Budget 2025: Canada Bets Big on Mining, Productivity, and National Strength

The Setup: A Defining Moment for Canada’s Resource Future

It was a telling scene in Ottawa. Finance Minister François-Philippe Champagne unveiled the 2025 Federal Budget, Building Canada Strong, against a backdrop of slowing growth, rising debt, and a global race for critical resources.
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But this wasn’t just another fiscal update, it was a pivot. A deliberate reshaping of Canada’s economic identity, one that places mining, energy, and industrial capacity at the heart of national strategy.
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The numbers underscore that ambition. The government projects a $78.3 billion deficit for 2025-26, narrowing to $56.6 billion by 2029-30, while introducing a Capital Budgeting Framework that distinguishes long-term nation-building investments from day-to-day spending. The message is clear: Canada is betting that today’s investments in productivity, infrastructure, and critical minerals will define its competitiveness for decades to come.
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A $2 Billion Signal to the World: The Critical Minerals Sovereign Fund

The centrepiece for investors is the creation of the Critical Minerals Sovereign Fund, a $2 billion initiative to be deployed over five years starting in 2026-27. Managed by Natural Resources Canada, this fund will make equity investments, loan guarantees, and offtake agreements in strategically important projects.

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It’s more than capital, it’s credibility. By taking a direct ownership stance in the sector, Ottawa is signaling to global partners and financiers that Canada is serious about securing its supply chains and competing in the era of strategic resources.
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From the First Mile to the Last: Building the Supply Chain Backbone

The budget also launches the First and Last Mile Fund, a $371.8 million program over four years, absorbing and expanding the existing Critical Minerals Infrastructure Fund. With as much as $1.5 billion available through 2029-30, it will finance transportation and clean-energy links essential to bringing near-term projects into production.
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For mining executives and investors, this is where federal money meets shovel-ready opportunity. Infrastructure, from roads to ports, is often the bottleneck that separates discoveries from development.
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Productivity Super-Deduction: Incentivizing Investment

Canada’s productivity problem has been one of the most persistent economic storylines of the past decade. Budget 2025 introduces a Productivity Super-Deduction, allowing businesses to immediately write off a larger share of new capital investment.

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For miners, manufacturers, and energy producers, this means lower upfront tax burdens and faster returns on investment, an attempt to narrow the competitive gap with the U.S., where accelerated depreciation has long been an advantage.

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Policy Certainty for Energy Producers

In another major reversal, the government announced it will remove the proposed oil and gas emissions cap, giving the oil sands and energy-mining sectors greater investment clarity. Combined with the five-year extension of the Carbon Capture, Utilization and Storage (CCUS) Tax Credit, now fully available on eligible expenditures through 2035, this move restores confidence to heavy industry.

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For mining investors, it’s a recognition that decarbonization requires not just ambition but realism. Critical minerals, energy, and resource extraction are the foundation of the transition economy.

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The Expanding Universe of Critical Minerals

Perhaps the most immediate impact for exploration companies lies in tax incentives. The Critical Mineral Exploration Tax Credit (CMETC) now covers an additional 12 minerals essential for defence, semiconductors, and clean-tech supply chains:
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bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin, and tungsten.

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Exploration and development firms have long argued that the credit was too narrow. The expansion not only broadens eligibility but strengthens Canada’s position as a preferred jurisdiction for global capital seeking exposure to strategic metals.

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Clean Tech and Polymetallic Processing Get a Boost

Budget 2025 extends the Clean Technology Manufacturing Investment Tax Credit to include polymetallic extraction and processing, another direct request from the Mining Association of Canada (MAC). The list of qualifying critical minerals also grows to include antimony, indium, gallium, germanium, and scandium, all materials vital to batteries, advanced alloys, and microelectronics.

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This could prove transformative for downstream processing in Canada. Until now, much of the country’s critical minerals output has been exported in raw or semi-processed form. By incentivizing domestic refining and manufacturing, Ottawa is laying the groundwork for a vertically integrated supply chain, from mine to metal to market.

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Export Development Canada and the Push for Scale

To ensure capital continues to flow, the government will increase Export Development Canada’s business-facilitation capacity by $25 billion by 2030, channeling more credit and guarantees toward sectors of strategic national importance, including critical minerals, clean energy, infrastructure, and defence.

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This expansion strengthens Canada’s export-finance toolkit at a time when global competition for investment has intensified.

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Infrastructure: Northward and Outward

Nation-building themes continue throughout the budget:

• $10 billion more for the Canada Infrastructure Bank, tasked with advancing major national projects;
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• $1 billion to Transport Canada for a new Arctic Infrastructure Fund, enhancing access and sovereignty in northern regions;
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• and $443 million over five years for Natural Resources Canada and ISED to advance critical minerals processing technologies, coordinate joint investments with allies, and establish a strategic minerals stockpile.

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Together, these measures signal a structural investment cycle aimed at linking Canada’s geography with its geology, an alignment long overdue.

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MAC’s Take: A Turning Point for Canadian Mining

Pierre Gratton, CEO of the Mining Association of Canada, had this to say in Budget 2025 Historic for Canada's Mining Sector about the budget:


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"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 Canada's mining industry."

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He added:

“These measures promise to usher in a new era in mining investment, creating high-paying jobs, boosting exports, creating major opportunities for Indigenous Canadians, and protecting Canadian sovereignty for years to come.”

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The sector already contributes $117 billion to GDP, supports 711,000 direct and indirect jobs, and represents 21 percent of Canada’s total exports, making it the country’s largest private-sector employer of Indigenous peoples. With the 2025 Budget, Ottawa has effectively declared it intends to double down on that strength.

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Personal Tax Highlights: A Budget of Subtle Shifts

Beyond industry incentives, the government introduced several measures that reshape the personal-tax landscape, especially for middle-income earners and trust holders.

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Middle-Class Tax Cut: The first marginal tax rate drops from 15 % to 14.5 % in 2025, and 14 % from 2026 onward. To offset side effects on non-refundable credits, a temporary Top-Up Tax Credit will maintain the current 15% rate on credit amounts above the first bracket, effective for the 2025-2030 period.

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Automatic Tax Filing: The CRA gains authority to automatically file returns for certain low-income individuals or seniors, ensuring access to benefits like the GST/HST Credit and Canada Child Benefit.

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Personal Support Workers Credit: A 5 % refundable credit (up to $1,100) for eligible health-care workers between 2026-2030.

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21-Year Rule for Trusts: The deemed-disposition rule now includes indirect transfers to new trusts, closing a long-standing tax-deferral loophole. Estate planners will need to reassess timing and structure carefully.

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Qualified Investments Reform: Starting 2027, RRSP and TFSA investment rules will be harmonized and simplified, easing access to small-business and venture investments while preserving investor protection.

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Time to Pull the Trigger on that Boat | The Luxury Tax Shift

Effective November 4, 2025, the federal luxury tax on private aircraft and recreational vessels will be eliminated. Taxes on high-value automobiles, however, remain in force, 10 % of the total value or 20 % of the amount above $100,000, whichever is less.

Ottawa framed this as a strategic adjustment to support aviation and marine manufacturing, both of which are export-intensive industries. The move should help domestic producers regain competitiveness lost to foreign jurisdictions where such taxes were absent.

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Deficit and Debt: The Balancing Act

Despite record commitments, the government insists it remains fiscally disciplined. The Comprehensive Expenditure Review aims to identify $60 billion in savings and new revenues over five years, while maintaining a declining deficit-to-GDP ratio.

Still, Canada’s debt trajectory depends on growth actually materializing. Should global demand weaken, or interest rates rise faster than expected, the math tightens quickly.

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Why This Budget Matters for Investors

This is the most mining-focused federal budget in a generation. Tax credits, infrastructure funding, and sovereign investments collectively create a tailwind for exploration and development companies listed on the TSX and TSX Venture Exchange.

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Fiscal Stimulus Meets Fiscal Restraint

The dual focus of spending big while promising discipline creates uncertainty. Inflationary risk remains, especially if infrastructure money hits the economy before productivity gains do.

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Real Assets Over Financial Engineering
By rewarding tangible investments, such as mines, factories, and roads, over buybacks or leverage, Ottawa is steering capital toward real economy projects. For macro-oriented investors, that signals a shift away from the financialization trend of the past two decades.

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Personal Tax Simplicity, Not Shock
No broad rate hikes, but targeted reforms ensure greater enforcement and fairness. Investors using trusts or registered plans must revisit compliance strategies.

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Policy Consistency for Energy and Industry
Extending CCUS credits and scrapping the emissions cap re-anchor Canada’s energy policy around investment certainty, critical for mining, resource, and industrial sectors that require 10- to 20-year planning horizons.

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Final Thought: Canada’s Resource Renaissance

Budget 2025 reads more like a strategy paper than an accounting document. After years of global competition and domestic underinvestment, Ottawa has determined that mining, energy, and productivity are the key drivers of future prosperity. As obvious as it was to come to this conclusion, it appears they finally have. Platitudes and virtue signalling don't get you into the black and Careny knows this.

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For investors, this could mean great opportunity in the mining sector. Policy momentum now aligns with resource development and real-asset productivity. Those positioned in critical minerals, infrastructure, and Canadian industrials stand to benefit most from what could be a generational cycle in domestic investment.

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If executed well, Building Canada Strong may prove more than a slogan: it could mark the beginning of Canada’s resource renaissance.

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This article is for informational purposes only and does not constitute investment, tax, or legal advice. Always consult a qualified professional regarding your specific circumstances.

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