Grassy Narrows First Nation is again facing off against a Canadian mining company to protect its land and waters from industrial contamination. The nation is opposed to plans by Toronto-based company Kinross Gold to pour treated wastewater laced with sulphate into the river system it relies on for fish. The plan was initially approved by the Ontario government but has been re-submitted by the company after a separate provincial tribunal found it to be unreasonable. According to experts, sulphate—which will not be removed from the wastewater—will dangerously compound the effects of mercury left over from decades of industrial dumping in the Wabigoon River.

Ontario’s support for Kinross’ Great Bear project goes far beyond lax regulation. Rather than protect Grassy Narrows and its environment, the province, together with the federal government, has quietly subsidized much of the exploration that undermines the First Nation’s attempts to protect its lands and waters. The Great Bear project has received more than $63 million in combined federal and provincial subsidies, allowing exploration that would likely not otherwise have been capitalized to proceed against Grassy Narrows’ objections.

Most of the exploration associated with the Great Bear property was capitalized using flow-through shares—a tax-based financing mechanism named for the tax relief it “flows through” to investors in order to de-risk exploration.

Financial statements prepared by Great Bear Resources—from whom Kinross recently acquired the property—and filed with the Canadian Securities Administrators reveal the company raised just over $118 million worth of flow-through shares between December 2017 and February 2021. This represented a combined federal and provincial subsidy of more than $63 million and after-tax profits for investors of up to $29 million. The company also received $100,000 from the province’s Junior Exploration Program to fund initial exploration of the property.

Aimed at high-net-worth individuals whose income would otherwise be taxed at the highest rate, flow-through shares reward investors by substituting tax relief for growth. Investors pay no tax on the value of their investment in the year they invest. Once they sell their shares, the proceeds are taxed as capital gains at a lower rate than personal income. In addition, investors are eligible for a non-refundable federal tax credit worth 15 percent of the share purchase price (the mineral exploration tax credit, or METC), along with a similar five percent tax credit for Ontario-specific exploration. For investments in critical mineral exploration, the METC was recently increased to 30 percent.

The colonial dimensions of these subsidies deserve scrutiny. Opposition, resistance, and the exercise of Indigenous jurisdiction ratchet up the already speculative qualities of exploration beyond what even the most tolerant “risk capital” is willing to withstand. Without subsidies, and in the absence of Indigenous consent, exploration cannot advance and mining claims lapse.

Flow-through financing—in which otherwise too-risky exploration is financed through the organized abandonment of tax revenues, channelled through the tax returns of high-net-worth individuals—plays a vital role in circumventing Indigenous resistance and advancing exploration against their will. It also represents a massive drain on tax revenues.

Unlike the investors who capitalized this exploration, the province will likely see very little in the way of wealth from it. Recent tax filings show that Kinross paid no taxes to federal or provincial governments in 2024 (no surprise, since exploration is subsidized, not taxed). By contrast, corporate shareholders—including Canadian banks and prominent public sector pension funds such as the Ontario Teachers’ Pension Plan, Investment Management Corporation of Ontario, and PSP Investments—would have pocketed more than $20 million USD (based on current shareholdings) from dividends paid by Kinross over a single financial quarter in 2024.

Nor is it clear that the mine, if it enters production, will provide much in the way of tax revenue. According to Ontario’s tax regime, the first $2 million of net profits would not be taxed, nor would an annual exemption of $500,000 in profits. A 10 percent royalty would apply to any remaining profits. Moreover, as experts have pointed out, corporations have no shortage of legal means to hide profits and avoid taxes. Kinross has multiple corporate subsidiaries registered in known tax havens, including holding companies in Luxembourg and the Cayman Islands that list no employees. In 2024, Kinross declared gross revenues of $5.14 billion USD across all operations and paid only $337 million in taxes.

The Ontario government has persistently acted to undermine Grassy Narrows First Nation’s attempts to rehabilitate their watershed: ignoring a Land Declaration established under Indigenous law that bans mining and other industrial land uses in the First Nation’s ancestral lands; refusing to acknowledge their establishment of an Indigenous Protected and Conserved Area; and dragging its feet in investigating one of Ontario’s most notorious and devastating sites of industrial contamination. In direct defiance of Indigenous jurisdiction and the laws of the First Nation, the Ford government has presided over the staking of hundreds of thousands of hectares of its ancestral territory—mostly for gold—and issued exploration permits without notifying or consulting the First Nation. Exploration subsidies directly underpin these initiatives, shifting financial risk to the public while enriching private investors.

What is at stake is not merely tax policy or corporate finance but the health of a people and the integrity of their watershed. For Grassy Narrows, the choice is clear: clean water, real remediation, and respect for Indigenous jurisdiction, not another subsidized industry project that threatens to deepen an already dire situation.

Dr. Anna Stanley is an adjunct professor in the Department of Geography, Environment and Geomatics at the University of Guelph.