An inquiry by the Senate Economics Legislation Committee has recommended the Federal Government’s Critical Minerals Production Tax Incentive be passed in Parliament.
But what is the Critical Minerals Production Tax Incentive and how has the Australian mining industry responded to it? Australian Mining investigates.
The legislation
The Critical Minerals Production Tax Incentive will provide eligible recipients with a refundable tax offset of 10 per cent for the costs of processing 31 critical minerals currently listed in Australia. These include antimony, lithium, nickel, rare earths elements and vanadium.
Originally announced last November, the credit will be available for a maximum of 10 years between July 1 2027 and June 30 2040.
The Critical Minerals Production Tax Incentive is part of the Federal Government’s Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024, which encourages innovation by giving firms various demand- and supply-side incentives to invest in developing and deploying clean energy technologies, while helping Australia transition to net-zero.
Through the Future Made in Australia policy, $22.7 billion will be invested in five key areas, including utilising natural resources and critical minerals.
“Our production tax incentives will help unlock private sector investment to build a stronger, more diversified and more resilient economy powered by renewable energy that creates secure, well‑paid jobs around the country,” Federal Resources Minister Madeleine King said.
“The credits are designed to reward success, as the government only pays once a company has processed or refined critical minerals in Australia … Our $13.7 billion in production tax incentives for green hydrogen and processed critical minerals are about more jobs and opportunities for Australian workers.”
Industry response
The Critical Minerals Production Tax Incentive has received support from various mining industry bodies, including the Association of Mining and Exploration Companies (AMEC) and the Chamber of Minerals and Energy Western Australia (CMEWA).
AMEC previously released a report, ‘Production Tax Credit for value-add processing of Australia’s critical minerals’, which detailed how implementing a production tax credit will enable Australia to go from having critical minerals strategies to delivering them through the creation of thousands of new jobs and a high-value industry for the country.
CMEWA chief executive officer (CEO) Rebecca Tomkinson said legislating production tax incentives for critical minerals processing and renewable hydrogen production must be prioritised.
“The road to net-zero should run through Western Australia – but it won’t without recognition that we are competing against jurisdictions that are rolling out the red carpet for downstream processing,” Tomkinson said in December.
According to the Federal Government, the Minerals Council of Australia also gave evidence supporting the Critical Minerals Production Tax Incentive.
In light of the Cassini, Long and Durkin nickel mines in WA temporarily shutting down due to the global nickel downturn, Wyloo CEO Luca Giacovazzi said Australia needs to incentivise the country’s downstream opportunities through a 10 per cent production tax credit.
The Future Made in Australia legislation is currently before the House of Representatives, having already passed in the Senate.
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