The federal government is proposing $2.3 billion in new support for Canada’s critical minerals sector, including funding and tax incentives aimed at encouraging mineral exploration as well as expanding domestic mining and processing capacity.

Outlined in the federal government’s Budget 2026, released on Nov. 5, the funding builds on Canada’s existing $5 billion Critical Minerals Strategy and includes support for mining technologies, geological research and priority projects.

More support for exploration and development

A key part of the plan is to allot $424.4 million for Natural Resources Canada over four years, beginning in 2027-28, to renew the Canadian Critical Minerals Strategy. The funding would support investments in technologies used to mine and process critical minerals, expand the country’s geoscience and research capacity and provide funding for key critical minerals projects.

The new funding builds on existing federal initiatives, including the $2 billion Canada Critical Minerals Accelerator, which was launched in July and is administered by Export Development Canada to support strategically important projects moving towards production.

The budget also proposes extending two mineral exploration tax credits for another five years, until March 31, 2032. The 15 per cent Mineral Exploration Tax Credit (METC) and the 30 per cent Critical Mineral Exploration Tax Credit (CMETC) provide tax incentives to investors who purchase eligible flow-through shares in junior mining companies. Antimony would also be added to the list of eligible minerals under the CMETC, extending the incentive to companies exploring for antimony.

The budget also proposes changes to the tax treatment of helium exploration and development expenses, aligning them with those of the conventional oil and gas sector. The measure is expected to provide $54 million in tax relief over four years, beginning in 2027-28.

The government expects the extensions and expansion of CMETC eligibility to provide $956 million in support for mineral exploration investment over five years, beginning in 2026-27.

Ahead of Budget 2026, organizations such as PDAC and the Association for Mineral Exploration (AME) called for greater long-term certainty regarding the tax credits.

“These measures show that the government is listening and recognizes that Canada will not have the mines, mineral production and secure supply chains the country needs without a strong exploration and development sector,” Karen Rees, president of PDAC, told CIM Magazine following the budget announcement. “The extensions of METC and CMETC provide much-needed certainty for investors and mineral exploration companies. Mineral exploration is high risk and depends heavily on attracting investment long before there is any prospect of revenue.”

Rees added that analysis conducted by PDAC showed that flow-through financing funded over two-thirds of Canada’s early-stage mineral exploration activity over the past decade. “Extending both tax credits allows explorers to plan and finance work across multiple field seasons and helps to protect Canada’s competitiveness as a destination for mineral investment,” she said.

To encourage further investment in the mining sector, the government is also relying on its Productivity Mega Deduction (PMD), announced in September, which would allow businesses to immediately write off the full cost of a broader range of eligible capital investments. The measure would allow immediate expensing for assets representing more than 65 per cent of business capital investment, including eligible mining equipment.

The PMD would also allow eligible Canadian development expenses to be fully deducted in the year incurred, rather than at the standard rate of 30 per cent on a declining-balance basis, providing another tax incentive for mining companies.

“The mega deduction is another big step that will improve the economics of Canadian discoveries, but it doesn’t fully close the gap that exists in financing projects from discovery to production,” Rees said. “Junior exploration companies still find it extremely difficult to finance the engineering, economic and feasibility work required to determine whether a discovery can become an economically viable mine.”

These types of engineering, economic and feasibility studies generally do not qualify as Canadian Exploration Expenses, limiting companies’ ability to finance the work through flow-through shares.

“PDAC’s priority is to expand Canadian Exploration Expense (CEE) eligibility to include the engineering, economic and feasibility studies needed to determine whether a mineral discovery can become an economically viable mine,” said Rees. She added that PDAC will build on its existing research and financial analysis to advance this recommendation with government.

AME is also calling for an expansion of CEE eligibility, saying the budget falls short of addressing financing challenges for early-stage exploration companies.

“We are disappointed that Budget 2026 missed an opportunity to take the steps needed to unlock Canada’s critical minerals,” Todd Stone, president and CEO of AME, said in a Nov. 6 news release.

“We worked diligently to build support across the provinces and territories for expanding the Canadian Exploration Expense. It is the single biggest tax policy measure the government has to move early-stage exploration projects through the ‘valley of death’ to a promising operating future.”

Stone also pointed to measures in the budget that would help early-stage technology companies access capital, arguing that mineral exploration companies need similar support.

“Ottawa has addressed the funding and scaling challenge faced by early-stage tech companies, but has not yet done the same for early-stage exploration companies,” he added.

AME plans to continue working with provinces, territories, Indigenous communities and industry to push for the expansion in the coming months.

Faster approvals and infrastructure investment

Alongside the financial incentives, the government is also looking to reduce the time required to advance major resource projects. Through the proposed Building Canada Strong Act, Ottawa is pursuing a “one project, one decision, one year” approach to federal approvals, targeting reviews and decisions within one year of receiving a comprehensive application.

 Separately from the Major Projects Office established in August 2025, Budget 2026 proposes $187.4 million over five years, beginning in 2026–27, and $24.2 million in future years to establish a complementary major projects management entity. While the existing Office focuses on accelerating approvals and coordinating federal support, the proposed entity would provide specialized technical and project development expertise to advance approved projects.

Among the northern infrastructure commitments supported by the new entity is the Mackenzie Valley Highway, for which the budget proposes $3.1 billion over five years to fully fund its construction and certain maintenance costs. The approximately 800-kilometre all-season highway would connect the community of Wrigley to the Dempster Highway south of Inuvik, providing year-round road access to remote northern communities, including Tulita, Norman Wells and Fort Good Hope, while potentially supporting future resource exploration and development in the region.