Australian Vanadium supports Production Tax Credit incentive

Australian Vanadium (ASX:AVL) welcomes news of the introduction of a Production Tax Credit (PTC) for critical mineral companies in Australia by the federal government.

The company, which has an asset in Western Australia and a vertically integrated vanadium supply chain strategy to support Australia’s energy transition, has worked with the Association of Mining and Exploration Companies (AMEC) in its engagement with the government regarding the PTC regime.  

Australian Vanadium proposes to develop the Australian Vanadium Project, a long-life asset 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). 

Chief Executive Officer Graham Arvidson says it’s highly encouraging to see the Australian government recognising and supporting the important role critical mineral developers play in the economic growth of the country and the benefits these projects and their downstream industries bring. 

Arvidson says the PTC will help to foster onshore initiatives for downstream, value adding activities, allowing Australia to capture more of the value of its resources. 

“We view the PTC initiative as complementary to existing government funding options available to the  mining and energy industries such as the Northern Australia Infrastructure Facility (NAIF), Export Finance Australia (EFA) and the Clean Energy Finance Corporation (CEFC),” he notes.

VFBs are a long duration energy storage battery slated to play a key role in storing and time shifting energy produced from renewable sources. In a February 2023 update to its 2022 Electricity Statement of Opportunities Report, the Australian Energy Market Operator confirmed the urgent need for investment in long duration storage over the next decade. 

Australian Vanadium is already taking vanadium oxides further downstream, with its recently commissioned vanadium electrolyte manufacturing facility in Perth. Vanadium electrolyte is a key component of VFBs which uses vanadium’s unique properties to store and discharge energy. 

Arvidson notes a PTC related to downstream, value-added processing of critical minerals will help stimulate investment in Australian downstream critical minerals projects, including the Australian Vanadium Project. It will also help to financially de-risk such projects, thereby making them  more amenable to funding from both debt and equity providers, he adds.

He says the introduction of the PTC will improve Australia’s global competitiveness in the value-added production of critical mineral products, including vanadium oxides and vanadium electrolyte. 

It will help level the playing field with the US, which implemented its own PTC regime as part  of the Inflation Reduction Act (IRA) and could help reduce capital flight from the Australian economy. Importantly, the PTC will provide a strong and globally cost-competitive platform for  the development of a vertically integrated VFB industry in Australia, which is greatly needed to help provide a solution for Australia’s long duration energy storage challenges. 

AMEC also commends the announcement of the PTC in last night’s 2024-25 Federal budget.

AMEC Chief Executive Warren Pearce says a PTC incentive is the cornerstone of the ‘Future Made in Australia’ strategy and sends a clear message to Australians and the world that Australia means business.

As part of its advocacy, AMEC has been working closely with Minister for Resources Madeleine King for over a year to develop this proposal and embrace our country’s downstream opportunity. 

A Critical Minerals Production Tax Incentive will provide a 10% tax credit to companies undertaking downstream processing that value-adds to raw minerals.

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Images: Australian Vanadium
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Written By Adam Orlando Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.