Canada holds a big presence within the international useful resource sector, however a current KPMG survey exhibits mining leaders agree extra work must be carried out if the nation desires to be an trade chief in vital minerals.
Whereas 91 % of these polled are optimistic concerning the nation’s potential to change into a key vital minerals participant, a equally overwhelming majority — or 98 % of respondents — imagine that a lot effort is required to place Canada on the forefront. They’d prefer to see extra funding and authorities dedication, in addition to favorable tax insurance policies.
Canada’s present Essential Minerals Technique
Whereas the mining leaders surveyed by KPMG wish to see extra motion from Canada in relation to vital minerals, the nation has been advancing its Essential Minerals Technique since its implementation in December 2022.
With substantial governmental backing price almost C$4 billion over eight years, notable milestones attained up to now embrace the launch of the C$1.5 billion Essential Minerals Infrastructure Fund, which is geared toward fortifying clear power and transportation infrastructure. Two vital minerals initiatives have additionally been allotted C$249 million.
Exterior vital minerals, Canada is the first producer of potash worldwide, in addition to a high 5 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 exhibits mining leaders are in search of extra help from Canada.
The respondents described decarbonization as a paramount problem confronting Canadian mining corporations. They anticipate that on account of heightened investor scrutiny, it will likely be key to concentrate on carbon-cutting initiatives shifting ahead.
At this level, solely 23 % of the businesses surveyed have dedicated formally to reaching all scope-related carbon emissions reductions by 2050 or earlier. Whereas extra corporations want to have interaction in long-term commitments, the mining leaders KPMG surveyed stated the dearth of home refining capability is making this aim tougher to attain.
As well as, the discount of Scope 3 emissions poses a extra complicated downside until Canada invests extra in native smelting and refining capacities. Whereas Scope 1 and a pair of emissions immediately come from company-driven processes, Scope 3 emissions are unowned and oblique emissions which can be produced throughout the corporate’s worth chain.
Because of Canada’s restricted capability for home smelting or refining vital minerals, baseline emissions change into tougher to observe and cut back for corporations. KPMG Associate and Nationwide Mining Chief Heather Cheeseman defined within the agency’s press launch how this deficiency poses a handicap for native corporations.
“As a result of Canada has comparatively little smelting or refining capability for most important minerals, the middleman minerals Canada produces are shipped to smelters world wide. Till Canada has the capability to smelt or refine what’s mined right here, the miners shall be restricted in what they will do,” she stated.
Tax credit score issues high of thoughts for Canadian miners
KPMG additionally requested survey respondents about Canada’s Essential Mineral Exploration Tax Credit score (CMETC).
Though it has facilitated financing for vital minerals exploration, the mining leaders stated its complexity and restricted functions have raised issues relating to its precise advantages.
For instance, the CMETC applies solely to fifteen of the 31 vital minerals listed in Canada.
KPMG additionally discovered that survey respondents have rising issues concerning the potential non-renewal of the 15 % federal Mineral Exploration Tax Credit score within the 2024 price range. This credit score incentivizes exploration concentrating on vital minerals excluded from the CMETC, in addition to different non-critical minerals equivalent to 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 via concerted efforts, Canada can understand its potential as a world chief inside the vital minerals trade, and are in search of robust authorities help 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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