Advocates praise critical minerals commitments in federal budget

A load enters the Nechalacho ice road in March 2021
A load enters the Nechalacho ice road in March 2021. Bill Braden/Cheetah Resources

Mining advocates say new investments in Canada’s critical minerals sector could benefit the North but more direct supports are needed to offset the high costs of exploration.

The federal government’s latest budget, released late last week, proposes $3.8 billion in funding to enhance exploration for critical minerals in Canada, including simplifying regulations and improvements to infrastructure and supply chains.

Canada considers 31 minerals critical to its sustainable economic success and national security, including zinc, cobalt, bismuth, copper, and rare earth elements. According to the territorial government, the NWT has seven critical minerals of “significant occurrence” or that are known to occur with the potential for additional discoveries. 

Among the federal budget’s funding proposals is up to $40 million over eight years to specifically support regulatory processes in the North. 



Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, said while the funding “confirms Canada’s urgency” to explore and discover critical minerals, the budget contains few direct references to the North’s mining sector.

“I think the trick will be finding ways to apply what’s in the budget to the North, and also to learn from bureaucrats what, if any, northern actions they had provided internally to help create the budget,” he told Cabin Radio in an email.

Hoefer pointed to the budget’s commitment of up to $1.5 billion over seven years for infrastructure investments that would support critical minerals supply chains. He said the four critical minerals projects in the NWT should be a priority for that funding as they all need investments in either all-season roads or green power. 

“Such infrastructure would reduce costs and would reduce fossil fuel consumption and emissions. Canada could help,” he wrote. 



Hoefer praised the budget’s commitment to double the critical mineral exploration tax credit to 30 percent. He said, however, that won’t offset the increased costs of exploration in the North.

The NWT and Nunvut Chamber of Mines, in its pre-budget submission, advocated for greater investments in the North’s mining sector, including calling for the creation of a 40-percent northern mineral exploration tax credit to “help level the playing field.” 

An aerial view of the Nico mine site
An aerial view of the Nico mine site. Photo: Fortune Minerals

Critical minerals projects are slowly advancing in the NWT.

The Nechalacho mine, around 100 km east of Yellowknife, became Canada’s first rare earth elements mine when it went into production in 2021. 

Farther south, Osisko Metals is working to resurrect the former Pine Point mine between Hay River and Fort Resolution as a zinc and lead project. Jeff Hussey, Osisko Metals’ president and chief operating officer, told Cabin Radio the company agrees with the chamber of mines’ assessment of the budget.

Other projects in the territory include the Nico mine, a proposed cobalt, gold, bismuth and copper project located outside Whatì, and the Prairie Creek mine, a proposed zinc, silver and lead project on land surrounded by the Dehcho’s Nahanni National Park Reserve.

Transition to a green economy

Robin Goad is the chief executive and president of Fortune Minerals, which plans to develop the Nico mine and an accompanying refinery in Alberta. Goad said he is pleased the federal budget recognizes the importance of the critical minerals sector. 

Goad agreed with Hoefer that northern-specific investments could help get the Nico mine, and projects like it, “across the line.”



Goad argues the transition to a green economy will require use of critical minerals but there are challenges like the political instability of some nations where those minerals are in abundance. He said the Nico mine will help to reduce reliance on the Democratic Republic of Congo and China for cobalt and meet the growing demand for lithium-ion batteries, electric vehicles and portable electronics. 

“We have a transformation taking place in the auto industry, to electric vehicles,” he said. “Cobalt is very important. It’s anticipated that the demand will more than double by the end of this decade, and we don’t have sufficient cobalt production to be able to supply a domestic auto industry.” 

In a 2020 report, the World Bank found that production of minerals like graphite, lithium and cobalt may need to increase by 500 percent by 2050 to meet demand for clean-energy technologies. The report estimates more than three billion tons of minerals and metals will be needed for wind, solar and geothermal power generation. 

Goad said the federal government needs to support not only exploration for critical minerals but also downstream processes, to ensure metals are used domestically and the country doesn’t lose out on benefits. He said companies can struggle to finance things like refineries and concentrators and, in the North, there are high operating and capital costs due to the infrastructure deficit, high power costs and long supply chains. 

“The near-term priority needs to be on getting some of the advanced projects like ours into commercial production, so we can actually start getting access to the materials that we need for a domestic electric vehicle supply chain,” he said. 

Shortly after the budget was released, the Mining Association of Canada praised the federal government’s “forward-looking vision,” saying investments in the critical minerals sector would support commitments to climate action and supply chain security. 

“The Government of Canada has positioned Canada in a leading competitive position for new investments up and down the minerals and metals sector and beyond,” Pierre Gratton, president and chief executive of that association, said in a statement.

“Doubtless, these measures will give Canada a lock on the top spot for global exploration investment and spur new investments across the value chain.”

NWT Liberal MP Michael McLeod highlighted his government’s commitment to the critical minerals sector as one of the areas in the budget that will improve “quality of life and opportunities in the North.” 

“With a strong emphasis on affordable housing, reconciliation, and economic development, budget 2022 provides much-needed investments toward the priorities of northerners,” he said in a statement.