Canada's reelected Liberal government must quickly fulfill its promises to the mining and metals industry if it is to take advantage of growing opportunities in the electric vehicle supply chain, sector leaders said in the wake of the Sept. 20 election that saw the incumbents return with another parliamentary minority.

Canadian miners see a burgeoning market for their wares amid bright prospects for electric vehicles and the broader energy transition. But they fear that the governing party will drag its feet and that the opportunity for major growth will pass the country by.

"It's not inconceivable that Canada can lose this race because we acted too slowly," Mining Association of Canada President Pierre Gratton said in an interview, pointing to competition in the battery metals sector from China, Europe and beyond.

To lure investors, the government must execute on its election-year commitments to create new incentives for key minerals, including doubling tax breaks for domestic exploration, experts said. Canada should also consider new incentives such as raising the profile of projects targeting critical minerals by labeling them in the national interest ahead of permitting.

The latter move would signal to investors that Canada sees the permitting of projects related to critical minerals as crucial to its broader plans in greening the economy, Gratton said, noting that the association would raise the issue with government. Labeling projects in the national interest before permitting would not bypass the permitting process, one of the Liberal Party's major environmental achievements of the last few years, but it could show investors that the country wants to have more mines producing battery metals, Gratton said.

"So the need for speed is there," Gratton said. "Has the federal government moved faster on mineral policy than it does on most things? Yes. Do they need to go faster still? Yes."

Prime Minister Justin Trudeau. Source: Government of Canada

The Liberals overhauled the federal environmental permitting process in 2019, requiring more consultation with First Nations and other stakeholders along with deeper consideration of issues such as climate change. Some considered the revamped process an improvement, in part given new exceptions for some types of smaller mines and greater consultation that could help projects build social license.

Chris Hodgson, president of the Ontario Mining Association, said he does not expect the Liberals to make major changes to Canada's permitting process, but the Liberals should improve it to help Canadian companies attract capital. With permitting timelines in the six- to eight-year range, Canada must provide businesses certainty through an open process driven by strong rule of law, Hodgson said.

"It's critical to keep that," Hodgson said.

Gratton and other mining industry leaders lauded mining-related planks of the Liberal platform, which included a broad plan to spur the development of an electric vehicle supply chain from minerals to vehicle production. In their platform, the Liberals also targeted 31 critical minerals with incentives to drive investment. In early 2021, the government deemed those minerals crucial to greening economic growth. One policy that Gratton and other industry leaders welcomed was a promise to double the 15% exploration tax credit for mineral exploration in Canada so long as the focus is on critical minerals.

The move to double the tax credit would attract additional funds from investors and help exploration companies target new discoveries, said John Burzynski, executive chairman and CEO of Osisko Mining Inc. Burzynski noted that Osisko Mining, one of Canada's most active exploration companies in terms of drilling, has used tax incentives successfully in Canada's gold exploration sector, as have other companies the executive was part of in leadership roles.

"It's a great program because it allows you to access capital to go and do the cheapest exploration in terms of dilution to your shareholders," Burzynski said.

Hodgson hopes that the Liberals will outline a more detailed plan for driving investment in a domestic electric vehicle supply chain. The government should invest in more research labs and should help incentivize the processing of metals that are critical to battery manufacturers, Hodgson said.

Gratton said he wants the newly reelected government to consider driving investment to miners and mineral processors through its Strategic Innovation Fund. The fund has dispersed about $4.8 billion to a broad array of projects, including a handful of metals-related endeavors.

"How do you entice the major nickel producers to refocus and retool to produce the kind of material that's needed for batteries? [The Strategic Innovation Fund] might be the right vehicle," Gratton said.

"All of the ingredients are in the Liberal platform on the battery side, and it's just a question of being able to attract the kinds of investments necessary to build out that supply chain more fully," Gratton said.

Liberal promises to boost the mining sector also drew skepticism.

Long a critic of Canada's permitting process, Russell Hallbauer, who recently retired as CEO of Taseko Mines Ltd. where he remains a director, said in an email that he doubted that there would be a successful federal charge to boost the mining sector.

"I'm not optimistic they will do much of anything except increase the regulatory burden," Hallbauer said.

S&P Global Market Intelligence sought comment from the Liberal government but had not received a response as of press time.