By Divya Rajagopal
Canada will extend a tax credit on mineral exploration by two extra years as part of the government’s relocation to support investments in exploration projects, energy and natural resources, said Minister of Natural Resources Jonathan Wilkinson on Sunday.
The mineral exploration tax credit is a tool for capital market that offers investors a tax credit of 15% to invest in transfer shares of smaller mining companies. It would end on March 31.
Wilkinson said that the expansion is to ensure that the mining sector has the tools to attract capital for exploration projects. The move is also an attempt from the government to offer companies an alternative source of capital to China.
Canada has taken a heavy attitude against investments by Chinese state -owned companies in domestic mining companies. It has asked at least five companies to divest investments from Chinese state-owned companies in Canadian-listed companies.
“There was some degree of fear on the part of the sector, especially the juniors (exploration companies), or it will be renewed,” Wilkinson said in an interview.
The extension is expected to deliver C $ 110 million ($ 76.05 million) to support the investments in mineral exploration, he added.
The expansion will be announced during the annual prospectors and developers Association of Canada (PDAC) conference in Toronto, one of the world’s largest meetings of mining companies and their financiers, which starts on Sunday.
Miners bracket for a possible trade war in North America that has been released by US President Donald Trump, who threatens to impose a rate of 25% on most Canadian goods.
Miners are also looking forward to harder checks on the export of critical minerals from China. Wilkinson said that Canada has placed a mutually beneficial partnership for the US by offering Washington a safe stock of critical minerals such as Germanium and Gallium.
“There are specific types of critical minerals that Canada has given China to the United States in large quantities that they have now forbidden the export to the United States,” he said.
Wilkinson said that his argument was to American officials that it is much better to talk about how the US and Canada can help each other. Canada has drawn up retaliation measures in case Trump continues with rates in Canada and Mexico.
Although Canada may not impose export tax on metals in the first round of its counter-general measures, it is considering raw materials such as zinc, copper and nickel in the future.