Why the NWT is pushing for two changes to Canada’s mining incentives

NWT ministers are urging the federal government to implement two tax measures to help spur critical mineral development in the territory.

“Right now, it’s two to six times more expensive to do business in the Northwest Territories,” territorial industry minister Caitlin Cleveland told Cabin Radio on Wednesday during a visit to Ottawa.

The federal government and GNWT are both talking up the North’s ample reserves of critical minerals, but the territory says it needs Ottawa to step up and help attract investment – a message they have been trying to drive home for years.

Ottawa already offers a critical mineral exploration tax credit that gives companies a 30-percent kickback for eligible projects, but Cleveland said many provinces in the south expand on that by adding their own tax credits to the tune of another 15 or 20 percent.

“We don’t have pockets that deep, so we’re asking for the federal government to really level the playing field between provinces and territories,” Cleveland said.

To achieve that, she is pushing for two policies.

The first is creating a “North of 60 Mineral Exploration Tax Credit” – an additional 15-percent tax credit that would apply only in the three territories, to help offset the higher cost of doing business and attract investment. The idea is to mimic the incentives provinces can afford to offer.

Offsetting the cost of doing business with tax kickbacks can speed up projects because companies can reinvest that money, Cleveland said. In her view, this is essential to ensure the three territories unlock stores of minerals like bismuth, tungsten and zinc for the economic benefit of both the North and Canada.

Zinc ‘headscratcher’

Another measure that Cleveland believes would “tremendously” help the NWT – and Canada – is changing the rules of a different, pre-existing tax credit so it includes zinc projects.

The federal government’s Clean Technology Manufacturing Investment Tax Credit offers about a 30-percent tax credit on investments in eligible projects.

However, to the bemusement of the GNWT and industry associations, zinc is not among the approved critical minerals.

“That’s been a bit of a headscratcher,” said Photinie Koutsavlis, vice president of economic affairs and climate change at the Mining Association of Canada.

“Our clean technologies are so reliant on zinc,” Cleveland emphasized, describing it as a coating that prevents corrosion and is important for the likes of wind turbines, solar panels and batteries.

Canadian zinc mining production has decreased 86 percent between 2002 and 2024, Koutsavlis noted.

Two of the NWT’s advanced projects are proposed zinc mines: Pine Point in the South Slave region and the Dehcho’s PC Silver, which would produce silver, zinc and lead.

“With the opening of those two mines, we have the potential to double Canada’s zinc production just from the Northwest Territories alone,” said Cleveland.

“The addition of zinc to that clean technology manufacturing tax credit makes the economics of that project possible.”

The Mining Association of Canada said it is constantly recommending the investment tax credit be tweaked to include zinc. The federal government already adjusted its criteria once to make a handful of defence-related minerals eligible, said Koutsavlis, who doesn’t see why the federal government shouldn’t make this change, too.

The tax credit applies to eligible machinery and the likes of processing equipment.

“It is a significant source of capital for especially junior miners that are looking to move the project forward, to make it economic,” Koutsavlis said.

“A 30-percent rebate essentially frees up that capital for them to be able to invest in other areas of their project,” she added, moving it toward a final investment decision.

Cleveland said these asks have been active for five years, since before she was industry minister, and she will keep bringing the two proposals to the federal government at every opportunity.