Mining is one of Canada’s main industries. The country is a significant exporter of minerals and metals, and a global leader in the production of critical minerals such as copper, nickel and cobalt. It is rich in resources and home to many mines producing a diverse array of other minerals and metals, including gold, coal, iron ore concentrates, potash, aluminium, platinum group metals, diamonds, silver, zinc, molybdenum and uranium. Advanced mineral projects for rare earth elements, including lithium and graphite, can also be found in Canada. Numerous junior mining companies that explore for minerals worldwide are domiciled in Canada.
Toronto, Ontario is Canada’s business capital and has been referred to as the mining finance capital of the world, with approximately 40% of global publicly listed mining and mineral exploration companies listed on the Toronto Stock Exchange (TSX) or TSX Venture Exchange. Tax and securities laws offer significant incentives for investment in the mining industry in Canada, and Canadian stock exchanges facilitate the listing and financing of both junior and senior mining companies.
Canada also boasts a large concentration of specialised professionals in the technical, engineering, legal, accounting and management fields that help sustain its robust mining industry.
This practice guide will highlight these features, many of which are unique to the Canadian mining industry.
Canada’s legal system is a combination of common law and civil law. The common law applies in all provinces and territories of Canada, except for Quebec, which is the only province with a civil law code.
As Canada is a federal state, the governmental powers and responsibilities applicable to mining are constitutionally allocated between its federal Parliament and ten provincial legislatures, with certain federal powers shifting to its three northern territories through statutory devolution, as discussed below.
Provincial legislatures have the power to enact laws in relation to provincial public lands, mineral titles and the exploration and extraction of minerals within their provincial jurisdictions. These powers include oversight of the development and operation of mines, conservation of mineral resources, and environmental protection. Provinces may also enact laws relating to the export of minerals and metals between provinces or outside of Canada.
Despite their independent governance, substantive mining regimes are generally consistent across Canadian provinces. However, these rules and regulations tend to be highly complex and are rarely codified in a single provincial statute.
Canada’s federal Parliament has the power to make laws affecting minerals and mining on federal lands, in addition to:
Canada’s three territories (Yukon, Northwest Territories and Nunavut) are within the federal government’s jurisdiction and are governed by territorial governments created by federal statutes. A statutory devolution process of legislative authority from the federal government to these territorial governments is almost complete, and provides each territory with additional self-governing power. Nunavut is the final territory to complete this process. Administrative responsibility for natural resources and public lands will shift to the territorial government pursuant to the Nunavut Lands and Resources Devolution Agreement (2024). The transfer of these responsibilities is currently underway and scheduled for completion in 2027, at which point Nunavut will implement its own mining legislation.
Property interests in surface and subsurface minerals are generally severed in Canada, largely as a function of early-settlement disposition procedures for land in what would ultimately become Canada. Generally, all lands were considered to be owned by the Crown until title was granted to settlers or municipalities via Crown (government) grant. A separate fee estate consisting of only surface rights, of both surface rights and mineral rights, or solely of mineral rights could be created by Crown grant of the fee simple estate, with or without reservation by the Crown of the mineral rights. Near the end of the 19th century, the Crown adopted a practice of reserving the minerals from fee simple grants, and modern federal and provincial legislation across Canada now provides that minerals are reserved from Crown land dispositions and that grants of mineral rights be of leasehold estate.
Section 109 of the Constitution Act, 1867 vests ownership of Crown minerals to the provincial Crown of the province where such minerals are situated. As a result, each province and territory’s respective discrete system of mineral tenure and legislation is accompanied by distinct procedures whereby mineral interests may be granted by the Crown and acquired by private legal persons. The Crown remains the largest holder of minerals in Canada (but open to private tenure and development), both as fee simple owner of Crown lands and through mineral reservations from historic Crown grants.
Title to minerals located in Canada’s three territories, the territorial sea, continental shelves and federal lands (national parks, harbours, First Nation reserves) vests in the federal Crown, and is governed as discussed in 1.2 Legal System and Sources of Mining Law.
Crown title to all Crown lands is subject to limitations pursuant to Aboriginal treaty rights, claims for Aboriginal title or other Aboriginal rights, and the provisions of any applicable land claim settlement agreement – in each case as enshrined and protected by the Constitution of Canada.
The federal and provincial governments serve as both grantors of right and regulators of mining activity within their respective jurisdictions. The federal government, ten provinces and three territories each have their own ministries, agencies or other governmental bodies to oversee the mining sector. Often, multiple agencies will administer separate facets of the mining business.
Examples of this multi-agency approach can be observed in all provinces, and multiple federal agencies regulate the environmental aspects of mining activity, as discussed in 2. Impact of Environmental Protection and Community Relations on Mining Projects.
Mineral rights have a constitutional basis wherein the rights and powers over mineral title and extraction have been apportioned between the federal and provincial governments.
Mineral rights in Canada are property rights and can be broken down into three distinct categories.
The Right of Entry on Crown or Private Lands Containing Crown Minerals
Holders of mining claims have the right to enter upon, use, occupy and let down such part(s) of the surface rights of the claim as necessary for prospecting and efficient exploration of, and the prospective development and operation of, the mines, minerals and mining rights therein. In all Canadian jurisdictions, compensation will be owed to existing surface rights owners for such use.
Priority Over Other Miners
Recording or registering a mining claim gives priority over other miners, so long as the claim remains in good standing. Where disputes arise between prospectors with respect to the recording, registration or priority of claims, inspections of the claims may be requested by a recorder or similar government official, and the recording of challenged claims may be appealed to a quasi-judicial officer or board.
The Right to a Lease and to Enter Into Production
A mining claim holder is entitled, and has the exclusive right, to apply for a mining lease over the area of the claim, following the prescribed periods of assessment work. Such a mining lease grants the right to enter into production from a mineral deposit and, upon production, to take title to the minerals and to process and dispose of them for valuable consideration.
The granting of mineral rights will depend on the location of the minerals. Most mineral rights are granted by statute by the provincial government of jurisdiction.
The provinces of British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Ontario and Quebec, along with the three territories, have adopted some form of modified free-entry system, which allows individuals and corporations to obtain mineral rights by recording and/or registering (in the case of Ontario) mining claims on their own initiative on mineral lands deemed open for recording.
The free-entry system relates only to the limited acquisition of mining rights or temporary limited tenure by mining claim (referred to as a mineral claim in other jurisdictions). The acquired rights do not necessarily extend to actual permission for the industrial activities of exploration, development or mining, which remain subject to land use, environmental and other principles and laws and regulations. If a mining claim holder wishes to develop a mineral deposit on the land subject to the claim, they must usually apply for and obtain a Crown mining lease.
Alberta, Saskatchewan, Nova Scotia and Prince Edward Island have adopted the Crown discretion mining system, under which the provincial government, as owner of the mineral resources, has the discretion to decide whether and on what terms a person may prospect for minerals. Governmental approval of a prospector’s activities generally takes the form of a licence or permit. If a permit holder wishes to develop a mineral deposit, it must usually apply for and obtain a Crown mining lease.
Once recorded, mining claims allow a mineral explorer to claim a demarcated portion of available Crown lands as their exclusive area, solely for exploration for a specified period. Many jurisdictions in Canada have moved away from the physical staking of mining claims (placement of visible markers on the ground to indicate the claimed area). Instead, mining claims are acquired by selecting blocks of claims using an online mapping system, known as “map selection” or “map staking”.
Finally, applications to record a mining claim must be filed within a specified time with the applicable ministry or agency. The recording is designed to give public notice of the area held by the recorder/claimant.
The holder of a mining claim generally has the right to transfer or sell an interest in that claim freely without Crown consent (unlike leasehold tenures, where Crown consent is required to sell or transfer a Crown mining lease).
Security of rights under a mineral claim is generally maintained through satisfying prescribed work requirements or making payment in lieu thereof. The length of a mineral claim and terms for extension will vary across provinces. In British Columbia, a mineral claim is initially valid for one year, but may be maintained indefinitely on a year-to-year basis by satisfying statutory work requirements or paying a fee. If payment is made in lieu of work, the mineral claim may be extended by a minimum of six months and a maximum of one year from the current expiry date. Crown mining leases are granted for terms ranging from ten to 30 years. Before proceeding to develop a mine, the holder of a mining claim will generally be required to convert a mineral claim to a mineral lease.
Mineral title can be terminated by the Crown, usually due to failure by the holder to comply with the applicable legislation or the conditions of the mining interest itself (eg, if prescribed work has not been performed, if reports have not been filed within the prescribed time, or if a Crown mining lease is used for some purpose other than mining).
Environmental Regulation
The development of mining projects in Canada is subject to environmental regulation at the federal and provincial levels, and requires, among other things, the completion of environmental impact assessments prior to commencing operations. In certain cases, these assessments must be repeated at subsequent stages of development. The regulatory objective is to determine whether approval for a mining operation should be granted based on the project’s likely environmental impacts. If a mining project receives approval from the relevant environmental authorities, significant obligations will be imposed on the developer for rehabilitation and restoration activities on affected lands following the completion of the project or mine closure.
In Canada, the broad scope of environmental regulation is shared between the federal government and the provinces. While municipal powers are generally limited with respect to the environment, municipalities are getting more involved in environmental regulation, and municipal by-laws and permitting requirements are important aspects to consider prior to and while implementing a mining project.
The federal government has primary jurisdiction over environmental matters of international and inter-provincial concern, as well as over fisheries, navigable waters and matters on federal lands, which includes Indigenous reserve lands and national parks.
All provinces and territories (except Nunavut, pending completion of the devolution process) are primarily responsible for environmental matters within their boundaries, including but not limited to the extraction and processing of natural resources like forestry, mineral resources and fossil fuels, and renewable energy industries like hydroelectricity, wind energy and cogeneration.
Environmental Licensing
Generally, mining regulators in Canada use three principal mechanisms for protecting the environment:
Environmental assessment
The environmental assessment process generally seeks to determine and predict the environmental impact of proposed mine development initiatives before they are carried out, and generates detailed terms and conditions for mine construction and operation.
Canada’s Impact Assessment Act (IAA) requires the Impact Assessment Agency of Canada to conduct an impact assessment when a federal authority provides lands or issues certain permits or approval to a project. An impact assessment must also be conducted if a project otherwise affects matters under federal jurisdiction. The responsible government minister may also order an impact assessment at their discretion.
Impact assessments go beyond the environmental effects of proposed projects to include matters such as:
The IAA does not apply to all projects in Canada, but it generally applies to most major mining operations.
In 2023, the Supreme Court of Canada ruled that sections of the IAA encroached upon provincial jurisdiction, and were therefore unconstitutional. The IAA was amended in June 2024 to address such encroachment and improve regulatory certainty by focusing on mitigation of impact to Indigenous rights and adverse environmental effects within federal jurisdiction. Notably, the amended IAA definition of “adverse effects within federal jurisdiction” excludes greenhouse gas emissions, but includes pollution to boundary or international waters and other marine pollution.
The new IAA also adds flexibility for the federal and provincial governments to use co-operative assessment processes for clean growth projects, and to enhance environmental protections.
Regulation of the discharge of pollution
Much environmental regulation in Canada consists of prohibitions against the discharge of pollutants into the environment, except where authorised in advance. For example, the British Columbia Environmental Management Act forbids the introduction of waste into the environment so as to cause pollution (unless valid permits and approvals are obtained).
Other environmental regulations focus on the impact of projects on the broader environment, including wildlife and their habitats. For example, Quebec’s Act Respecting Threatened or Vulnerable Species and Ontario’s Endangered Species Act prohibit the destroying or harming of designated species, including altering the ecosystem or biological diversity of their habitat.
Environmental protection and permits
In mining, environmental standards are commonly prescribed in relation to air emissions, waste, water, noise and mine closure plans. Regulatory authorisation for discharges of effluents or emissions into the environment from a mine usually takes the form of permits tied to commitments to meet pre-established standards or guidelines tailored to the particular project.
Proponents are required to provide financial security against mine closure plans towards reclamation of the mine site as a condition of permit approval. This security safeguards communities from lasting environmental damage if a proponent becomes insolvent or prematurely abandons their project.
Each province has its own environmental permitting regime, often overlapping under multiple statutes and ministries. Permits are required for the discharge of waste, the building and storage of mine tailings and the use of water, among other activities. Mining operations may also require certain federal permits or approvals under various federal statutes, including:
While Indigenous communities and governments do not have statutory authority over the environment, mining projects frequently intersect with the statutory and constitutional rights of Indigenous people. As such, the participation of Indigenous groups in the regulatory review process is fairly standard, and affected groups are given an opportunity to make submissions to statutory decision-makers in such cases.
Cultivated lands, park lands, railway lands, public roadways, environmentally sensitive lands (eg, game reserves and bird sanctuaries), heritage lands, airport lands, town sites and other such developed areas are typically not open for mining activity, nor are lands for which a claim, mining exploration licence, mining concession or mining lease has already been granted.
Government officials responsible for administering statutes governing the disposition of minerals on Crown lands have the discretionary power to designate lands as withdrawn or not open for mining activity.
Community relations are a critical part of the approval and ongoing operation of mining projects in Canada and can be an essential requirement for governmental regulators in the consideration and approval of such projects. For Indigenous communities that may be affected by a mining project, proactive community relations – both before and after a project is developed – can be a key factor in the regulatory approval of a project, including satisfying any Crown duty to consult Indigenous people regarding their constitutional and treaty rights.
Under Section 35 of the Constitution Act, 1982, the Crown has a duty to “uphold the Honour of the Crown” to consult and, where appropriate, to accommodate Indigenous peoples where a government action or decision (such as granting an authorisation) may potentially adversely impact their established or asserted Aboriginal or treaty rights. Accommodation can take the form of project conditions to minimise or avoid potential adverse effects on the rights of Indigenous peoples. Most natural resource-related projects, including mining projects, will trigger the duty to consult. British Columbia and Yukon court decisions indicate that consultation may be required as early as at the mineral claims registration stage.
While the consultation process is the Crown’s responsibility (both federal and provincial, within their respective jurisdictions), the Crown can delegate some or all of the procedural aspects of consultation to project proponents. In such cases, proponents must work closely with the Crown to carry out their consultation obligations. The objective of the consultation process is to provide a fair and transparent forum for the issues and concerns of Indigenous peoples to be heard and considered in light of the proposed project’s potential or actual impacts on their traditional lands, their rights and the environment. Where appropriate, the process should address such concerns through accommodation or other mitigation measures.
The obligations imposed by the Crown’s duty to consult and accommodate vary according to the particular circumstances, and not every project requires the same degree of consultation or accommodation. A single Crown decision can affect many separate Indigenous groups with overlapping claims or interests. It is imperative that all relevant Indigenous groups are correctly identified and consulted, that proper consultation and accommodation records are kept, and that consultation with the affected Indigenous community is meaningful. Failure to follow these steps can result in:
Indigenous groups are the most notable specially protected community in Canada. Indigenous law in Canada is based on constitutionally protected inherent and treaty rights, referred to in Section 35 of the Constitution Act, 1982 as Aboriginal and treaty rights. The Canadian Constitution recognises and affirms the rights of Aboriginal peoples of Canada (eg, Inuit, Métis, First Nations), and both the federal and provincial governments are obliged to “act honourably” when dealing with Aboriginal peoples in light of this constitutional protection. Aboriginal rights legally flow from historic Indigenous occupation and traditional use of land, historic and modern treaties, negotiated claim settlements and court-affirmed rights.
Aboriginal Rights, Aboriginal Title, Treaty Rights and Traditional Land Use Rights
Aboriginal rights in Canada are based upon and include customs, activities and traditions that have been exercised historically by Aboriginal peoples, including the right to hunt, trap, fish and gather on the land in question, and the protection of related economic, sacred, cultural and archaeological lands, sites, and flora and fauna.
Aboriginal title is a form of Aboriginal right that includes the right to the land itself derived from exclusive and unsurrendered occupation and use of land from prior to contact, and encompasses the right to exclusive benefit from and use and occupation of the land for a variety of purposes (not just traditional or cultural uses). Aboriginal title holders have the right to determine how land is used and the right to benefit from those uses. This is the highest order of Aboriginal land rights.
Treaty rights are those rights that an Aboriginal group enjoys as a result of having entered into a treaty (a unique legal instrument) setting out such rights with the Crown. Large parts of Canada are subject to treaties, while other parts are not (notably, large portions of British Columbia). The applicable treaty will determine which specific rights have been granted and are held.
Aboriginal rights are based upon and include customs, activities and traditions that have been exercised historically by Aboriginal peoples, without surrender by treaty; they may or may not be sufficient to support Aboriginal title and may be subject to, but protected by, treaty terms. Nevertheless, Aboriginal rights are recognised and protected, and will trigger the Crown’s duty to consult (and potentially accommodate) where they may be adversely affected by a Crown decision or action.
Justifiable Infringement of Aboriginal Rights
The Supreme Court of Canada has affirmed that certain Crown objectives can, in principle, justify the infringement of Aboriginal title or treaty or other Aboriginal rights, such as:
In order to justify an impairment or infringement of Aboriginal or treaty rights, the Crown must demonstrate a compelling and substantial governmental objective, and demonstrate that its actions are consistent with the fiduciary duty it owes to the Indigenous groups, including appropriate consultation (or attempts to consult) as a precursor to justification of the infringement. Proof that infringement is consistent with the Crown’s fiduciary duties to Indigenous peoples involves a three-part test:
The Supreme Court of Canada has held that provincial governments, when acting within their jurisdiction, may seek to justify an infringement of Aboriginal rights, including Aboriginal title.
The federal government and the Province of British Columbia have attempted to adopt the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) via statute. However, the Supreme Court of British Columbia recently held that British Columbia’s UNDRIP statute did not implement UNDRIP into British Columbia law, nor create justiciable issues. Federal legislation approving the adoption of UNDRIP in 2021 required consultation and co-operation with Indigenous peoples to implement an action plan to achieve the objectives of UNDRIP.
Impact Benefits Agreements
It has become common, through consultation processes, for proponents of resource projects to enter into impact-benefit, participation or other mutual benefit agreements with Indigenous peoples. Such agreements are often necessary to ensure that projects proceed with greater certainty while the legitimate concerns of affected Indigenous groups are addressed.
Depending upon the nature and strength of the proven or asserted Aboriginal right, benefits negotiated in these agreements can include revenue or income participation, employment opportunities, education and training initiatives, or contracting and business opportunities for affected Indigenous communities, as well as capacity-building initiatives and plans to mitigate the environmental impacts of the project. Some modern treaties contain terms requiring the negotiation of such agreements as a matter of law.
It is common, and in many cases expected, that mining projects will enter into some form of agreement with communities in proximity to and affected by such project. In some cases, community benefit and similar agreements are mandated by law – particularly in northern Canada, relating to modern land claims agreements such as the Nunavut Land Claims Agreement.
ESG factors are used by investors to evaluate the sustainability of investments and corporate practices. There are currently no ESG-specific legislative regimes in Canada for the mining sector. However, there are emerging securities disclosure regimes, securities exchange commentary and industry guidance that relate to ESG factors, any of which may:
Securities Disclosure Regimes
In Canada, the Canadian Securities Administrators (CSA) is primarily responsible for developing a harmonised approach to securities regulation across all provinces and territories. It works with provincial and territorial securities regulators to design policies and regulations to achieve that goal. A primary guidance tool of the CSA is the publication of national instruments. CSA-issued guidance is typically adopted by provincial and territorial regulators, ensuring some consistency to securities regulation across Canada. Despite the growing prominence of ESG in Canadian investment, the CSA has not yet developed comprehensive ESG guidance, although it has provided substantive guidance on certain environmental and governance matters that are typically viewed as being within the ESG rubric.
In 2021, the CSA published National Instrument 51-107, Climate-related Disclosure Requirements (NI 51-107) for public comment. The CSA has articulated that it will consider the impact of international developments prior to finalising NI 51-107, including certain United States Securities and Exchange Commission and IFRS International Sustainability Standards Board climate disclosure rules proposals, which were ultimately adopted in 2024.
Also in 2021, the Ontario Capital Markets Modernization Taskforce issued 74 recommendations to the Ontario government. Recommendation 41 outlines enhanced disclosure requirements for material ESG information, which would apply to all non-investment fund reporting issuers. These enhanced disclosure requirements would include the disclosure of:
In 2022, the CSA published guidance via Staff Notices for investment funds on their ESG disclosure practices, particularly for ESG-related funds. The guidance seeks to address “greenwashing” concerns – where a fund’s disclosure or marketing intentionally or inadvertently misleads investors about the fund’s ESG attributes. The guidance is based on existing securities regulatory requirements and does not create or modify any legal requirements. Instead, the guidance provides the views of CSA staff on how existing regulatory requirements apply to ESG-related fund disclosure. The guidance also includes best practices to enhance ESG-related disclosure and sales communications to enable investors to make more informed investment decisions.
The CSA published updated ESG guidance for investment funds in 2024 to address matters not covered in its 2022 guidance. Disclosure expectations for funds that do not reference ESG factors but use ESG strategies were included. The updated guidance sets out disclosure expectations depending on the degree to which ESG factors are considered, and clarifies the types of investment funds that can market themselves as being ESG-focused.
The Canadian Sustainability Standards Board (CSSB) has drafted sustainability standards regarding sustainability-related financial information and climate-related disclosure requirements, which are expected to apply in 2025. Once the standards are finalised, the CSA will release updated rules regarding climate-related disclosure.
Industry Standards
The Mining Association of Canada’s Towards Sustainable Mining (TSM) standard helps mining companies evaluate and manage environmental and social responsibilities, and addresses certain ESG matters. The TSM evaluates, independently validates and publicly reports on eight aspects of social and environmental performance against 30 distinct performance indicators. Although becoming a member of the Mining Association of Canada is voluntary for project proponents, all members are required to undergo site-level assessments for evaluation under the TSM standard.
Canada has one of the most highly regulated mining industries in the world, so evidence of illegal mining is limited to non-existent. Overlapping federal and provincial regulatory schemes address all aspects of a mine’s life cycle, from exploration to operation, transportation and export.
While Canada does not typically experience issues associated with artisanal and other small-scale mining activity, there have been instances of mining activity encroaching on restricted land. In 2020, there were illegal mining claims in protected caribou habitat in Manitoba’s Nopiming Provincial Park. The claim was modified but no public explanation was given. In 2023, another illegal mining exploration claim was staked by Grid Metals Corporation on lands located in the protected backcountry area of Nopiming Provincial Park. This part of the park prohibits all mining development, and the claim violated the Provincial Parks Act. The provincial government stated that the claim would be rejected, with a potential penalty for the company.
Greenstone Gold Mines – Hardrock Project
Greenstone Gold Mines has entered into three long-term relationship agreements involving four First Nations and the Métis Nation of Ontario, which provide benefits to First Nations and Métis peoples regarding each community connected to Greenstone Gold’s “Hardrock Project” in northern Ontario. While none of the agreements were legally required, Greenstone Gold proactively engaged in positive relationship-building with the affected Indigenous groups, which ultimately resulted in “win-win” agreements and strong working relationships going forward for the advancement of the project.
Generation Mining Limited – Marathon Palladium Project
Generation Mining Limited’s “Marathon Project” in Ontario was approved after long-term relationship agreements were reached with several First Nations. While none of the agreements were legally required, Generation tailored its environmental commitments for the Marathon Project with input from the relevant First Nation and Métis communities. The Marathon Project was approved by the government of Canada despite findings during a Joint Review Panel’s environmental assessment that the project was likely to cause an adverse cumulative effect on critical caribou habitat. The government of Canada’s approval contains 269 legally binding conditions to protect the environment throughout the life of the project, many of which were advanced by Generation in consultation with the Indigenous groups most likely to be adversely affected by the project.
Taseko Mines – Prosperity Project
In 2010, Taseko Mines’ “Prosperity Project” in British Columbia was denied regulatory approval after an adverse environmental assessment flagged issues with the draining of Teẑtan Biny (Fish Lake) and associated impacts to local First Nations communities, who strongly opposed the project. Taseko later proposed a “New Prosperity Project”, which attempted to address regulator concerns and did not involve the draining of Fish Lake. Taseko attempted to reach agreements with local First Nations and to seek remedies through the courts, but the Tsilqhot’in Nation remained opposed to the project, and the Supreme Court of Canada refused to hear Taseko’s 2020 regulatory appeal in connection with the project. Taseko continues to list the New Prosperity Project on its website, but no updates have been reported beyond 2023. Reports indicated that stakeholders would discontinue negotiations if a resolution was not reached by the end of 2024; however, as of January 2025, there have been no press releases issued by Taseko indicating that the status of this project has changed.
National and provincial (regional) governments in Canada and abroad have introduced climate change legislation that affects the mining industry, in addition to international treaties. Climate change standards are generally becoming more stringent and are expected to increase compliance costs.
Climate change itself may also impose risks on mining industry operations due to increases in extreme weather events, rising sea levels, the melting of Arctic permafrost and other natural phenomena. Major Canadian mining companies consider these potentially significant effects on their operations.
Canada has a two-tiered approach to climate change regulation: federal and provincial. As detailed below, federal regulations prevail in cases where provincial regimes do not meet the minimum standards.
Federal Regulation
The Greenhouse Gas Pollution Pricing Act implements the federal carbon pollution pricing (fee) scheme aimed at reducing GHG emissions, and in 2021 the Supreme Court of Canada upheld the constitutionality of this legislation. The federal scheme has two key parts:
Federal climate change legislation affecting the mining industry also includes the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds, which came into force in January 2023, and the overlapping environmental protection regimes discussed in 2. Impact of Environmental Protection and Community Relations on Mining Projects.
Provincial and Territorial Regulation
Each province and territory has its own supplementary climate change regime and is free to choose whether to implement a carbon pollution price or a cap-and-trade system, provided such system meets the minimum federal pricing and emissions reduction targets. Where a provincial system does not meet these minimums, the federal pricing system will apply as a backstop to ensure national compliance with the regulatory regime.
Currently, the federal fuel charge system applies in Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Nunavut and Yukon. The federal output-based pricing system applies in Yukon, Manitoba, Nunavut and Prince Edward Island.
Many sustainable development and corporate social responsibility initiatives affect the mining industry in Canada, including:
The federal government released “The Canadian Critical Minerals Strategy” on 9 December 2022, containing a list of 31 critical minerals that are deemed to be:
The Canadian Critical Minerals Strategy addresses the following five core objectives:
Corporations that carry on exploration and mining activities in Canada are subject to the general income tax rules that apply to all corporations operating in the country. Income tax is imposed at the federal level under the Income Tax Act (Canada), and at the provincial and territorial level each province and territory has its own income tax statute. The current Canadian federal corporate tax rate is 15%, and provincial/territorial tax rates range from 8% to 16%.
A non-resident corporation carrying on business in Canada is subject to Canadian income tax at the same tax rate as is applicable to Canadian resident corporations, in addition to a 25% “branch tax” on profits that are not reinvested in Canada. The branch tax is intended to approximate withholding tax on dividends; where the dividend withholding tax rate is reduced under an applicable tax treaty, the branch tax is generally correspondingly reduced. In addition, a non-resident is subject to income tax in Canada on the disposition of “taxable Canadian property”, which includes any interest in real or resource properties situated in Canada, and certain shares and partnership or trust interests that derive their value from such properties.
Canada levies a 25% withholding tax on certain payments to non-residents, including dividends, certain interest payments, rents and royalties. The rate of Canadian withholding tax may be reduced if the non-resident recipient is eligible to claim the benefits of one of Canada’s tax treaties.
Each province and territory also levies separate mining taxes or royalties on mining activities; the rates and basis of calculation vary depending upon the jurisdiction and the type of mineral. In many provinces and territories, the mining tax is computed by reference to mining profits, whereas certain provinces impose royalties that vary according to the specific mineral.
As in other sectors, a corporation engaged in exploration and mining activities is entitled to deduct expenses incurred for the purpose of earning income. A corporation may also deduct certain capital expenditures, including tax depreciation on tangible capital assets (capital cost allowance, or CCA). Canadian tax regimes applicable to exploration and mining recognise the capital-intensive nature of the mining industry. To ensure the international competitiveness of Canada’s resource industry, these regimes provide incentives designed to encourage investment, including the following.
Canada does not offer tax stabilisation agreements to non-resident investors in the mining industry.
A mining project may be disposed of by way of a sale of the mining assets or of the relevant entity in which the mining project is held. The disposition of capital property in Canada generally results in a capital gain (or loss). For dispositions occurring after 24 June
2024, two thirds of any capital gain is included in income. The disposition of mining assets may result in income (in the case of resource property), recapture (in the case of depreciable property) and capital gains on capital property.
Non-residents are subject to tax in Canada on the disposition of “taxable Canadian property”, which includes:
Most provinces impose land transfer taxes on transfers of real property. The rates of land transfer tax vary by province, and transfers of resource properties are often exempt from this tax.
Canada consistently ranks highly in world mining surveys for investment attractiveness. The Fraser Institute Annual Survey of Mining Companies 2023 ranked Canada the third most attractive region in the world for investment.
Canada attracts considerable investment in the mining industry due to its favourable combination of:
In general, investment in a Canadian mining enterprise may require pre-closing approval under the Investment Canada Act (ICA), under which the federal government reviews foreign acquisitions of control of Canadian businesses above certain monetary thresholds. The review threshold ultimately depends on the transacting parties and whether a trade agreement exists between the non-Canadian party’s country and Canada (eg, the United States, European Union member states, the United Kingdom and Mexico). As of December 2024, the monetary thresholds are as follows:
The ICA currently requires post-closing notification of all other foreign acquisitions of control (within the meaning of the ICA) of Canadian businesses and of certain new foreign investment. However, there is no provincial or territorial mining legislation that restricts the ownership or development of mineral rights based on citizenship.
Where an investment is subject to a pre-closing review under the ICA, the foreign investor must demonstrate that the investment is of “net benefit” to Canada. Typically, this requires investors to provide binding undertakings to the federal government regarding their intended operation of the Canadian business.
In addition, the ICA allows the federal government to review any level of investment in or related to a Canadian business by foreign companies where it believes the investment may be “injurious to national security”.
Foreign mining companies are generally free to hold mineral rights directly or through Canadian subsidiaries. However, the federal government does limit non-resident ownership of uranium mines to 49% at the first stage of production. Exemptions may be granted in cases where it can be demonstrated that the project remains under Canadian control, or where Canadian partners cannot be found. There are no restrictions on uranium exploration by foreign persons or companies.
Recent Developments
In October 2022, the Canadian government issued its Policy Regarding Foreign Investments from State-Owned Enterprises in Critical Minerals under the ICA (Critical Minerals Policy), under which investments by SOEs and foreign-influenced private investors in Canada’s critical minerals sectors (eg, cobalt, copper, lithium, graphite and rare earth elements) at any stage of the critical minerals value chain are subject to special rules, including that the direct or indirect participation of such foreign SOE or foreign-influenced private investor will support a finding that there are reasonable grounds to believe the investment could be injurious to Canada’s national security. In June 2024, the Canadian government updated its Critical Minerals List to add three more minerals: high-purity iron, phosphorous and silicon metal, for a total of 34 critical minerals.
SOEs include:
Foreign-influenced investors are private investors closely tied to, subject to influence from or who could be compelled to comply with extrajudicial direction from foreign governments, particularly non-likeminded governments such as China (Hong Kong), Russia and Iran.
In 2022, pursuant to the Critical Minerals Policy, the federal government ordered the divestiture by certain Chinese entities of their investments in Canadian companies with critical mineral projects. Notably, divestiture was not ordered for an operational lithium property in Manitoba, which has been owned by Sinomine Resource Group Co. Ltd., a Chinese public company, since 2019. In March 2023, the government clarified its position to not force existing, legacy Chinese investors to divest shares in three major Canadian mining companies, suggesting it would not “start looking backwards at investments”.
In July 2023, it was announced that China-based Carbon ONE New Energy Group would purchase a 19.4% stake in the TSX-listed graphite miner SRG Graphite Inc. (SRG) for CAD16.9 million, and SRG announced that the transaction was subject to a national security review. In November 2023, however, SRG stated that it would redomicile to the United Arab Emirates and rebrand as Falcon Energy Materials, and therefore the deal would no longer require governmental clearance pursuant to the ICA. In response, the ICA Minister appeared to disclose his intention to prohibit the deal, which was finally abandoned in March 2024.
On 11 January 2024, TSX-listed Solaris Resources Inc. (Solaris) announced that it had entered into a subscription agreement (Proposed Zijin Transaction) for an approximately CAD130 million private placement of common shares of Solaris (Solaris Shares) by an affiliate of China-based Zijin Mining Group Co., Ltd. (Zijin). Upon closing of the private placement, Zijin would have owned approximately 15% of the Solaris Shares and would have been entitled to nominate a member to the board of directors of Solaris for so long as it owned, controlled or directed at least 5% of the Solaris Shares. Closing was conditional on “receipt of regulatory approval under the ICA”, among other things. A national security review of the Proposed Zijin Transaction was initiated following a voluntary notification under the ICA. Four months later, with no decision rendered for the national security review, on 21 May 2024, Solaris announced the Proposed Zijin Transaction was voluntarily terminated.
In May 2024, Pan American Silver Corp. (PAAS) announced an agreement to sell 100% of its interest in Peru’s La Arena gold mine for USD300 million to Jinteng (Singapore) Mining (Jinteng), a subsidiary of Zijin. In response to a voluntary notification, in June 2024 the ICA Minister advised that he “may” order a formal national security review under the ICA. Jinteng filed a judicial review application in the Federal Court of Canada, arguing that the ICA Minister lacked jurisdiction. The ICA Minister agreed to a settlement, whereby the proposed transaction was approved subject to a joint undertaking from PAAS and Zijin to enter into an offtake agreement securing 60% of the future copper concentrate supply from the La Arena II project upon commencement of commercial production.
Amendments to the ICA are expected to become effective in April 2025. In part, the amendments will create a mandatory, suspensory pre-closing notification regime for prescribed investments in certain sensitive sectors, including critical minerals. The amendments will also broaden government discretion to order pre-closing net benefit to Canada reviews for proposed acquisitions of control of Canadian businesses, unless the investor is from a trade agreement country.
The developments discussed in this section portend significant scrutiny on proposed acquisitions and investments in Canadian mining companies by Chinese, Russian, North Korean and Iranian investors and other state-owned or influenced entities, including non-Chinese companies with material Chinese shareholders.
In November 2024, the federal government released its annual report covering foreign investment reviews under the ICA from April 2023 through March 2024. The report confirmed that foreign investment continues to trend toward pre-COVID-19 levels. The report noted a decrease in the number of extended national security reviews, down from the peak number of reviews seen in the 2022–2023 fiscal year.
Canada is a party to several multilateral free trade agreements and investment agreements, which give foreign investors, including Canadian mining companies, the right to file a claim for damages against the government of the host country for expropriation or unfair or discriminatory treatment of their investments and investors. The Canadian government’s Foreign Investment Promotion and Protection Agreement Model confirms that Canada intends to continue providing international dispute resolution protections to foreign investors.
To date, Canadian investors in the mining, oil and gas industries have been relatively more aggressive in asserting arbitration rights to safeguard their offshore interests, with the majority of their complaints targeting Latin America. July 2023 marked the end of the sunset clause in the North American Free Trade Agreement (NAFTA), and the mechanism for arbitration proceedings with the United States and Mexico under NAFTA is no longer available (other than for legacy claims submitted prior to that time); instead, investors must submit claims under the United States-Mexico-Canada Agreement.
The Canadian mining sector is subject to Canadian economic sanctions legislation as well as foreign anti-corruption legislation, including the Extractive Sector Transparency Measures Act, which requires Canadian mining companies to implement mandatory reporting standards and report annually on payments to all levels of government, domestically and internationally.
In Canada, the traditional sources of financing for exploration-stage projects have been capital raises through equity markets (eg, private placements or public offerings) and option/joint venture transactions – eg, a junior company that owns a project grants an option to a more senior company for it to earn a controlling interest in the project in exchange for exploration expenditures (or cash payments) on an agreed schedule. In option/joint venture transactions, the junior company is not required to fund the initial stages of the project and is “carried” until the senior company earns its majority interest, following which both parties contribute to the project in proportion to their interests, with a joint venture then being formed between the companies.
As a project evolves into the development phase, debt financing becomes more accessible, such as bond or convertible debt offerings, and debt facilities from a bank. Once a production decision is made based on a feasibility study, project financing is the most common source of financing for the construction of a mine, with the assets of the project being offered as security. Such project financing may be supplemented by offtake agreements, where the producer will sell all or a percentage of the future production from a specific facility to an end user.
Other less traditional finance methods, such as royalties and metal streaming, have recently become more common in the financing of all stages of a project, including exploration and development, well before the construction of a mine begins. Stream financings are where a company agrees to sell a certain percentage of one or more of the metals/minerals produced from a mining operation to a streaming company, at a fixed price that may be lower than the prevailing market rate, in exchange for an upfront payment. This enables a company to wholly or partially monetise a specific metal/mineral prior to physically extracting it.
Domestic and international securities markets play an especially crucial role in the financing of mining projects in Canada. As discussed in 5.4 Sources of Finance for Exploration, Development and Mining, junior companies rely on raising capital through Canadian equity markets (and, in some cases, in other markets, such as those in the United States, Australia and London), especially at the early stages of a project. The amount of investment a junior company can attract depends on commodity prices, world economic health, the state of global mining cycles and competition from other industries for this risk capital.
The types of security available over mining-related assets in Canada differ depending on the stage of development and the location of the project.
For exploration-stage projects of Crown minerals, a lender or financer can obtain minimal security due to the nature of the type of mineral tenure that is granted early in a project in most provinces or territories; typically, these are mineral claims granted under statute. The type of security that can be granted will depend on the statute creating the interest and the related registry. Some statutes deem mineral claims to be a form of personal property, while others deem mineral claims to be an interest in land equivalent to a lease.
Regardless of the interest, land title statutes and personal property security legislation typically do not apply to Crown minerals, and security must be registered in accordance with the mining statute. Most provincial mineral statutes and registries will, however, allow notices to be filed on mineral claims, giving notice of the security granted over such mineral claims. Many of these statutes do not provide a priority regime and are merely a notice to third parties regarding a potential encumbrance or interest, and the priority is governed by common law.
As a project advances, most companies will upgrade their mining or mineral claims to a more secure type of tenure, typically a mining lease (or equivalent). In most jurisdictions, mining leases are considered an interest in land and, therefore, mortgages and other encumbrances can be filed on title, which could provide priorities and enforcement rights to lenders or other financers, depending on the jurisdiction and nature of the mining tenure.
When the project has advanced to the stage of mine construction, the security for project financing is generally provided at the project level, by the project entity that owns the project and the minerals.
Exploration and Investment
Investor interest in the Canadian mining sector has been bolstered in recent years by:
Precious metals accounted for 50% of total exploration spending in 2023, which is expected to decrease as funds are increasingly directed toward critical minerals projects. Exploration spending for uranium has also climbed significantly in recent years, and this trend is expected to continue.
In 2023, Canada experienced a pullback in exploration spending as mining companies addressed rising costs flowing from inflation, geopolitical conflicts and other macroeconomic factors, including volatility affecting certain commodity prices. However, long-term forecasts suggest a return to growth for both junior and senior mining companies as demand strengthens for clean energy transition minerals.
Reconciliation With Indigenous Peoples
Haida Title Lands Agreement
In April 2024, the Haida Nation and the Province of British Columbia entered the Haida Title Lands Agreement, which is the first agreement to expressly recognise the existence of Aboriginal title over privately owned lands (ie, the entirety of the Haida Gwaii archipelago). Moving forward, provincial land and resource management decisions will be made in accordance with Haida title, including decisions regarding interests in land. The Haida Title Lands Agreement purports that private land interests, local governments and public service delivery will not be impacted, but it is currently unclear how such interests will be reconciled with Haida title. Jurisdiction and laws on Haida Gwaii will be made consistent through a to-be-negotiated process, in which other existing interests such as Crown leases will continue for the duration of their term. However, there will be uncertainty concerning continuing interests in land that overlap with Haida title until this process is concluded.
Indigenous ownership in projects
Indigenous ownership in resource-based projects is increasing throughout Canada. This trend provides Indigenous communities with independent and self-governing authority over resources overlapping their traditional territories and concurrently increases certainty for projects within such communities. For example, Nations Royalty Corp. is a publicly traded company that provides Indigenous communities with early benefits from mining projects while retaining royalty ownership. Governments are also facilitating Indigenous equity in projects (eg, the Province of Alberta may provide loan guarantees to Indigenous-led projects). Such participation is seen as a form of economic reconciliation, allowing Indigenous communities to benefit directly from resource development on their territories.
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