Government support
Governments fund exploration through grants and tax incentives, and increasingly fund critical-minerals projects through loans and equity.
2 min read
Many governments help pay for exploration and mine development, through grants, tax incentives and state-backed loans.
What it is
Governments want mineral discoveries for jobs, tax revenue and, increasingly, secure supply of critical minerals such as copper, lithium, nickel and rare earths. They support the industry in four main ways.
The main forms
| Form | How it works | Typical stage |
|---|---|---|
| Exploration grants | Co-funding for drilling or surveys, usually competitive and capped | Grassroots and discovery drilling |
| Tax incentives for investors | Investors receive tax deductions or credits for funding exploration | Exploration |
| Geological data | Free government surveys, maps and drill-core libraries | Grassroots |
| Critical-minerals funding | State-backed loans, loan guarantees, grants or equity for strategic projects | Development and construction |
Examples
- Canada: flow-through shares let investors deduct exploration spending, and a mineral exploration tax credit adds to the benefit.
- Australia: some states co-fund exploration drilling, and a junior exploration incentive lets companies pass tax credits to investors.
- Critical-minerals programmes: governments in North America, Europe, Australia and Asia have created loan, guarantee and equity programmes for projects producing critical minerals.
Programmes change often. Check what is currently available in the project's jurisdiction.
Advantages and disadvantages
| For the company | |
|---|---|
| Advantages | Cheap or free money; can attract other investors; government backing can ease permitting and financing |
| Disadvantages | Limited and competitive; conditions on how and where money is spent; reporting requirements; programmes can end |
Government support also has a cost side. Many countries take a free carried interest in mining projects, and all charge royalties and taxes. Those are covered in the jurisdictions track.
Terms and ranges are indicative and vary by market, jurisdiction and project. This is educational material, not investment advice.
Key terms
Next in this track
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Educational material only. Nothing here is investment advice or an offer to buy or sell any security or mineral interest.