Australian Vanadium (ASX:AVL) says it supports the federal government’s Critical Minerals Production Tax Incentive following the introduction of the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 to Parliament.
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 modern technologies, economies, and national security, as reported by Mining.com.au.
Australian Vanadium notes the tax incentive is targeted to stimulate investment in Australian downstream critical minerals projects, which would assist projects like tits Western Australia-based vanadium asset.
It will assist in financially de-risking such projects, making them more amenable to funding from both debt and equity providers. This has the potential to support the development of funding markets for the critical minerals industry, the company adds.
According to the government, the scheme will run for 10 years per project, starting in June 2028.
Australian Vanadium is focused on vanadium extraction and processing in the Mid West of Western Australia to produce vanadium oxide products suitable for use in vanadium flow batteries (VFBs).
VFBs, with its underlying technology developed in Australia 40 years ago, are a long duration energy storage battery slated to play a key role in storing and time shifting energy generated from renewable sources.
Australian Vanadium is already taking vanadium oxides further downstream, through its vanadium electrolyte manufacturing facility in Perth.
Vanadium electrolyte is a key component of VFBs which use vanadium’s unique properties to store and redeploy energy. The company says it is well positioned to participate in the vanadium value chain in Australia through its pit-to-battery strategy.
Australian Vanadium says the introduction of the incentive has the potential to assist in developing a strong and globally cost-competitive platform for a vertically integrated VFB industry in Australia, which is greatly needed to help provide a solution for Australia’s long duration energy storage challenges.
In the case of the Australian Vanadium Project, the Critical Minerals Production Tax Incentive could apply to eligible production costs at two stages of the company’s vertically integrated operations.
It may apply at the processing stage of vanadium oxide production at its proposed vanadium processing plant and in the production of vanadium electrolyte at its vanadium electrolyte manufacturing facility.
The Australian Government announced in May 2024 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 is Australia’s ambition to become a ‘renewable energy superpower’.
Write to Adam Orlando at Mining.com.au
Images: AVL
