Alberta supports northern exploration tax credit, federal position unclear

The federal government and GNWT both say they want to build the North and unlock its critical mineral reserves but, after five years of the territories advocating for a northern tax credit to attract investment, Ottawa has yet to act.

Pressed by Cabin Radio on whether anything would change in the coming federal budget, a spokesperson pointed to existing measures but declined to comment – as is standard practice – on what might be coming.

Alberta’s government said it endorsed the idea.

“The [federal] ministers who I’ve been able to have conversations with all do say this makes complete sense, but it’s not something that we’ve seen put into action,” NWT industry minister Caitlin Cleveland told Cabin Radio.

“I would love to better understand what [the federal government’s] reservations are, so that we can address those.”

On a recent trip to Ottawa, Cleveland kept up her government’s five-year push for a North of 60 Mineral Exploration Tax Credit. Ottawa already has a Canada-wide critical mineral mining tax credit, but provinces can afford to add extra incentives on top of that. The comparatively cash-strapped territories are calling for a special 15-percent tax credit to help level the playing field and ensure companies are incentivized to look north for critical minerals.

Prime Minister Mark Carney has repeatedly said building the North through major projects and defence investments is a priority for his government. That includes funding for major infrastructure projects like the Mackenzie Valley Highway, which would improve access for mining companies.

If the federal government is serious about its goal to make Canada a critical minerals superpower, Cleveland said, it needs to ensure the territories – which comprise nearly 40 percent of Canada’s landmass and have rich stores of critical minerals – are included in that ambition.

NWT and Nunavut Chamber of Mines CEO Paul Hébert is feeling optimistic. He said the chamber is seeing “increased receptiveness” to the idea of this tax credit.

Describing “dramatically improved public policy support for Canadian mining activity across the country,” Hébert said he expects the territories’ desired tax credit to arrive next spring if not this fall.

Asked about Ottawa’s position on the tax credit, John Fragos – the federal finance minister’s press secretary – pointed to mining-related measures Ottawa has implemented since the last budget. Those include expanding the Canada-wide Critical Mineral Exploration Tax Credit to include 12 additional minerals and the recently announced “Productivity Mega Deduction” to help the resource sector expand operations and invest in new machinery and equipment. 

Cleveland said some neighbouring provinces, including BC, Alberta and Saskatchewan, support the territories’ calls for a North of 60 tax credit. She added that when she brings it up at meetings of energy and mining ministers, she hasn’t heard any of her counterparts speak negatively about the proposal.

The office of Alberta’s minister of energy and minerals, Brian Jean, confirmed it supports the northern tax credit in an emailed statement to Cabin Radio.

“Alberta’s 2021 Minerals Strategy and Action Plan recognizes opportunities to collaborate with the Northwest Territories and support northern mineral development,” Jean’s office stated.

“Alberta is working to position itself as a minerals processing and manufacturing hub, making it an ideal destination for minerals mined in Yukon, Northwest Territories and Nunavut.”

Saskatchewan’s government did not respond to a request for comment. In BC, which is mid-election, the provincial government said it could comment only on critical matters related to health and public safety.

If the North of 60 tax credit doesn’t appear in the upcoming federal budget, both Cleveland and Hébert say they will keep pushing. Cleveland sees this as the most logical way to spur investment in the North.

Mining projects take time, so ensuring there is incentive for exploration companies to start work immediately is “incredibly important,” she said. When the Mackenzie Valley Highway is finished, Cleveland added, the territory must make sure “we already have projects in the pipeline” for that road to support.

Conservative northern affairs shadow minister Bob Zimmer declined to state his position on the proposed North of 60 tax credit. NDP northern affairs critic Leah Gazan said the federal government should focus on giving back to people in the NWT by addressing issues like the housing and affordability crisis, “not lining the pockets of big corporations.”

“In the course of this Liberal government, we’ve seen more attention on the Northwest Territories than we’ve ever seen before in my lifetime – and in the North as a whole – so we’re getting there,” Cleveland said. “But we still have work to do, and we need to make sure that that work comes with outcomes.”

The territories and Alberta also want the federal government to expand an existing Clean Technology Manufacturing Investment Tax credit to include zinc, an omission they view as an oversight.

The federal government did not explain why zinc was not included in the tax credit, nor whether there are plans to make the change in line with industry recommendations.