The federal and Western Australian governments are teaming up to bolster Australia’s critical minerals processing power, amid a surging willingness on the part of global government finance bodies to invest in critical minerals projects and entities.
Minister for Resources and Northern Australia Madeleine King and WA Mines and Petroleum Minister David Michael yesterday (4 February) announced a joint $3 million investment to support a Feasibility Study for a common user Critical Minerals Advanced Processing (CMAP) facility in Western Australia.
The study will be led by the Minerals Resources Institute of Western Australia, with the funding under the $10.2 million Critical Minerals National Productivity Initiative to investigate a facility to be built in the Perth region.
The critical move comes amid predictions of further government involvement in the sector this year.
In 2025, global commercial law firm Allens anticipates an increasing willingness on the part of government finance bodies to invest directly in critical minerals projects and entities in the form of long-term commitments (including in the absence of private sector capital).
Allens also expects like-minded partners to increase international cooperation and coordination on their strategy for critical minerals investment (this is part of a broader theme of national governments seeking to align foreign investment, security alliances and trade alliances).
“Critical minerals transactions are likely to be subject to ever greater geopolitical and regulatory risks,” the firm notes.
Australia’s list of 31 critical minerals contains minerals essential to the country’s modern technologies, economies and national security, specifically the priority technologies set out in its Critical Minerals Strategy. The list of minerals are those for which Australia has geological potential for resources, are in demand from strategic international partners, and are vulnerable to supply chain disruption.
Australia’s list includes critical minerals such as high-purity alumina, antimony, gallium, graphite, indium, lithium, manganese, nickel, REEs, tungsten, and vanadium, among others.
There’s many in the junior exploration space currently focused on such minerals. These include ABx (ASX:ABX), Astute Metals (ASX:ASE), Black Canyon (ASX:BCA), Burley Minerals (ASX:BUR), Cazaly Resources (ASX:CAZ), Critica (ASX:CRI), Firebird (ASX:FRB), Iltani Resources (ASX:ILT), Impact Minerals (ASX:IPT), Kingsrose (ASX:KRM), QEM (ASX:QEM), Solis Minerals (ASX:SLM), and Victory Metals (ASX:VTM).
Minister King says the Critical Minerals Advanced Processing facility announced yesterday will be home to pilot plant equipment for small and medium sized businesses to undertake downstream processing of critical minerals and strategic materials at demonstration scale.
“Common user facilities are an important piece of the puzzle when it comes to scaling up our capacity to process our mineral resources here onshore – while securing more of the value chain,” the minister says.
“By equipping local businesses with the tools to process what they dig up, we’ll not only be helping them collaborate and grow but also enhancing our economic resilience and further strengthening Australia’s sovereign capability.”
It’s the latest move by various Australian governments to bolster its influence in the global critical minerals sector. The federal government is already committing an estimated $7.1 billion over 11 years from 2023-24 to support the refining and processing of critical minerals (which also includes the Critical Minerals Production Tax Incentive), plus the recently announced additional $21 million funding to support five critical minerals projects across Western Australia, Queensland, and South Australia.
In November 2024, the federal government introduced legislation that will provide tax incentives for critical minerals production. 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. To date, the inquiry has received wider industry support, with an acknowledgment that the Critical Minerals Production Tax Incentive (CMPTI) has the potential to benefit and further motivate companies with current and future projects in Australia.
In July, the government said it was providing a $2.5 million grant for a new CSIRO research program to support critical minerals technology and strengthen international collaboration on critical minerals science. The grant is financed through the Australian Critical Minerals Research and Development (R&D) Development Hub.
An international R&D collaboration scan, strategic R&D projects across critical minerals technologies, international science delegations, scholarship networks, and a critical minerals research summer school for domestic and international researchers are being funded through the grant.
Also in July, the federal government said it is aiming to boost downstream processing and strengthen the country’s sovereign capabilities by providing $13 million in grants to critical minerals projects in Queensland and South Australia, as reported by Mining.com.au.
The grants, provided through the International Partnership in Critical Minerals program, will cover up to 50% of project costs and help build diversified supply chains with support from the US, Japan, and Republic of Korea.
Competitive advantages over China
Meanwhile, the Western Australian Government in 2024 announced a Lithium Industry Support Program valued at $150 million designed to preserve the state’s critical minerals industry, including the temporary waiver of government fees to support downstream processing (valued at $90 million).
As part of this, mining companies in the ramp-up phase will have port charges and tenement fees waived for 24 months. A $50 million loan facility to provide miners with temporary interest free loans to sustain their operations is also being rolled out.
Western Australian Minister for Mines and Petroleum David Michael says the upcoming Feasibility Study for a common user Critical Minerals Advanced Processing facility in WA is another step to help position the country as an important player in the global battery and critical minerals sector which underpin decarbonisation efforts.
“The Cook government aims to capture more value onshore, with a particular focus on expanding our advanced processing capabilities and or ‘midstream’ industries. To achieve these ambitions, a Critical Minerals Advanced Processing facility capable of demonstrating critical minerals processing to a more advanced value-added stage, will lead to the development of greater onshore processing and manufacturing opportunities, over the next 10 to 20 years,” Michael says.
“A Critical Minerals Advanced Processing facility capable of demonstrating critical minerals processing to a more advanced value-added stage will lead to the development of greater onshore processing and manufacturing opportunities, over the next 10 to 20 years”
With competitive advantages such as economies of scale, abundant capacity, and various government subsidies, China remains the single most dominant global player in the critical minerals space.
One defining characteristic of China’s influence is lower labour costs. A recent Goldman Sachs report found that the operation of a $230 million, 50 kiloton per annum lithium hydroxide plant in China would cost $650 million in Australia.
However, other governments around the world are increasingly recognising that China wields significant influence over critical minerals processing and battery manufacturing, and this concentration creates real geopolitical risks.
These global economies are implementing their own critical minerals initiatives designed to reduce such influence. For example, the US Inflation Reduction Act and Jobs Act and the European Union’s Critical Raw Materials Act in 2024 led to an increase in the number of country-specific and multi-national efforts to address the imbalance.
The US government in May 2024 announced an increase of the tariffs on Chinese EV exports to the US from 27.5% to 102.5%, and that tariffs on batteries and battery parts would increase from 7.5% to 25%.
In October last year, the Biden administration announced new guidance enabling producers to claim tax credits on mining and extraction costs of critical minerals (as long as they process some of the material).
Meanwhile, US President Trump has since placed duties of 25% on imports from Mexico and Canada, and a 10% tariff on all imports from China. The tariffs came into effect on Tuesday. All three countries have since announced tariff countermeasures.
The European Commission began imposing import duties on Chinese battery electric vehicle (BEV) producers on 5 July 2024.
According to Allens, the surge in the size and scale of these government-sponsored initiatives is promising, and indicates that the rhetoric of Australia and other governments as to their ambition for critical minerals is starting to be matched by the scale of the investment required.
“Although the (incumbent) Trump administration has indicated a desire to wind back some of the Biden administration’s policies, including the IRA, we believe that bipartisan agreement on the need to build critical minerals security in the US will ensure that US Government support for critical minerals remains strong,” the firm notes.
“This has recently been most clearly demonstrated by the (Australian) federal government re-affirming its commitment to Iluka’s vision to establish a domestic rare earths supply chain, by upsizing the funding package provided for construction of the Eneabba Rare Earths Refinery.
“The terms of this additional investment include a further $400 million in construction facilities and $75 million for cost overruns at the same attractive, low interest rate of BBSY+3% offered under the initial funding support announced in April 2022.
“The expanded financing, which now totals $1.725 billion of non-recourse government-funded support, is intended to see Iluka through construction and into commissioning of the Eneabba Rare Earth Refinery in 2027.”
In Australia, there has been broad support for the aforementioned Critical Minerals Production Tax Incentive. According to the Association of Mining and Exploration Companies (AMEC), if Australia wants to diversify and achieve its aspirations to further downstream critical minerals, such a tax incentive will make the country competitive.
AMEC is taking part in the Senate Economics Legislation Committee’s inquiry into the Australian Government’s proposed Future Made in Australia production tax credits. As part of the legislative process, AMEC acting CEO Neil van Drunen represented members and stakeholders to answer questions and detail the association’s support for the bill.
The inquiry is considered an essential part of the process as it provides an opportunity for industry and multiple sectors to be consulted on the tweaks and adjustments required for the plan to work.
AMEC’s van Drunen says the inquiry was held at the right time and is considered a positive step in the right direction to ensure proper consultation leads to better outcomes.
Write to Adam Orlando at Mining.com.au
Images: iStock, Iluka & WA Government
