Mining sector lauds tax credits in budget update

TORONTO The Canadian mining industry applauded the latest budget update, which provides tax credits and incentives at a time when the sector is struggling.

“To be quite candid, it is the most positive economic statement or budget for the mining sector that we have seen in years, without question,” said Pierre Gratton, of the Mining Association of Canada.

The Liberal government is targeting mining companies, both large and small, by extending the Mineral Exploration Tax Credit — which allows companies searching for new mineral deposits to pass on tax credits to their investors — from one year to five years; and another provision allows mining companies to immediately take larger tax writeoffs on large capital investments in equipment and machinery.

While many of the details of these incentives are still being examined, Gratton said his initial impression is that the mining sector will find many pleasant surprises.

For instance, he said Finance Minister Bill Morneau’s fiscal update Wednesday restores the budget of Canada’s Trade Commissioner Service, which helps the mining sector, among others, find overseas customers for its products, which had been cut in years past.

The good news comes at a time when trade tension between the U.S. and China have cast doubt over global economic growth, creating headwinds for many commodities, stifling profits and making it difficult for mining companies to raise money.

“I’ve been in this business since 1978 ... and I don’t think I’ve ever seen the sentiment this bad,” said Bruce McLeod, chief executive of Sabina Gold and Silver Corp, which is constructing a gold mine in Nunavut.

Overall, the number of mining companies listed on the TSX and TSX-Venture exchange has declined to 1,195 at present from more than 1,400 in 2008.

On both exchanges combined, mining companies have raised $5.2 billion in equity through the first nine months of 2018, not quite on pace for the $8.2 billion raised in all of 2008.