Thank you, Mr. Chair.
Good morning, everybody.
Thank you for the invitation and for the opportunity to speak to you this morning. It's great to see some of you again. I've met some of you in the past.
I, too, would like to acknowledge and thank Kwanlin Dün First Nation and Ta'an Kwäch'än Council for allowing us to meet this morning to discuss these important issues.
I'd like to tell you a little more about the Yukon Chamber of Mines before starting my remarks.
The Yukon Chamber of Mines is a chamber organization that was created in 1943 and represents over 500 members with direct or indirect interests in Yukon's mining industry, and that's everything from a prospector all the way up to a fully operating quartz mine.
The Yukon Chamber of Mines fully supports the Prospectors and Developers Association of Canada's pre-budgetary recommendations. You may have heard some of these already. We're adding strength to some of those recommendations, as well as interweaving some northern aspects to those recommendations.
The five recommendations that would have a direct impact on supporting economic development in Canada's north are about the renewal of the mineral exploration tax credit for a minimum of three years, and I'll speak to that a little more; strengthening competitiveness in Canada's north and remote regions through an infrastructure investment fund; enhancing the capacity of indigenous peoples in the industry; creating a funding mechanism to support comprehensive mineral resource assessments; and finally, supporting geoscience mapping and innovation.
We believe the north would benefit from all these initiatives. However, the most pressing to us are strengthening competitiveness in Canada's north and remote regions, enhancing the capacity of indigenous peoples in the industry, and renewing the mineral exploration tax credit.
When we talk about strengthening competitiveness in Canada's north and remote regions, the cost of operating Canada's north and remote regions is high, which directly affects investment in the region, and in turn economic development opportunities for northern indigenous communities. We've heard that from some of the previous panellists here. The future of Canada's mineral industry lies increasingly in remote and northern regions. We represent 40% of Canada's land mass.
While many factors influence decisions about where to explore and mine, cost is a primary driver. Costs are largely a function of remoteness, and remote deposits are significantly more expensive to find, develop and mine. Due to significant infrastructure deficits, it can cost up to six times more to explore, and two or two and a half times more to build new mines in remote regions. A disproportionately high percentage of known mineral deposits also remain undeveloped in Canada's territories, compared to non-remote regions. Infrastructure investments are key to unlocking mineral potential in the north.
The federal carbon pricing backstop and the resulting output-based pricing system will add additional costs to mineral projects in Canada's north and remote regions, further reducing the viability of these projects. Given the lack of energy infrastructure in the north, companies operating in these environments rarely, if ever, have viable alternatives to the diesel fuel used to power drills and camps.
Other costs associated with mineral exploration will also significantly increase. Taken together, these costs will adversely impact Canada's mineral industry competitiveness. Without any action, Canada will lose out on development opportunities and associated benefits to more competitive jurisdictions.
The federal government can do two things to improve competitiveness in Canada's north and remote regions. First, to address the region's infrastructure deficit, it can increase strategic investments in critical transportation and energy infrastructure, which in this case would mean maintaining the federal government's support for the Yukon resource gateway project, which was identified through the northern envelope of the infrastructure investment fund.
Second is ensuring that any new carbon pricing regime addresses the unique challenges faced by remote and northern regions, and includes a fiscal support mechanism for mineral exploration projects that must rely on diesel and other fossil fuels. We heard that through a presentation and a submission from the Mining Association of Canada, which provided recommendations—everything from delayed implementation to rebates, a funding pool, or potentially a tax credit.
Speaking of tax credits, the renewal of the mineral exploration tax credit is a fiscal and tax incentive that supports the flow of capital into mineral exploration projects, ultimately supporting Canada's competitiveness in the global mineral industry. Mineral exploration is a high-risk endeavour, and the probability of a successful discovery of an economic deposit is very low. Attracting investment for small- to medium-sized exploration companies is extremely difficult, especially given today's investment climate. METC is an innovative, made-in-Canada policy tool, complementary to the flow-through share regime. The tax incentive supports exploration financing by providing individuals who invest in companies that are exploring for minerals in Canada with a 15% tax credit on eligible expenditures.
Extending METC for a minimum of a three-year period would catalyze investor interest in flow-through shares and support access to exploration financing for proponents. In fact, a three-year extension would provide greater certainty and boost confidence for investors in Canadian projects.
With regard to enhancing the capacity of first nation peoples in the industry, government investment is critical to enhancing the meaningful participation of indigenous peoples in the mineral industry. The mineral industry strongly supports efforts to facilitate meaningful participation of indigenous peoples and the economic opportunities it generates through training, business development and procurement, employment, and mutually beneficial partnerships. There is a great potential to further increase participation by indigenous peoples in the industry, particularly given the young and growing indigenous population, the impending mineral industry labour shortage, and the proximity of indigenous communities to projects.
However, many indigenous communities are faced with various barriers that affect their ability to participate. Investment in indigenous communities by government to improve health, living conditions, early childhood development and secondary or post-secondary graduation rates is critical to increasing participation and maximizing the opportunities generated by mineral exploration and development.
The federal government can support efforts to enhance the participation of indigenous peoples in the mineral industy by making foundational social investments—as we heard earlier this morning—and also through housing, water and infrastructure, which contribute to improved health and educational outcomes for indigenous communities, as well as providing targeted funds for skills training and entrepreneurship to assist indigenous peoples in maximizing opportunities generated by the industry.
To tie that back around, we heard earlier from Yukon U. Of course, it has the Centre for Northern Innovation in Mining facility, which trains up a lot of the locally trained workforce for the mines of tomorrow.
If I have one more minute, I can talk about mapping and innovation.