The Association of Mining and Exploration Companies (AMEC) CEO Warren Pearce is expecting mining companies to establish “valuable” projects in Australia rather than overseas, following the new legislation introducing tax incentives for critical minerals production.
On 25 November, the Australian Government proposed a new law that will set up a tax incentive worth 10% of the relevant processing and refining costs for the nation’s official critical minerals list.
Speaking to Mining.com.au, Pearce says investors will see Australia is open for business and as such, investments will begin to flow to companies that take advantage of this “favourable” tax setting.
“One of the benefits to Australia is that by value-adding to the raw minerals we are blessed to have, our supply chain for the critical minerals we need for the energy transition are strengthened,” he tells this news service.
“All emerging markets need a hand from time to time. This is absolutely the case for our critical minerals industry.”
The Critical Minerals Production Tax Incentive (CMPTI) comprises a $7 billion commitment over 10 years for the 31 critical minerals on the Australian list.
AMEC says the incentive provides assistance for companies to value-add to their raw minerals by conducting downstream processing.
Pearce adds that the CMPTI is a “proud” moment for AMEC and the broader industry.
“This was a policy lever discussed with critical minerals members and developed in co-ordination with Mandala consulting, who produced a report into the benefits of a production tax credit,” he says.
“The report was then taken to the federal government and Minister for Resources Madeleine King for consideration. Following that there was a delegation to Canbreea and regular consultation with Minister King and the Treasury.”
AMEC says by making sure that products like lithium spodumene ore refined into lithium hydroxide happens in Australia, it keeps jobs in Australia and helps build a Future Made in Australia.
“Importantly, this is a smart and zero risk approach for Australia,” Pearce adds.
“If companies don’t produce a value-added product, they don’t receive a tax credit and it costs taxpayers nothing. If they do invest, and produce a value-added product, the economic benefits for Australia, massively outweigh the cost of the incentive. It’s a can’t lose situation.”
Pearce notes that the benefits will come in the form of a new industry of highly paid jobs, greater tax and royalty revenue.
AMEC anticipates that if it is successful, the initial uptake will be relatively low but will grow over time and ensure that the emerging industry truly emerges on the global stage.
The Association of Mining and Exploration Companies is a national association that represents over 500 member companies from across Australia. Mining.com.au is an official associate member of AMEC.
Write to Aaliyah Rogan at Mining.com.au
Images: AMEC
