Feds pitch $2B fund for critical minerals investments, including equity stakes

OTTAWA — The federal budget says Canada will take out equity stakes in critical mineral projects to open up mining and position Canada as a major global supplier.

The federal budget, released Tuesday in Ottawa, outlines a plan for a $2 billion “critical minerals sovereign fund” over five years for equity investments, loan guarantees and offtake agreements.

Ottawa is also planning to add a dozen more critical minerals to its exploration tax credit list.

Many of the minerals and metals on the list play roles in Canada’s EV and battery supply chains. Many of the newly added minerals, such as tin, tungsten and chromium, have defence applications. They’re also used in the energy sector and to build semiconductors and clean technology.

“The scale of the opportunity for Canada on critical minerals is massive, so I would say there’s pretty much unlimited funds that we could allocate to that and it likely is going to pay off,” said Rachel Samson, vice-president of research at the Institute for Research of Public Policy.

Last week in Toronto, Energy Minister Tim Hodgson signed Canada into the G7’s critical minerals production alliance in a bid to push back against China’s dominance in the global critical minerals market.

China is a major critical mineral producer and an even bigger refiner. It accounts for an average of 70 per cent of the market share for 19 of 20 key minerals, according to the International Energy Agency.

China’s position is even more dominant in the production of rare earth elements — which are hard to extract and are used to make powerful magnets found in everything from electric vehicles to advanced radar systems. China accounts for 91 per cent of global refining production for rare earth elements.

“I think the announcements that they had in the budget are significant, particularly being willing to take equity investments in projects, or do offtake agreements,” Samson said.

“That’s going to be more significant because right now China has the market power to sort of influence commodity prices, which leads to low levels of investment in projects in Canada.”

The budget also promises $371.8 million over four years for upstream and midstream critical mineral projects, with a focus on getting near-term projects into production.

Ottawa plans to use its new fund to absorb its existing critical mineral infrastructure fund, which would provide $1.5 billion over three years to support critical minerals infrastructure.

This report from The Canadian Press was first published Nov. 4, 2025.

— With a file from Jordan Omstead in Toronto

Nick Murray, The Canadian Press