Mining industry insiders gave mildly positive reviews to a federal budget which they said has some useful measures for the ailing sector, but could go much further.
"We would give it a seven out of 10. It's probably not a bad budget for the times," said Paul Stothart, vice president of economic affairs at the Mining Association of Canada (MAC).
To try and encourage more activity in the sector, the government extended the 15% mineral exploration tax credit to 2010
(the "super flow-through program"). The tool helps cash-strapped junior companies raise money for exploration, and it played a major role in getting the industry get through its last downturn. But insiders were hoping that the credit would be made permanent this time rather than just extended.
The Canadian mining industry was riding high for most of this decade, but it went through a dramatic decline late last year when a sudden collapse in commodity prices led mining companies to cancel investments and shed jobs.
The government also announced a pure relief measure that will help communities hit by the downturn in the resource sector: the $1-billion Community Adjustment Fund. That announcement was welcomed.
Another potential plus for the industry is the temporary increase in capital-cost-allowance rates for machinery and equipment, which likely applies to at least some mobile mining equipment.
Similarly, the industry should benefit from the elimination on import tariffs on much of that equipment.
There is also hope that the nearly $12-billion committed to infrastructure will encourage more exploration in the future, particularly in less accessible areas of the far north.
However, the so-called "priority projects" outlined in the budget appear more focused on cities.
Industry spokespeople are also unhappy that the budget does not appear to do anything to improve the glacial and inefficient mine permitting process in Canada. Any new investment here could speed up development time on mining projects and create some jobs in the short-term.
The budget also did not offer anything new with regards to science or research and development. There were calls for the government to make investments in geoscience to encourage exploration, and the MAC hoped to get funding for the proposed Canadian Mining Innovation Council.
The MAC also asked for a tax credit that would encourage companies to invest in modernizing outdated smelters and refineries, but the budget had nothing to offer in those areas.
Hg
