be directly investing in mines and having offtake agreements (for) mining products, people would have said, ‘no, you’re crazy,’ ” said john steen, director of the bradshaw research initiative in minerals and mining at ubc.
in its budget document, the federal government said the measures are intended to back up the efforts carney started at this year’s g7 summit to set up “trusted international partnerships” for the development of critical-mineral supply chains in aid of their collective defence and tech sectors.
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the measures, particularly the $2 billion so-called sovereign fund, takes canada down the path of trying to directly influence the industry that china has taken “for many decades,” and the u.s. has started on with its own strategic deals.
“in some ways, it sort of abandons market economics,” steen said. “it’s saying we’re now playing a post-market game with countries using economics as trade weapons against each other.”
on a cautionary note, steen added the reminder that mining is a cyclical business and canada’s recent enthusiasm will need to be maintained through economic ups and downs over the long-term. building a new mine is a process that takes years.
“this is not just one budget cycle, but an investment that has to be supported with bipartisan approaches through many budget cycles,” steen said.
federal efforts to support mining, such as including newmont corp. and imperial metals’ $2.6 billion red chris mine expansion project in the province’s northwest, has won favour with victoria, which is betting heavily on the industry as a means of economic diversification.
the industry as a whole looks at the 2025 budget as “a solid step forward positioning canada and b.c. as a leading global supplier of critical minerals,” said michael goehring, ceo of the mining association of b.c.
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government intends to use the $2 billion sovereign fund, to be paid out over five years, to buy direct stakes in early stage companies, loan guarantees or agreements to buy some of the output from mines, referred to as offtake, which helps shore up project financing.
the amount is modest in a sector where mines have become multibillion-dollar endeavours, but goehring said the fund might still help companies in b.c. develop deposits of rare earth elements that are produced in small amounts and mostly in china in today’s market.
rare earth elements, such as niobium, terbium and germanium, are important in high-tech magnets and electronic components and goehring said “its really a geopolitical imperative” for canada to speed up development of its own supply chains among allies.
however, goehring added that the sovereign fund is just one of several measures in the budget that help the mining sector.
for instance, the 2025 budget adjusts criteria in government’s clean technology manufacturing tax credit that extends the 30-per-cent break to more mines that produce multiple minerals, which include copper.
the credit, established in 2023, applies to the purchase of mining equipment, but goehring said that up until now only mines where copper was 90 per cent of their output qualified. with this budget, the threshold drops to 50 per cent.
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“what i think i can say is that this sends a very strong signal to global investors and to industry that canada is stepping up and serious about developing its critical mineral resources,” goehring said.
the credits also offer some encouragement to companies interested in processing minerals, which is another part of the industry dominated by china and other asian economies.
goehring said it could be of help to teck resources, which operates canada’s largest copper mine in b.c. and has talked about adding some copper processing to its trail lead-zinc smelting operations as part of its proposed merger with anglo american.
steen said the credit recognizes that “exploration is great, but really the trouble is processing. that’s where the real pain point is and that’s where china completely dominates the western world.”
however, goehring said a firm commitment to victoria’s $6 billion north coast power transmission line, a critical component to opening up mining and liquefied natural gas development in the northwest, was one missing piece in the 2025 budget.
“that will deliver billions in new investment to british columbia and canada,” goehring said.
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