Retired mining machines are set up as a tourist stop along Highway 63 north of Fort McMurray, Alta., on April 25.AMBER BRACKEN/The Canadian Press
John Turner, Krisztian Toth and Paul Blyschak are lawyers at Fasken Martineau DuMoulin LLP. The views expressed herein are those of the authors.
After years of underwhelming policy support, our federal government has finally awoken to the vital importance of Canadian mining. The alarm bell has been the critical minerals race and its integral bearing on the green energy transition and high-tech applications (including artificial intelligence) and, by extension, national and international security. But the lack of foresight has left policy makers scrambling. We must make up lost ground, quickly, and with minimal politicking, or we risk the entire energy transition.
In the decade after the millennium, before critical minerals were “critical minerals,” the authors were busy representing Asian interests pursuing every copper and gold project available, whether in Canada or elsewhere (gold is considered a critical mineral in some countries, including China). Most project owners were eager sellers, believing the buyers were overpaying. Our clients were undeterred, inviting doubters to circle back in 20 years.
Our lead author, John Turner, repeatedly raised strategic concerns with senior Canadian politicians. The only attentive ear was Michael Ignatieff, then leader of the federal Liberal Party. But as we know, his international relations acumen did not save him in the 2011 election. The years since have seen the true scope of the latest great geopolitical game revealed to all.
We therefore applaud the federal government’s dedication to stimulating mineral exploration and streamlining mining permitting in its 2024 budget. This includes multiple tax credits, aiming to reduce the approval process for new mines to as few as five years, and facilitating Indigenous ownership in mining projects through loan guarantees. We need new mines, and we need them permitted much quicker than the current rate of 15-plus years.
The task now shifts to seeing these long-overdue measures through. But the task also remains promoting Canadian mining through a fully co-ordinated, consistent and committed approach.
Simply put, the progress made in the 2024 budget has been greatly undercut by, first, uncertainty created by the impact of the capital-gains tax increase on flow-through financings and, second, the inconsistent and arguably political nature of the application of national-security concerns to mining financings and transactions.
The Mining Association of Canada was quick to highlight that the federal budget’s increase in capital-gains taxes would significantly undermine the benefit of the federal mineral exploration tax credit. We’re therefore encouraged by reports that a carve-out for the mining industry is under way, but remain disheartened by the uncertainty created by the way the capital-gains increase was implemented. Canadian mining’s best interests must always be a priority going forward and never an afterthought.
So, too, must the federal government commit to transparency, predictability and streamlining in its regulatory reviews, including relating to national security. Recent decisions and prolonged reviews have seen deeply conflicting signals being sent regarding which types of investment by which types of investors will face enhanced scrutiny. Regulatory opacity and uncertainty to this degree threatens investment in Canadian mining across the board and not just from jurisdictions Ottawa deems to raise national-security concerns. It also threatens to encourage mining companies currently based in Canada to redomicile elsewhere. Again, the focus must always be the best interests of Canadian mining, not political or electoral positioning.
Canada has been a perennial mining superpower. More mining companies trade on the Toronto Stock Exchange and TSX Venture Exchange than on any other stock exchange globally and more mining companies are headquartered in Canada than in any other country. And with this comes a wide and deep array of mining expertise and service providers, including financial, accounting, consulting, legal, technical and environmental. Over all, it’s no exaggeration to say that much of the global mining industry runs one way or another through Canada.
But this dominance and the many economic benefits that flow from it are not guaranteed and have in fact been slipping, with Canada losing ground to Hong Kong and Australia, among others. We should not take our historic strengths in mining for granted. We should be fully leveraging them on every policy front reasonably available. This is particularly the case in the face of Canada’s mounting productivity crisis. Our first priority should be to protect and play to our strengths. The alternative is to lose one of the few remaining sectors in which Canada punches well above its weight. We will be much poorer, less secure and less influential for it.
And responsibility does not fall on the government of the day alone. Aggressively supporting Canada’s mining industry should transcend party lines and not require the outlay of political capital. Our collective motivation should be obvious: the clean energy transition, our national prosperity and international security all hang in the balance.