Nearly half of provinces, territories call on Ottawa to expand mining tax credit

Nearly half of Canada's provinces and territories have urged the federal Liberals to fulfill their election promise to expand eligibility for a mining exploration tax credit. This measure aims to help smaller mining companies navigate their exploration phase. The Liberals pledged in their 2025 election platform to include engineering and feasibility study costs for critical mineral projects under the mineral exploration tax credits.

The Association for Mineral Exploration, which recently launched a campaign to hold the government accountable for this promise, supports the initiative. They believe the expanded tax credits would help projects transition from exploration to production. Todd Stone, president of the Association for Mineral Exploration, explained that small mining companies often face challenges during the "valley of death" – a critical phase where they struggle to raise funds for engineering, feasibility, and technical studies.

A report commissioned by Stone's group found that 2,052 projects in Canada are currently in the early stages and may be stalled. Expanding the tax credits to cover feasibility and economic viability studies could create 14,000 to 34,000 jobs over 10 years, with a potential increase of $5.2 billion to $12.2 billion in GDP if such studies were eligible for government tax breaks.

Provinces and territories generally align their criteria for mining tax credits with Ottawa's guidelines. For instance, B.C.'s Mining Minister Jagrup Brar highlighted that major mining projects in the province continue to face financing difficulties in the final stages of permitting, which further compounds the challenges during the "valley of death."

The federal government recently expanded eligibility for the Critical Mineral Exploration Tax Credit to cover 12 critical minerals and introduced the Productivity Mega Deduction, which has received praise from the mining sector. However, the government also stated that expenses related to feasibility studies are not included in the Income Tax Act, potentially limiting the benefits available to junior mining companies.