
Brian Zinchuk is editor and owner of Pipeline Online

Minister of Energy and Resources Colleen Young. Photo by Brian Zinchuk
REGINA – One of the big questions around the development of a new lithium industry in Saskatchewan is just what will be the royalty structure? Will it be based on oil and gas extraction, or potash? How much will it be, which is a huge factor in the economics for any project planned for Saskatchewan. That’s doubly important given lithium prices are currently in the dumps, making any project’s economics difficult. Just what royalty rate will allow the birth of an entirely new industry, and yet be fair to taxpayers, owners of the resource?
With lithium companies edging closer to actual commercial production, this needed to be settled forthwith.
Those questions were answered on Oct. 6, with the Minister of Energy and Resources announcing the new structure, with the introduction of regulatory amendments “to set a clear and consistent royalty framework for lithium and other minerals produced from natural brine aquifers,” according to a ministry release.
“These amendments to The Subsurface Mineral Royalty Regulations, 2017 will provide certainty for resource companies looking to develop or invest in lithium projects in Saskatchewan.”
“Lithium is a critical mineral that is expected to see strong demand and growth in the decades ahead, and Saskatchewan is well-positioned to take advantage of this opportunity,” Energy and Resources Minister Colleen Young said in the release. “By putting this royalty framework in place now, we are providing certainty for industry, while ensuring the people of Saskatchewan benefit as this sector develops.”
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“The new royalty framework sets a Crown royalty rate of 3 per cent of the value of brine mineral sales, with a two-year holiday for new productive capacity. The rate set is consistent with Saskatchewan’s Crown royalties for potash, salt and sodium sulphate, while the overall system is competitive with other leading jurisdictions developing lithium from deep natural brine aquifers,” the government said.
That’s substantially lower than royalty rates from oil and gas. When reporting on the Multi-Lateral Oil Well Program announced in 2024, Pipeline Online conferred with the Ministry of Energy and Resources to use examples of oil royalties vs the new program. In that discussion, the number of 17.5 per cent was used as an example for oil royalties.
As it stands, lithium brine processing will be nearly indistinguishable from oil production except by the trained eye. It will involve pumping lithium-rich brine, (salt water) to the surface, processing it, and pumping the remaining salt water back into the ground. This same description essentially describes high water cut oil production.
Historically, Alberta’s oil sands were developed with a one per cent royalty until a project’s cost was paid out, and then 25 per cent after that. While that meant very little in the way of royalties in the early years, as the province’s oil sands projects achieved payout, the royalties to the province became much more substantial. That was not the model chosen here. Insdead, there will be an initial royalty holiday followed by a three per cent royalty ongoing.
This is also happening with a critical mineral has seen enormous price fluctuations in just the last six years. As noted in the previous Pipeline Online lithium story, “The lithium industry in Saskatchewan appears to have officially experienced its first full cycle. Global demand for lithium grew 5X from 2020 – 2025, and with it came extreme price volatility. Zach Maurer remembers lithium prices under USD $8,000 per tonne in 2019, skyrocketing to over USD $80,000 per tonne in 2022, and settling back down to USD $8-$9,000 in spring of 2025.”
That’s a variation of 10x increase then a 90 per cent fall in just six years. As noted above, these variables have enormous impact on each project’s economics. Just a few years ago, lithium explorers in Saskatchewan were basing their calculations on USD $20,000 per tonne, a number long in the rear-view mirror. So the three per cent royalty should make it a lot easier to deal with, as well as attract investment.
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Positive reaction
Lithium developers are happy with the announcement.
Zach Maurer, executive director of Prairie Lithium, said in an email, “The royalty rate, in combination with the production holiday and royalty credit programs, make Saskatchewan an attractive destination for lithium investment.”
Prairie Lithium, having just recently returned to its previous name after a few years as Arizona Lithium, is the closest of Saskatchewan’s lithium developers to reaching commercialization. It is currently working on financing to go ahead with its initial small-scale commercial production, which was likely the key impetus for the policy being announced at this time. Maurer has accompanied Premier Scott Moe to Washington specifically to discuss critical minerals with the U.S.

Savanna Drilling Rig 606 drilling for Arizona Lithium, now again Prairie Lithium, north of Tribune on Oct. 21, 2024. Photo by Brian Zinchuk
“This is another example of the Government of Saskatchewan continuing to encourage responsible resource development and employment in the province,” Grounded Lithium president and CEO Gregg Smith said in the government release. “This new regulatory framework provides a reasonable royalty rate while also recognizing the significant risk and initial investment companies make in processing facilities to ultimately achieve commercial production. Our pursuit of the most attractive geology brought Grounded Lithium to Saskatchewan, and we are pleased to be here.”
Grounded Lithium is developing a project north of Kindersley, near Coleville.

EMP Metals drilling in 2024 near Stoughton. Photo by Brian Zinchuk
Karl Kottmeier, CEO of EMP Metals, commented in an email, “This is very welcome news. The government of the province of Saskatchewan has once again proven itself to be supportive of lithium production in the province. This is a highly competitive royalty rate internationally and a two-year royalty holiday on new production immediately makes a positive impact on financial modelling of what is already a compelling business case for our Project Aurora lithium production project.”
EMP Metals is currently building its demonstration plant at Viewfield, south of Stoughton.
In 2023 the province introduced ‘Securing the Future: Saskatchewan’s Critical Minerals Strategy,’ aiming to grow the sector in line with the Saskatchewan growth plan. This strategy targets increasing Saskatchewan’s share of national mineral exploration to 15 per cent by 2030, doubling the number of critical minerals produced, and growing the output of potash, uranium and helium. It also aspires to position Saskatchewan as a key hub for rare earth elements.
Pipeline Online requested a response from the opposition New Democratic Party. They asked for more time to examine the announcement further before responding. Pipeline Online will also be speaking to Minister Young in the near future to discuss how the royalty was arrived at.
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