Canadian miners cheer Ottawa's critical minerals budget plan

Search Minerals

08/04/2022 20:30

By Ernest Scheyder and Steve Scherer
    OTTAWA, April 8 (Reuters) - Canadian miners say Ottawa's
plan to spend C$3.8 billion ($3.02 billion) to boost domestic
production of lithium, copper and other strategic minerals
should help propel the country's efforts to become a key part of
the global electric vehicle supply chain.
    The spending, announced during Canada's federal budget
unveiling on Thursday, promises grants for mineral surveying,
processing and recycling, as well as tax credits for digging new
mines and subsidies for infrastructure, though it would not
reduce regulatory oversight.
    "This is a game-changer," said Greg Andrews, chief executive
of Search Minerals Inc  SMY.V , which is developing a rare
earths mine in Newfoundland and Labrador. Rare earths are used
to make magnets that transfer electricity into motion for EVs.  
 
    While Canada has long been known as a major gold producer,
its efforts to mine and process EV minerals have lagged other
nations, including China. 
    Miners also have complained that Ottawa's recent investments
in battery components and facilities - including a battery
gigafactory in Windsor that is a joint venture between
Stellantis  STLA.MI  and South Korea's LG Energy Solution
 373220.KS  - overlooked those facilities' need to procure
minerals to build the EV products. 
    "The world economy is going green. Canada can be in the
vanguard, or we can be left behind," Finance Minister Chrystia
Freeland said on Thursday when she presented the budget to
parliament. 
    The spending does not include plans to lessen regulatory
requirements for new mines, just like the industry support
announced last week by U.S. President Joe Biden. Mining in
Canada is largely regulated at the provincial level. Quebec, for
example, is known as far more open to new mines than British
Columbia.
    "The general climate in Canada is becoming more and more
supportive, which is very good for the industry," said David
D'Onofrio of Toronto-based bank PowerOne Capital Markets, which
is invested in several Canadian lithium and nickel projects.
    The budget foresees doubling of the exploration tax credit
to 30% for a range of EV metals, including nickel, lithium,
cobalt, graphite, copper, rare earths elements, vanadium,
tellurium, gallium, scandium, titanium, magnesium, zinc,
platinum group metals and uranium.
    "What we see in the budget is a carefully thought-out plan,
with targeted funds at segments of the mining ecosystem that all
collectively need to be bolstered," said Brendan Marshall of the
Mining Association of Canada, an industry trade group.  
    Canada's critical mineral deposits at current prices are
valued at approximately C$340 billion, a senior official said on
Thursday.
    "The key to moving beyond mining is to do more mining so you
have ample supply of resources needed to grow supply chains,"
said Ryan Castilloux, a Toronto-based critical minerals
consultant at Adamas Intelligence.
    
    THE GREAT NORTH    
    Miners also said the budget should help to further develop
Northern Canada, which is sparsely populated but contains much
of the nation's minerals wealth.
    "The only way you develop the Great North is by having
programs that encourage prospectors, geologists and others to
explore there," said Stan Bharti, CEO of Toronto-based bank
Forbes & Manhattan, which has invested in several Canadian
lithium and graphite projects.
    Ottawa says the budget aims to make critical mineral
projects less risky for companies, in part by supporting
infrastructure investments with C$1.5 billion over seven years,
backing processing with C$1.5 billion over six years, and
investing almost C$79 million over five years in detailed
surveying. 
    "You need those other industries or else the metals are
going to go to China for processing," said Kiril Mugerman, CEO
of rare earths recycler Geomega Resources Inc  GMA.V .
    The budget also includes C$25 million for "early engagement
and Indigenous communities' capacity building to support their
participation in the critical minerals strategy." 
    While miners said they plan to apply for funding, they would
wait for more details. "We need to see the mechanics of the
support being offered to understand how best to utilize the
funding available," said Mark Saxon, CEO of Vancouver-based rare
earths processor Medallion Resources Ltd  MDL.V .
    Vale SA  VALE3.SA , which produces nickel in Ontario as well
as in Newfoundland and Labrador, said the spending plans show
Ottawa "has a real opportunity to become a global ESG champion
of critical minerals and the EV battery supply chain."     
    Rio Tinto Ltd  RIO.AX  and BHP Group Ltd  BHP.AX , which
last year moved its exploration offices for copper and nickel to
Toronto, were not immediately available to comment.
 ($1 = 1.2583 Canadian dollars)  

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 (Reporting by Ernest Scheyder in Houston and Stever Scherer in
Ottawa
Editing by Matthew Lewis)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))