The Minerals and Metals Policy of the Government of Canada

III. The Business Climate: Ensuring the Competitiveness of Canada’s Minerals and Metals Industry

Attracting Investment: “Canada is Open for Business and Committed to Sustainable Development”

With the globalization of capital markets and the liberalization of investment regimes around the world, Canada must compete, as never before, for mineral investment capital. Given comparable geological potential, mineral capital will be attracted to countries that are politically stable and that have competitive tax rates, efficient infrastructure, a skilled labour force, and efficient and predictable policies and regulations.

In this environment, all governments in Canada must work together to ensure that a positive investment climate is maintained, and that domestic and foreign investors are adequately and accurately informed about the quality of that investment climate. These challenges require two related initiatives by governments: the improvement of the investment climate through policy, regulatory and fiscal reforms, and the effective promotion of the improvements achieved through those reforms. Significant progress has been made by the federal government in both regards. Nevertheless, room for improvement remains.

Efforts by the Government to address the challenge of improving the investment climate are outlined below.

To address the need to inform investors, the Government will continue to promote Canada as a leading source of mineral and metal commodities, minerals- and metals-related semi-fabricated and fabricated products, and minerals- and metals-related technology and services, including technology and consulting services in such fields as mineral exploration, environmental protection and management. It will undertake these activities in close collaboration with the industry and provincial and territorial governments, utilizing the “Team Canada” approach.

Finance and Taxation

Canada has become one of
the world’s principal venture
capital markets for mineral
exploration and
development.

Canada has become one of the world’s principal venture capital markets for mineral exploration and development. Obstacles remain, however, to the ready access by firms to risk capital. Consequently, the Government supports, in partnership with interested provinces, the reduction of the multiple securities-related regulatory requirements for raising investment funds through the development of a Canadian Securities Commission and other appropriate mechanisms. Such action would help make securities regulations and capital markets across Canada more coordinated and efficient, thus facilitating the raising of risk capital, especially for the junior sector.

The Government’s fiscal regime is an important component in promoting investment, maintaining competitiveness and ensuring a positive investment climate. The Government has introduced many important fiscal improvements. These have been based on the principles of fairness, simplicity, economic growth, stability of revenues, and competitiveness.

In developing new fiscal measures, and in recognition of the important role that the minerals and metals industry plays in the Canadian economy, the Government will:

afford the minerals and metals industry fiscal treatment that recognizes exploration risk, ore reserve risk, and other specific risks unique to the sector;
provide, to the extent possible, fiscal treatment to the Canadian industry that is competitive with the type of treatment afforded by other governments to mineral developers and producers operating in their jurisdiction;
seek to ensure that government measures aimed at cost recovery reflect the cost of providing the goods or services received. Such measures should also be developed in consultation with industry and take into account competitiveness concerns; and
within areas of federal jurisdiction, maximize the benefits for Canadians of their mineral resource endowment by ensuring that royalty rates and mining taxes are set at an equitable level, taking into account the industry’s need to realize a return on its investment that is reflective of the risk taken and opportunity costs involved, and bearing in mind that Canada’s mineral endowment is largely a publicly owned resource.

Regulatory Efficiency

Regulatory instruments are an important means for the federal government to achieve public policy objectives. The efficiency and effectiveness of these regulatory regimes have a substantial impact on Canada’s investment climate and the international competitiveness of Canadian mineral producers.

The efficiency and
effectiveness of…regulatory
regimes have a substantial
impact on Canada’s
investment climate…

The Government recognizes the vital role that regulations play in achieving Canada’s environmental, economic and social objectives. It also clearly understands the need to ensure that they do not impose unnecessary costs and other burdens on minerals and metals activities. Regulatory reform, as an ongoing process, contributes to a more efficient national environmental framework. Consequently, the Government is committed to continuing to streamline environmental regulations affecting mining, while maintaining high standards of environmental protection. In undertaking those reforms, and in establishing any new regulatory processes, the Government will:

ensure the early involvement of stakeholders in defining a problem and developing regulatory approaches;
ensure that a broad range of non-regulatory approaches are considered as alternatives or complements to regulation prior to making any decisions to develop new regulations;
strengthen processes for federal-provincial cooperation and harmonization (e.g., environmental management and freshwater fish habitat protection), notably through multilateral, bilateral, industry-specific or project-specific agreements;
develop, in consultation with the provinces and territories, national goals and standards, particularly in air and water quality, the application of which may take into account the local and regional variability of natural environments as determined by scientific studies;
ensure that regulatory processes are clear, coordinated in their delivery, and administered with minimal delay; include time lines, wherever possible; maintain procedural fairness; and achieve their objectives in a cost-effective manner;
ensure that the design or amendment of regulations is based on a sound, scientific approach and a cost-benefit analysis, and that administration and enforcement are supported by the monitoring of environmental effects to ensure compliance and verify environmental or human health impacts; and
provide monitoring and reporting on progress in regulatory reform so that the Canadian public can judge progress in achieving sustainable development goals.

…encourage the minerals
and metals industry to
continue to assume greater
responsibility for environmental
performance…and
to be a steward for miner
als and metals throughout
their life cycle…

Consistent with the partnership approach taken in this Policy, and building on its belief that traditional regulatory approaches should be complemented by nonregulatory measures, the Government will also encourage the minerals and metals industry to continue to assume greater responsibility for environmental performance wherever it operates, and to be a steward for minerals and metals throughout their life cycle in a manner that is transparent and, where possible, measurable.

The Government is also committed to improving regulatory efficiency in uranium mining and milling. To facilitate this, it recently amended the Canada Labour Code to allow for the delegation of regulatory responsibilities for labour matters, including conventional occupational health and safety, to the provinces. The Government will work closely with provincial governments, particularly the Government of Saskatchewan, to negotiate the transfer of these regulatory responsibilities to them when reasonable and practical.

Helping Exporters of Minerals and Metals and Related Products and Services

Both commercial and non-commercial factors play a major role in the sourcing decisions of customers. For this reason, the Government recognizes the need to cooperate with industry to facilitate enhanced exports and access to both traditional and new markets, bearing in mind that the marketing of products and services remains a private sector responsibility. In this context, the Government will:

provide timely, relevant and incisive market intelligence and reporting as a complement to private sector efforts;
work to raise the profile of Canadian mineral and metal products and services, including environmentally related products and services in traditional and new markets; and
continue to emphasize the need for greater market transparency for minerals and metals and the value of intergovernmental commodity study groups and other such information-sharing mechanisms.