CRITICAL MINERALSWho Will Benefit from Australia’s Critical Minerals Strategy?
Critical mineral projects will be favored for Australian federal government loans under its new critical minerals strategy, but there are to be no tailored tax breaks. Nor are there any plans to make downstream processing a condition of mining or export approvals.
Critical mineral projects will be favored for federal government loans under its new critical minerals strategy, but there are to be no tailored tax breaks. Nor are there any plans to make downstream processing a condition of mining or export approvals.
The strategy, released this week by Resources Minister Madeleine King, is more a description of what the government is doing than a charter for a bold new direction.
The government hopes that its provision of base funding for critical minerals projects will attract larger flows of private-sector investment.
Funding is being delivered through an array of public-sector funds. The headline ‘announceable’ in the strategy was the direction that the Northern Australia Infrastructure Fund would earmark an additional $500 million for lending to critical minerals projects, particularly those that involve downstream processing.
There is also the $2 billion Critical Minerals Facility, administered by Export Finance Australia, which was the vehicle used to provide a $1.25 billion non-recourse loan to Iluka Resources to build a plant to process its large stockpile of rare-earth-rich sands at Eneabba in Western Australia.
That facility has also funded two smaller projects—$185 million to Renascor Resources for a graphite mine and processing plant and a US$40 million loan to EcoGraf for a battery anode material plant at Kwinana.
The government’s new $15 billion National Reconstruction Fund, designed to stimulate domestic manufacturing, also sets aside $1 billion for ‘value-add’ resource projects and $3 billion for ‘renewables and low-emission technologies’, which can be accessed by critical industry projects.
The strategy paper also suggests that the $6.5 billion Clean Energy Finance Corporation could also be tapped by critical minerals projects. Across all funds, it says there have been nine loans so far to critical minerals projects totaling $2.3 billion.
The fact that only nine loans have consumed what must be a material share of the potentially available funding highlights the limits of this approach. The strategy paper mentions that there are 81 ‘major critical minerals’ projects underway, with an estimated value of between $30 billion and $42 billion. The Australian Securities Exchange has 87 lithium companies on its list worth $50 billion (excluding Rio Tinto) and 38 rare earths companies worth a combined $16 billion. Plainly, only a lucky handful will get a government loan. It is at risk of becoming a lottery.