Canada sanctions $1.5B aid for the US tariff-stricken aluminium industry

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The Federal Government of Canada has sanctioned financial aid worth USD 1.5 billion to support companies affected by the recent US tariffs imposed on aluminium, steel and copper products, effective from April 6. Commenting on the funding, Mélanie Joly, the Minister of Industry and Minister responsible for Canada Economic Development for Quebec Regions, stated, "We are taking concrete action to strengthen Canada's economy by standing behind our steel, aluminium and copper industries."  

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Lifting the burden of immediate cash flow pressures on manufacturing and export firms across the metals value chain, which are heavily dependent on these metals. The primary share of funding, viz., the USD 1 billion Business Development Bank of Canada (BDC) programme and another USD 500 million from the Regional Tariff Response Initiative for smaller enterprises for market diversification. “The new measures announced today will protect workers and ensure companies have the tools and financing they need to keep operating, growing, and building Canada's strength at home,” Joly mentioned.

In line with the announced aid, BDC President Isabelle Hudon stated, “BDC is ready to get this money into the operations of steel and aluminium companies quickly, keeping their doors open and them producing.”

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Miners concerned – Why?

The funding move comes as part of Ottawa’s wider response to the US trade measures, such as the retaliatory tariffs on USD 15.6 billion of American steel and aluminium, along with fresh quotas on imports from third countries. Eligibility criteria to avail the funding are yet to be announced.

The grant, therefore, could redefine the positions of mining companies faced with uncertainties from downstream demand as manufacturers absorb cost inflation and search for market alternatives. Aluminium producers who need to procure the raw material or bauxite may be compelled to reduce orders due to the high import costs.

The impact of the newly imposed tariffs, as well as how they are mitigated, would be the main watchpoints for mining firms as aluminium manufacturers cope with the effect of the tariff burden to sustain in the sector and remain strong against the possibility of a weakening commodity demand.

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