Mining industry wins big with tax relief in B.C. budget

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British Columbia’s mining industry, scarcely mentioned in the provincial budget tabled on Feb. 22, will be the largest beneficiary of tax relief in the fiscal plan.

Mines are the province’s largest industrial consumer of electricity: The 4.6-per-cent BC Hydro credit will save the average mine at least $200,000 this year. In addition, changes to the new carbon tax rate for heavy emitters will cut the amount the sector pays on pollution in half – representing savings of between $1-million and $2-million for a typical open pit copper mine in 2025, with the annual value rising to as much as $7-million by 2030 as the carbon tax is set to climb.

After a year of back and forth, the government has cut the proposed tax rate in half because a dispute over the carbon pricing policy with B.C.’s mining industry threatened to hamper the province’s critical minerals strategy.

The changes in the budget, finally, have closed the competitive gap with other provinces enough to satisfy his members, Michael Goehring, president and chief executive of the Mining Association of BC, said in an interview. “It will improve the competitive position of B.C.’s critical mineral sector and should enable our sector to obtain the investment that we need to grow and maintain the sector.”

The budget also included a $250-million fund to help rural and remote governments in the province’s northwest to build up infrastructure that will pave the way for more mining development. The First Nations Equity Financing Framework is designed to encourage new industry partnerships. As well, the province is boosting funding to speed up permitting for mines.

“That’s good news for tens of thousands of workers in urban and regional centres, and small towns, and First Nations communities who stand to benefit from really high-paying jobs that have sustained British Columbians for generations,” Mr. Goehring said.

The provincial government first announced an industrial carbon pricing policy in early 2023, to align with Ottawa’s requirements for industrial emitters. But B.C.’s mining industry argued that plan would undermine the sector’s ability to compete with mines in Ontario and Quebec, where the carbon tax rate is much lower.

Canada is seeking to join a global critical minerals revolution by developing mining for copper, nickel, lithium, graphite and cobalt needed for renewable energy projects and electric vehicles. B.C. is developing its own strategy, arguing that its clean energy future will require new mines.

The mining association says there are 16 critical minerals mines on the books in B.C., representing potential capital investments of $36.5-billion, but the industry refused to endorse the government’s strategy meant to unlock that potential, until the carbon tax rate was cut.

Josie Osborne, B.C.’s Minister of Energy, Mines and Low Carbon Innovation, said the changes in the budget delivered a clear message to the industry. “The budget is a really strong sign of this government’s support for the sector.”

Ms. Osborne said the province can cut the carbon tax for heavy emitters such as mining while still working toward sectoral targets to reduce emissions.

“It’s our responsibility as a jurisdiction in a world that’s facing huge impacts of climate change, of course,” she said in an interview. But the government had to balance that against the competitive challenges that would have been created by the carbon pricing plan as it was initially designed, she said. “We need these minerals to build solar panels, wind turbines and electric-vehicle batteries.”

Mr. Goehring said the carbon pricing regime in B.C. is still double the amount paid by comparable mines in Ontario and Quebec, but the province moved a long way. “Even with these changes, B.C. mines and smelters will still pay the highest, most stringent carbon tax in Canada and the world.” Because the province’s mines and smelters rely heavily on hydroelectricity for operations, however, emissions are limited.

While B.C. promotes an expansion of mining as part of a low-carbon economy, a joint investigation by The Globe and Mail and the Narwhal chronicles a shortfall, of hundreds of millions of dollars, in the funds set aside to deal with environmental cleanup when a mine closes.

The province has made significant progress in closing the gap, Ms. Osborne said. “We’ve closed that gap to from above 40 per cent, which is where the previous government left us, to 90 per cent now, and we will continue that work.”