The Australian Government is today (25 November) expected to introduce legislation that will provide tax incentives for the production of critical minerals, as lawmakers seek to boost investment in the sector.
The proposed law will set up a tax incentive worth 10% of the relevant processing and refining costs for Australia’s list of 31 critical minerals — those considered important for Australia’s modern technologies, economies and national security. According to the government, the scheme will run for 10 years per project, starting in June 2028.
In addition to critical minerals, renewable hydrogen production will also enjoy new guidelines, with a proposed tax incentive worth $2 per kilogram of renewable hydrogen produced during the same period.
Only once these projects are up and running will the incentives be available.
“The legislation will give investors clarity and certainty to invest in Australia’s potential to add more value to its natural resources, and help deliver cheaper and cleaner energy,” Treasurer Jim Chalmers says.
Most, if not all, of the world’s major economies are looking to invest billions in support of clean energy projects. Many of these initiatives are also designed to compete with China in the production of electric vehicles and semiconductors, which are seen as essential for economic prosperity and national security.
However, sliding commodity prices and challenging market conditions have weighed on the traditional supply-demand dynamic.
“Slowing growth in EV sales and an oversupply in China’s battery capacity are likely to weigh on demand for battery metals,” ANZ commodity analysts wrote in a note this morning.
“Lithium, cobalt and nickel are likely to remain oversupplied in the short term, but the response from producers in cutting output amid the low prices should limit the downside. We see a strong long-term outlook. Supply still needs to increase by a factor of 1.5 to 3.5 over the next five years, which is a difficult goal.”
Still, the Australian Government announced in May this year a $22.7 billion package to boost domestic manufacturing and renewable energy, including the production and refinement of critical minerals.
Spending under the Future Made in Australia scheme will be rolled out over the next decade, facilitating what Chalmers said at the time is Australia’s ambition to become a “renewable energy superpower”.
Write to Oliver Gray at Mining.com.au
Images: iStock
