Federal budget proposes $3.8B to support Canada’s critical minerals industry  

Canada’s 2022 Budget has proposed to provide a total of up to $3.8 billion over eight years to develop electric vehicle components such as batteries and permanent magnets and ensure that the country becomes a “vital part” of the global critical minerals industry.  

The budget allocates up to $1.5 billion for the development of critical minerals supply chains, with “a focus on priority deposits.” It also aims to invest $79.2 million over five years for Natural Resources Canada to provide public access to data sets that inform minerals exploration and development.  

In addition, the budget proposes to introduce a new 30% tax credit for mineral exploration expenses incurred in Canada that target minerals like nickel, lithium, cobalt, graphite, copper, rare earths elements, zinc, uranium, platinum group metals and others.  

“We will be investing in Canada’s abundant critical minerals and metals. They are a key part of going green,” said Finance Minister Chrystia Freeland while unveiling the budget.  “As carmakers urgently upgrade their assembly lines to make zero emission vehicles we will be making sure Canadians can afford them. We will manufacture the batteries that power zero emission cars and trucks and we will invest in charging stations from coast to coast. For our children, that means cleaner air and cleaner water tomorrow.” 

Brendan Marshall, VP economic and northern affairs at the Mining Association of Canada (MAC),  described the budget as “exceptionally positive” for the mining sector during an interview with The Northern Miner.  

“The emphasis on the mining sector in this budget is unique compared to those in recent years, the level of prominence in the sector… as a driver of low carbon, clean tech development is well thought out and well understood. This is a vision budget for the sector,” he added.  

A month before the release of the budget, MAC, which represents about 50 of Canada’s leading mining companies, urged the government to invest more in critical minerals if it wants to avoid “slipping behind” its competitors. It called on the need for “heightened investment in research and development” and doubling the mineral exploration tax credit for critical minerals.  

Marshall said that the measures proposed in the budget were representative of MAC’s views. He added that the proposed budget provided geoscience and exploration incentives to find more minerals and metals, especially in the case of rare earth and battery metals.  

More resilient supply chains

The budget proposed $603.2 million over five years to build a “more resilient” supply chain. “The recent flooding in British Columbia — which cut off the flow of goods to and from the west coast — reinforced the importance of our highways, railways, and ports as the backbone of our transportation system,” stated the budget document released by the finance ministry.   

Damage caused due to excessive rains and flooding compelled Teck Resources (TSX: TECK.A/TECK.B; NYSE: TECK) to lower its sales estimates last year.  

The budget also proposed $1 billion over six years, starting in 2024-25 to provide “targeted support” towards critical minerals projects, with priority given to manufacturing, processing, and recycling applications. It also hopes to allocate up to $144.4 million over five years to support research development related to critical mineral value chains.  

In addition, the budget proposed to provide $103.4 million to develop a National Benefits-Sharing Framework for natural resources and the expansion of the Indigenous Partnership Office and the Indigenous Natural Resource Partnerships program.  

“These investments will increase Indigenous capacity to benefit from all types of natural resources projects, including critical minerals,” the budget stated.  

In the budget last year, the government said that it would invest $9.6 million over three years to create a Critical Battery Minerals Centre of Excellence at Natural Resources Canada to coordinate federal policy and programs on critical minerals. It had also proposed to invest $36.8 million for federal research and development to advance critical battery mineral processing and refining expertise.