Nearly half of Canada’s provinces and territories are calling on the federal Liberals to fulfil their election promise to expand eligibility for a mining exploration tax credit to help smaller mining companies get through their exploration phase.
The Liberals’ 2025 election platform said the government would expand the range of activities eligible for mineral exploration tax credits by including the costs of engineering and feasibility studies for critical mineral projects.
The Association for Mineral Exploration, which recently launched a campaign to hold the government to its promise, said it’s hoping to that included in the upcoming budget.
Nova Scotia, Manitoba, Saskatchewan, Alberta, British Columbia and Yukon have all written letters in support of the campaign. They say the measure would help projects move from exploration to production.
“When you’re a junior mining company, you’re predominantly focused on proving your assets, right? Like, you’re trying hard to move from discovery to ultimately development when it becomes a mine,” said Todd Stone, president of the Association for Mineral Exploration.
“It means you have to poke a lot of holes, you have to do a lot of engineering work, you have to do a lot of technical analysis and feasibility assessments and so forth, none of which institutional investors really want to invest in.”
Stone said there’s a part of a mine’s life cycle — which the industry calls the “valley of death” — when exploration projects get stalled because companies can’t raise money to continue engineering, feasibility and technical studies.
A report from Ernst & Young, commissioned by Stone’s group, found 2,052 projects in Canada are currently in their early stages. Stone said that figure reflects the number of projects that have “stalled.”
The report said expanding the tax credits to cover feasibility and economic viability studies could generate 14,000 to 34,000 jobs over 10 years, on top of the projected best-case scenario of 184,000 new jobs in the sector.
The report suggested increased spending in the mining sector is projected to generate $68 billion in GDP over the next 10 years. The report said that projection could increase by anywhere from $5.2 billion to $12.2 billion if feasibility and viability studies were covered by government tax breaks.
Provinces and territories largely use Ottawa’s criteria to determine eligibility for their own mining tax credits.
“Major mining projects across B.C. continue to face financing challenges in the late stages of permitting as they prepare for development,” B.C. Mining Minister Jagrup Brar wrote in an August letter to federal Natural Resources Tim Hodgson and Finance Minister François-Philippe Champagne.
“This is … a time period of minimal news flow to the investment community, resulting in a lack of investor excitement in public markets. The ‘valley of death’ is a particularly difficult period for companies (especially single asset companies) to finance their projects, compounded by the breadth of technical studies that a modern mining project requires to proceed through regulatory processes.”
In a media statement, Champagne’s press secretary pointed out that the government expanded eligibility for the Critical Mineral Exploration Tax Credit in its last budget to include 12 more critical minerals.
Champagne’s office also said the new Productivity Mega Deduction — which has been praised by the mining sector — will help companies expand their operations and invest in new equipment.
“This adds to the myriad other measures and billions more in supports the government has invested in the mining sector,” spokesperson John Fragos wrote, adding the government’s new measures cover 65 per cent of a mine’s assets.
Fragos also noted that the 2025 budget amended the Income Tax Act to state that expenses incurred to determine the quality of a mineral resource do not include expenses related to feasibility studies.
Fragos said the mega deduction will still give junior mining companies significant breathing room in the early stages of development, and can be applied to equipment that can be used — and may be needed — later in the mine’s life cycle.
He said the government is trying to make it easier for projects to get approved in order to encourage investment in their early stages.
A spokesperson for Hodgson declined to comment.
“The Canadian exploration expenses don’t allow for economic assessments and feasibility studies to be put through, and those are a critical part of the process leading up to actual project approval and construction of a project,” said Pierre Hebert, CEO of the Nunavut and N.W.T. Chamber of Mines.
“You need more than a drilling program to demonstrate project viability. You need those studies, and they can be very costly to produce. So having them eligible to expense will make a big difference.”
Hebert said while the mega deduction will go a long way to helping with construction costs to set up exploration camps, it won’t help get companies through the “valley of death.”
“The fact remains that those feasibility studies, in demonstrating the viability of a mining project that are absolutely a required part of the process, are not eligible,” Hebert said.
This report by The Canadian Press was first published Oct. 10, 2026.
By Nick Murray | Copyright 2026, The Canadian Press. All rights reserved.