Canada holds a big presence within the world useful resource sector, however a latest KPMG survey exhibits mining leaders agree extra work must be executed if the nation desires to be an trade chief in vital minerals.
Whereas 91 p.c of these polled are optimistic in regards to the nation’s potential to change into a key vital minerals participant, a equally overwhelming majority — or 98 p.c of respondents — imagine that a lot effort is required to place Canada on the forefront. They’d wish to see extra funding and authorities dedication, in addition to favorable tax insurance policies.
Canada’s present Vital Minerals Technique
Whereas the mining leaders surveyed by KPMG need to see extra motion from Canada in terms of vital minerals, the nation has been advancing its Vital Minerals Technique since its implementation in December 2022.
With substantial governmental backing price practically C$4 billion over eight years, notable milestones attained to this point embrace the launch of the C$1.5 billion Vital Minerals Infrastructure Fund, which is geared toward fortifying clear vitality and transportation infrastructure. Two vital minerals tasks have additionally been allotted C$249 million.
Outdoors vital minerals, Canada is the first producer of potash worldwide, in addition to a high 5 producer of commodities like diamonds, gem stones, gold, titanium focus and uranium.
Canadian miners say decarbonization is a key problem
Regardless of these efforts, the KPMG survey exhibits mining leaders are on the lookout for extra assist from Canada.
The respondents described decarbonization as a paramount problem confronting Canadian mining corporations. They anticipate that on account of heightened investor scrutiny, will probably be key to deal with carbon-cutting initiatives transferring ahead.
At this level, solely 23 p.c of the businesses surveyed have dedicated formally to attaining all scope-related carbon emissions reductions by 2050 or earlier. Whereas extra corporations need to interact in long-term commitments, the mining leaders KPMG surveyed stated 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 advanced drawback until Canada invests extra in native smelting and refining capacities. Whereas Scope 1 and a pair of emissions instantly come from company-driven processes, Scope 3 emissions are unowned and oblique emissions which might be produced throughout the corporate’s worth chain.
As a consequence of Canada’s restricted capability for home smelting or refining vital minerals, baseline emissions change into more durable 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 crucial minerals, the middleman minerals Canada produces are shipped to smelters around the globe. Till Canada has the capability to smelt or refine what’s mined right here, the miners shall be restricted in what they’ll do,” she stated.
Tax credit score considerations high of thoughts for Canadian miners
KPMG additionally requested survey respondents about Canada’s Vital 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 considerations 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 considerations in regards to the potential non-renewal of the 15 p.c 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 corresponding to gold and silver.
Investor takeaway
Regardless of Canada’s established place within the mining sector, there may be untapped development that awaits behind a wall of challenges. Mining leaders hope that via concerted efforts, Canada can notice its potential as a worldwide chief throughout the vital minerals trade, and are on the lookout 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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