Saskatchewan is looking to increase its critical mineral production and recently introduced a number of incentives to help achieve ambitious new targets.
On March 27, 2023, the Government of Saskatchewan launched Securing the Future: Saskatchewan’s Critical Minerals Strategy (the Strategy) to spur growth and development in Saskatchewan’s critical minerals sector. Critical minerals will be key to transitioning to a low-carbon economy and Saskatchewan has 23 of the 31 critical minerals found on Canada’s Critical Minerals List.
In this blog, we’ll outline the goals of the Strategy and look at how Saskatchewan is incentivizing critical minerals development.
Goals and incentives
The Strategy sets out four main goals: increasing Saskatchewan’s share of Canadian mineral exploration spending to 15% by 2030; doubling the number of critical minerals produced in Saskatchewan by 2030; growing Saskatchewan’s production of potash, uranium and helium; and establishing Saskatchewan as a rare earth element hub.
The province has introduced a number of incentives to achieve these goals:
- The Saskatchewan Mineral Exploration Tax Credit has increased from 10% to 30%. This is a non-refundable tax credit available to Saskatchewan taxpayers who invest in eligible flow-through shares issued by mining or exploration companies.
- Program funding for the Targeted Mineral Exploration Incentive has been increased from $750,000 to $4 million. The program promotes drilling on hard rock mineral exploration projects by providing grants to exploration companies undertaking eligible drilling activities.
- New base and precious metal mines beginning commercial production are eligible for a 10-year royalty holiday, with royalties on metal production not payable until after the payor has recovered 150% of its initial exploration and development costs following the 10-year period.
- The province has introduced various incentives for potash production. The Potash Incentive Tax Credit entitles potash producers to credits for 40% of eligible expenditures for approved research and development projects and market development programs. The Potash Base Payment Holiday provides potash producers with a 10-year holiday from the base payment portion of the Potash Production Tax for production from approved new mines and mine expansions. Finally, the Potash Crown Royalty Reduction eliminates the Crown potash royalty for certain new potash mines for the first 36 months of production to a maximum of $100 million; whereby tax credits against the profit tax portion of the Potash Production Tax are reduced by an amount equal to the royalty reduction.
- The Oil and Gas Processing Investment Incentive has been expanded to add helium and lithium projects as potentially eligible for transferable oil and gas royalty/freehold production tax credits worth 15% of eligible costs up to a maximum of $75 million per project.
- The Saskatchewan Petroleum Innovation Incentive has been expanded to add helium and lithium projects as potentially eligible for transferable oil and gas royalty/freehold production tax credits worth 25% of eligible costs up to a maximum of $5 million per project.
MLT Aikins has advised on numerous critical minerals projects. If you’re interested in advancing a critical minerals project or considering related incentives, we would be delighted to advise you. Contact us to learn how we can help.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.