Canada holds a big presence within the world mining sector, however a recent survey launched by KPMG reveals mining leaders agree extra work must be carried out if the nation desires to be an trade chief within the important minerals sector.
Whereas 91 % of mining leaders expressed optimism concerning the nation’s potential to change into a world chief in important minerals, a equally overwhelming majority — or 98 % of respondents — imagine that a lot is required to place Canada on the trade’s forefront. They’d prefer to extra funding and authorities dedication, in addition to favorable tax insurance policies.
Canada’s present Crucial Minerals Technique
Whereas the mining leaders surveyed by KPMG wish to see extra motion from Canada on the subject of important minerals, the nation has been advancing its Critical Minerals Strategy since its implementation in December 2022.
With substantial governmental backing price almost C$4 billion over eight years, notable milestones attained so far embody the launch of the C$1.5 billion Crucial Minerals Infrastructure Fund, which is aimed toward fortifying clear vitality and transportation infrastructure. Two important minerals initiatives have additionally been allotted C$249 million.
Outdoors important minerals, Canada is the first producer of potash worldwide, in addition to a top five producer of commodities like diamonds, gems, gold, titanium focus and uranium.
Canadian miners say decarbonization is a key problem
Regardless of these efforts, the KPMG survey reveals mining leaders are searching for extra assist from Canada.
The respondents described decarbonization as a paramount problem confronting Canadian mining firms. They anticipate that attributable to heightened investor scrutiny, will probably be key to deal with carbon-cutting initiatives transferring ahead.
At this level, solely 23 % of the businesses surveyed have dedicated formally to reaching all scope-related carbon emission reductions by 2050 or earlier. Whereas extra firms wish to have interaction in long-term commitments, the mining leaders KPMG surveyed mentioned the shortage of home refining capability is making this aim more durable to realize.
As well as, the discount of Scope 3 emissions poses a extra complicated drawback until Canada invests extra in native smelting and refining capacities. Whereas Scope 1 and a couple of emissions immediately come from company-driven processes, Scope 3 are unowned and oblique emissions which might be produced throughout the corporate’s worth chain.
Resulting from Canada’s restricted capability for home smelting or refining important minerals, baseline emissions change into more durable to observe and cut back for firms. KPMG Accomplice and Nationwide Mining Chief Heather Cheeseman defined within the agency’s press launch how this deficiency poses a handicap for native firms.
“As a result of Canada has comparatively little smelting or refining capability for most crucial minerals, the middleman minerals Canada produces are shipped to smelters all over the world. Till Canada has the capability to smelt or refine what’s mined right here, the miners will probably be restricted in what they will do,” she mentioned.
Tax credit score considerations high of thoughts for Canadian miners
KPMG additionally requested survey respondents about Canada’s Crucial Mineral Exploration Tax Credit score (CMETC).
Though it has facilitated financing for important minerals exploration, the mining leaders mentioned its complexity and restricted functions have raised considerations concerning its precise advantages.
For instance, the CMETC applies solely to fifteen of the 31 important minerals listed in Canada.
KPMG additionally discovered that survey respondents have rising considerations concerning the potential non-renewal of the 15 % federal Mineral Exploration Tax Credit score within the 2024 finances. This credit score incentivizes exploration focusing on important minerals excluded from the CMETC, in addition to different non-critical minerals resembling gold and silver.
Investor takeaway
Regardless of Canada’s established place within the mining sector, there’s untapped progress that awaits behind a wall of challenges. Mining leaders hope that by means of concerted efforts, Canada can notice its potential as a world chief throughout the important minerals trade, and are searching for sturdy authorities assist in a number of areas.
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Securities Disclosure: I, Giann Liguid, maintain no direct funding curiosity in any firm talked about on this article.
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