October 11, 2023
We call Canada the “Silicon Valley” of the mining industry.
The country is home to hundreds of publicly traded mining companies operating globally.
It’s where mining companies come to raise funds to implement their strategies for the exploration and production of all sorts of commodities, from gold and silver to rare earth minerals, lithium, and copper.
Almost one-third of all capital raised by mining juniors in the world was raised in Canada in 2022.
In 2022, companies that trade on the Toronto Stock Exchange (or TSX) and the Venture Exchange (TSX-V) raised almost CAD8 billion (or about USD5.9 billion).
And Canada plans to remain a major global player in the mining industry.
In 2022, Canada announced that it would support sustainable production of critical minerals.
As a reminder, critical minerals are the commodities that underpin the “clean transition.” Lithium, which is used in electric-vehicle batteries; copper, which is used in wires; rare earth elements, which have multiple high-tech uses… the list goes on.
The program announced that it would make millions of dollars in funding available, as well as tax credits for qualifying projects.
For example, the program says that a 30% tax break called the Critical Mineral Exploration Tax Credit will become available to investors under some flow-through share agreements. This credit will cover nickel, lithium, cobalt, graphite, copper, rare earth elements, vanadium, uranium, and others. The list includes 31 minerals.
The goal of the program is to stimulate growth in the critical minerals space. Canada aims to boost the domestic value chain, from exploration to production and recycling, and become a supplier of critical minerals to the United States and other allies.
(The growing tensions between the United States and China add to this urgency. Both Canada and the United States aim to become self-sufficient when it comes to the supply of critical minerals.)
The introduction of this program shows again that the Canadian mining industry is focused on keeping its leading position in the world.
And just recently, we learned that a group of companies were awarded funding by the Mining Innovation Commercialization Accelerator Network.
Twenty-four recipients will get about CAD15 million in total.
Some of the technologies that got funding included the ones that reduced carbon emissions in the potash sector and expanded the use of autonomous vehicles in underground mining.
So far, the program distributed about CAD40 million in funding.
But this is not the whole story…
Investing in the mining space can be risky.
This is why investors who are new to the Canadian mining industry may want to focus on the more established areas in the Canadian resource space.
The country is already a leading global producer of several critical elements.
The list includes nickel, potash, aluminum, and uranium.
The Canadian government says that since these industries are more established, it wants to focus its efforts on the under-developed sub-industries.
This is fair, in our opinion.
And it gives investors several options… one option is to pursue the most established players in the nickel, potash, aluminum, and uranium space.
Voisey’s Bay mine, for example, is the largest nickel project in Canada. It’s owned by Vale (NYSE:VALE), a global mining conglomerate with a market capitalization of USD56 billion.
Nutrien (TSX:NTR) is Canada’s largest potash company operating in Saskatchewan. Its six mines have over 20 million tonnes of capacity.
On the aluminum side, Alcoa (NYSE:AA) is one of the largest and most established players. It operates three aluminum smelting operations in Canada.
Cameco (TSX:CCO) owns McArthur River, the largest uranium project in Canada. It is the world’s largest high-grade uranium mine.
This list should get you started if you’re new to the Canadian mining industry.
Canada has mining in its DNA. The country’s government has proven that it will go to great lengths to boost Canada’s mining industry. Especially when it comes to the "new economy" minerals necessary for the "clean transition."
Some of the world’s largest miners operating in the critical minerals space are located in Canada. And, in our opinion, in the future, we will see more activity in this space as investors realize the benefits of putting their capital to work in Canada.
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