Measures included in the 2018 Fall Economic Statement (FES) would provide an “important boost for Canadian mining competitiveness”, industry organisation the Mining Association of Canada (MAC) noted in a statement released last week.
The mining industry is a major sector of Canada’s economy, contributing C$97-billion to gross domestic product and is responsible for 19% of Canada’s total domestic exports.
MAC reported that the 2018 FES – a midyear update on Canada’s budget projections, which was presented by Finance Minister Bill Morneau earlier this month – proposed several measures that would enhance the investment competitiveness of Canada’s mining and metal manufacturing sectors, including the Accelerated Investment Incentive and extending the Mineral Exploration Tax Credit (METC) for a five-year term.
The MAC commented that the investment incentive would enable miners to write off three times the eligible cost of newly acquired assets in the year the investment was made, while the METC extension allowed for greater investment certainty for early-stage mineral exploration. The FES also introduced a measure enabling businesses to immediately write off the full cost of clean energy equipment.
“The enhanced treatment of capital expenditure in the first year for mining and metal manufacturing provides an important incentive to invest in Canada at a time when the mining industry is enjoying generally stronger commodity prices and is looking at growth prospects around the world,” MAC president and CEO Pierre Gratton declared in the statement.
He added that the write-off for clean energy equipment would serve to incentivise investments in northern Canada, where access to grid power “does not exist”, thereby supporting a transition to low-carbon energy alternatives.
“We are hopeful that this will also include the transition currently under way to move towards the use of electric haul trucks and other heavy equipment.”
Gratton noted that extending the METC for five years would assist Canada in recapturing the top global position for mineral exploration investment.
The MAC stressed that Canada’s tax regime had fallen behind global competitors, as a result of budgets in 2012 and 2013 reducing or eliminating several direct and indirect mining-related tax credits. “Most recently, the US Tax Cuts and Jobs Act reforms significantly reduced Canada’s mining tax competitiveness vis-à-vis the US.”
Gratton stated that Canada’s tax regime was a “major” determinant of its attractiveness for domestic and international mining investment. “The MAC appreciates government’s recognition of the need to improve Canada’s investment competitiveness in mining”
despite Canadian provinces being three of the top ten jurisdictions in terms of investment based on the Fraser Institute’s Investment Attractiveness Index. The country’s overall attractiveness score dipped in 2017. Canada remains the most attractive region.
Nonetheless, the MAC lauded other measures contained in the FES, such as an additional C$800-million over five years for the Strategic Innovation Fund, a commitment to increase overseas exports by 50% by 2025, and a proposed increase of C$13.6-million for the Multimodal Integrated Passenger-Freight Information System.
Gratton also welcomed the bolstering of the Canadian Trade Commissioners Service, noting that the mining and mining supply sector “significantly values the work of Trade Commissioners around the world that support our access to global markets”, as well as an accelerated investment of C$773.9-million over the next five years for national trade-corridors funding.