New Canadian gov initiative enables 'most competitive mining jax jurisdiction in the world'
Industry body Mining Association of Canada (MAC) has welcomed an announcement by the federal government on a "Productivity Mega Deduction" as a permanent measure allowing businesses to fully write off the cost of most new capital assets in the year they are put to use.
For Canada's mining industry, the Productivity Mega Deduction would allow companies to immediately deduct the full cost of a broad range of eligible depreciable assets acquired on or after September 15, once those assets are available for use.
This could include a broad range of machinery, equipment and infrastructure used to build, operate, modernise or expand mines, as well as equipment used in mineral processing, smelting and refining.
Qualifying Canadian development expenses incurred from that date would also be immediately deductible, including costs associated with developing new mines and qualifying development work at existing operations.
Mining projects require enormous upfront investment, often years before they begin generating revenue, MAC states, adding that receiving these deductions sooner will improve project cash flow and net present value, lower the effective cost of investments in equipment and mine development, and could help some marginal projects or brownfield expansions meet companies' investment thresholds.
"Making immediate expensing permanent will also provide greater certainty for the long-term investment decisions needed to bring new mines into production, extend the life of existing operations and strengthen Canada's mineral-processing capacity," the organisation explains.
Importantly, the measure is broadly commodity-agnostic. This broad eligibility is especially valuable in mining, where projects frequently produce multiple minerals and investment decisions must account for changing markets over the long life of a mine.
"Today's announcement by Prime Minister Mark Carney is transformative. With these announced new measures, Canada will become one of, if not the most, competitive mining tax jurisdiction in the world," says MAC CEO and president Pierre Gratton.
"It will usher in a new age of new mining investment, spurring job creation, supporting local and Indigenous businesses and increasing Canada's supply of the minerals and metals the world needs and wants from a trusted country like ours. We expect these measures to have demonstrable effect in the near to medium term.
"For mining, timing matters: Canada is competing with other jurisdictions for the investment needed to build out mineral supply chains, from base metals like nickel and copper to the critical minerals that allies are counting on.
"By covering all of mining rather than a narrower list of commodities, the Productivity Mega Deduction stands to mark a turning point for investment across the sector and builds on Canada's growing strength in other commodities like gold and precious metals," Gratton concludes.
