The federal government is fast-tracking production tax credits to try to protect the failing Australian nickel mining industry, on top of the 50 percent royalty discount over 18 months announced by the Western Australian (WA) government.
The measures are in response to warnings from mining giant BHP and other nickel miners that they may have to cease operations—with the loss of thousands of jobs—because of a glut of low-priced minerals being produced by Indonesia and China.
Credits may also have to be extended to lithium miners if the price of that commodity also continues to fall.
BHP was making $36,838 ($US24,021) a tonne for its nickel in 2022/23 but the price has plummeted in the past 12 months to about $US16,000 a tonne.
Ahead of the federal cabinet meeting in Perth today—to which WA Premier Roger Cook has been invited—Prime Minister Anthony Albanese said the government was “looking towards smart, targeted, time-limited support.”
“This is a short-term issue for what is in the long term, a very critical industry for Australia,” he told reporters on Feb. 19.
Scheme to Try to Lure Green Investment
On Feb. 16, the government added nickel to the official list of critical minerals and announced it was looking at a scheme to try to rival the United States’ Inflation Reduction Act, which is luring green technology investment with hundreds of billions of dollars in subsidies and other measures.While admitting Australia couldn’t match the U.S. dollar-for-dollar, Mr. Albanese said it could “go toe-to-toe on the quality and impact of our policies.”
A detailed announcement isn’t expected following Cabinet today, as Treasury is still working on a plan.
Miners Seek Tax Credits
Meanwhile, the Association of Mining and Exploration Companies (AMEC) and other industry sources have proposed a production tax credit.It would be worth at least 10 percent of the cost of production of value-added critical minerals, including labour, utilities, chemical inputs, and maintenance and would either offset a miner’s tax bill or, if they had no tax to pay, see them receive a payout of the same amount.
The Association estimates this would cost the government $340 million across the forward estimates to 2028 and a further $1.69 billion from 2028/29 to 2034/35, while adding $2.4 billion to the size of the Australian economy and creating more than 4,200 new jobs.
Speaking at the Munich Security Conference on the weekend (Feb. 17 and Feb. 18), Mr. Forrest said the collapse in nickel prices reflected an unfair playing field between countries like Australia and Canada, which adhere to high environmental standards, and Indonesia and China, who are flooding the market with cheap product.
“You’re going to find that ... Indonesia will only deal with China because Chinese-backed companies will come straight in and they will do what is happening in Indonesia right now, which is wiping out terrestrial ecosystems, dumping all the waste into the ocean, wiping out marine ecosystems, wiping out the sustainability of communities which have been there for centuries and, ‘oh, that’s all OK because we’re just going to pay a dollar-price for it,’” Mr. Forrest said.
