Canadian Prime Minister Justin Trudeau said the government will propose a new incentive that would extend its existing zero-emission vehicle coverage to off-road machines, including mining vehicles. The March 2 announcement was made during a global mineral exploration and mining convention in Toronto, Ontario, Canada, hosted by the Prospectors & Developers Association of Canada.
The incentive would provide a 100% write-off of the purchase cost of eligible zero-emission vehicles and automotive equipment in the year they are put in use.
“We are supporting businesses that are making investments today to help protect our environment for future generations,” said Trudeau. “By making it more affordable for Canadian businesses to make the switch to zero-emission technologies, we can help accelerate our transition to a low-carbon, clean-growth economy and create good middle-class jobs.”
Since March 19, 2019, Canadian businesses have been able to claim 100% of the cost of the purchase of on-road passenger vehicles up to a limit of $55,000 per eligible vehicle purchase. By expanding it to off-road vehicles, the government said the proposed tax relief is estimated at $62 million over the 2020-’21 and 2024-’25 period.
This new incentive is expected to encourage businesses, including in sectors such as mining, transportation and agriculture, to take advantage of opportunities to invest in alternative technologies.
To be eligible for an income tax deduction of 100%, vehicles would need to be available for use before 2024. The deduction allowance would decrease to 75% for 2024 and 2025 and would decrease to 55% for 2026 and 2027. Vehicles that are not available for use before 2028 would not be eligible for the accelerated deduction allowance.
The Mining Association of Canada (MAC) said it supported the government’s commitment to write off the full cost of clean energy equipment.
“This announcement is welcome news for Canada’s mining sector and responds to one of MAC’s specific budget requests,” said Pierre Gratton, president and CEO, MAC. “Last year, Canada opened its first all-electric mine, and the deployment of electric vehicles across Canada is accelerating. Nonetheless, such equipment has a significant cost premium, so today’s announcement will help de-risk such purchases and accelerate the adoption of electric vehicles at more mines.”
Electric mine vehicles provide significant benefits, said MAC. For underground mines, electric vehicles reduce ventilation requirements, reduce mine waste through smaller drifts, improve air quality for workers. Expanded use of electric vehicles should also contribute to lower unit costs over time, which will further accelerate their deployment.
“Just as miners know their materials are essential to the transition to a low-carbon economy, we also know we must reduce our own operational footprint,” said Brendan Marshall, vice president of Economic and Northern Affairs for MAC. “This announcement underscores the government recognizes this and is committed to a sustainable extractive sector as a key component of Canada’s economy.”
MAC said Canadian mines supply the critical minerals necessary to support the transition to a lower carbon economy, with many Canadian mines supplying some of the world’s lowest carbon intensive nickel, copper and metallurgical coal.