Nearly half of Canada’s provinces and territories have written to federal Liberal officials urging expansion of a mining exploration tax credit to cover engineering and feasibility studies for critical mineral projects.
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Nearly half of Canada’s provinces and territories have called on the federal government to expand eligibility for a mineral exploration tax credit, arguing it would help smaller mining companies push projects past exploration and into production.
The request follows a 2025 Liberal election platform promise to expand the range of activities eligible for mineral exploration tax credits by including the costs of engineering and feasibility studies for critical mineral projects.
Supporters of the campaign include Nova Scotia, Manitoba, Saskatchewan, Alberta, British Columbia and Yukon, which have all written letters backing the proposal.
Todd Stone, president of the Association for Mineral Exploration, said junior companies spend significant time on technical analysis and feasibility assessments that institutional investors typically do not fund. He described a “valley of death” period in the mine life cycle when exploration projects can stall because companies can’t raise money to continue the studies needed to move forward.
Stone said a report commissioned by his group found 2,052 Canadian projects are currently in early stages and that the number reflects projects that have “stalled.” The report also projected that expanding tax credits to cover feasibility and economic viability studies could support 14,000 to 34,000 jobs over 10 years, on top of a projected best-case scenario of 184,000 new jobs in the sector.
According to the same report, increased spending in the mining sector is projected to generate $68 billion in gross domestic product over the next 10 years, with the total potentially increasing by $5.2 billion to $12.2 billion if feasibility and viability studies are covered by government tax breaks.
The campaign also points to how provincial mining tax credits use Ottawa’s eligibility criteria. In an August letter, B.C. Mining Minister Jagrup Brar wrote that companies face financing challenges in the late stages of permitting, with the “valley of death” proving particularly difficult for companies attempting to finance projects that require extensive technical studies to proceed through regulatory processes.
In response to the request, a spokesperson for federal Natural Resources Minister Tim Hodgson declined to comment.
A media statement from Finance Minister François-Philippe Champagne’s office said the government expanded eligibility for the Critical Mineral Exploration Tax Credit in its last budget to include 12 more critical minerals, and said the Productivity Mega Deduction praised by the mining sector would help companies invest in equipment and expand operations.
The statement, signed by spokesperson John Fragos, also said the 2025 budget amended the Income Tax Act so that expenses incurred to determine the quality of a mineral resource do not include expenses related to feasibility studies. Fragos said the mega deduction would still provide junior mining companies with “significant breathing room” in early development and that it can be applied to equipment that can be used later in a mine’s life cycle.
Nunavut and N.W.T. Chamber of Mines CEO Pierre Hebert said Canadian exploration expenses do not allow economic assessments and feasibility studies to be expensed, and said those studies are required before a project can be approved and constructed. Hebert said while the mega deduction could help with construction costs for exploration camps, it would not address financing the “valley of death” period, calling feasibility studies “absolutely a required part of the process” that remains not eligible.
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