Canada will establish a $2-billion Critical Minerals Sovereign Fund to accelerate investment in strategic mining projects and strengthen national security supply chains, Finance Minister François-Philippe Champagne announced on Tuesday in the 2025 federal Budget.

The new fund – to be administered by Natural Resources Canada – will provide equity investments, loan guarantees, and offtake agreements to advance critical minerals projects. The government will also allocate C$50-million over five years to support the fund’s delivery.

Complementing the new sovereign fund, Ottawa will also launch a C$371.8-million First and Last Mile Fund to support upstream and midstream development of critical minerals supply chains. The new programme will absorb the existing Critical Minerals Infrastructure Fund, leveraging up to C$1.5-billion in total support through to 2029/30. It will help move near-term projects into production and fund clean energy and transport infrastructure needed to connect mine sites with processing facilities and markets.

The 2025 Budget further proposes to expand the Critical Mineral Exploration Tax Credit to cover 12 additional minerals – bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin, and tungsten.

The expansion builds on the government’s Critical Minerals Strategy launched three years ago and aligns with Canada’s growing focus on securing critical minerals for allied nations under the Critical Minerals Production Alliance, introduced by the Prime Minister during the G7 Summit in Kananaskis, Alberta, earlier this year.

INDUSTRY WELCOMES ACTION

The Mining Association of Canada (MAC) praised the 2025 Budget for delivering on multiple industry priorities, describing it as a “strong, comprehensive commitment” to Canada’s mining competitiveness.

“Budget 2025 confirms the federal government’s unwavering commitment to the Critical Minerals Strategy released three years ago,” said MAC president and CEO Pierre Gratton. “These measures, taken together, send a powerful signal to the mining industry, global investors, and Canada’s allies that Canada is very serious about improving the competitiveness of its mining industry.”

Gratton said the creation of the Critical Minerals Sovereign Fund and First and Last Mile Fund, alongside enhanced tax credits and infrastructure support, “promises to usher in a new era in mining investment”, with benefits spanning high-paying jobs, export growth, Indigenous partnerships, and strengthened sovereignty.

MAC highlighted other key measures in the budget, including:

• A Productivity Super-Deduction allowing immediate write-offs for new capital investments;
• Extension of the Carbon Capture Utilisation and Storage Tax Credit full rates to 2035;
• Expansion of the Clean Technology Manufacturing Investment Tax Credit to cover polymetallic extraction and additional minerals such as antimony, indium, gallium, germanium, and scandium;
• An additional C$25-billion in business facilitation capacity for Export Development Canada by 2030, targeting critical minerals and clean technology;
• A renewed Mineral Exploration Tax Credit through 2027;
• C$10-billion in new funding for the Canada Infrastructure Bank;
• C$1-billion Arctic Infrastructure Fund through Transport Canada; and
• C$443-million to support new processing technologies, joint critical minerals projects with allies, and a national stockpiling mechanism.

The government’s critical minerals agenda also aligns with mounting geopolitical urgency. With China, Russia, and other producers dominating global supply, Canada is accelerating its partnerships with G7 and Nato allies to build reliable, transparent supply chains for materials used in defence, renewable energy, and digital technologies.

The Budget describes critical minerals as “central to Canada’s Climate Competitiveness Strategy”, tying resource development directly to national security, decarbonisation, and industrial growth.

Canada’s mining industry already contributes C$117-billion to national GDP and accounts for 21% of total exports. It directly and indirectly employs 711 000 people, making it the country’s largest private-sector employer of Indigenous peoples.

“Today’s budget promises to create major opportunities for Indigenous Canadians and protect Canadian sovereignty for years to come. We urge the government to implement these proposals expeditiously," said Gratton.