Miners fire warning shot on critical minerals

The Minerals Council of Australia believes the ‘jury is still out’ on whether a budget boost would attract any additional investment in the nation’s critical minerals processing.

Minerals Council of Australia chief executive Tania Constable at Australia's Economic Outlook conference.

Minerals Council of Australia chief executive Tania Constable has called for more details on how the federal government’s proposed tax credits for critical minerals processing will work, amid fears over whether the incentive will spur new investment in the sector.

Ms Constable said if the new production tax credits announced in the federal budget did not generate any new investment in critical minerals processing in Australia they would be a failure and a waste of taxpayer money.

She said the “jury is still out” on whether the policy announced in the budget would actually lead to such additional investment.

“With the Future Made in Australia (policies announced in the budget) we need to see more detail, particularly around the production tax credits,” Ms Constable said at Australia’s Economic Outlook conference in Sydney on Friday, hosted by The Australian and Sky News.

“We think it will be for processing and refining. But it needs to deliver additional investment. If it is just about investment that we already have, then it’s a failure. The jury is still out.”

Treasurer Jim Chalmers announced a critical minerals production tax incentive of 10 per cent of eligible processing costs for the 31 critical minerals on the official list as part of the government’s Future Made in Australia policy.

The policy, which is estimated to cost $7bn in the decade from 2024-25, is scheduled to start on July 1, 2027.

But the mining sector is still seeking details on how the new policy will work and which projects might be eligible for credits.

Ms Constable told The Australian the mining industry wanted the credits to apply to the processing of copper, which also was a critical mineral for the energy transition. She said the mining industry needed to see more fundamental issues addressed before it could start making decisions on new investments around minerals processing.

“There are fundamental issues which really need to be addressed,” she said.

“Taxation needs to be addressed; we have an arcane industrial relations system, which has just been passed into legislation; we have difficulty with environmental approvals, which are taking way too long, which need to be streamlined.

“We have got energy costs that are way too high compared with the rest of the world. These things really have to be addressed. We need to get the fundamentals right and then other issues such as incentives will be welcomed.”

Ms Constable told The Australian after the panel that chief executives in the mining industry told her their cost structures were very high in Australia compared with other parts of the world.

“Unless you get those major areas right (tax, energy costs and speed of approvals), it doesn’t matter what other incentives you put in place, you might not even neutralise any of those fundamental (problems).

“If you can get the fundamentals right, then the incentives will give you that extra competitive edge, hopefully.”

But she said the mining industry had not seen any details on which companies in the production chain might be entitled to the new production tax credits.

“We are looking forward to working through those details with the government, but it has to (generate) additional investment, otherwise it is a waste of taxpayer money.”

Ms Constable said there also needed to be a debate in Australia over the potential use of nuclear energy.

“We have a lot of uranium in Australia, with very high reserves in this country, so it makes sense to look at a move up the value chain.”

She said Australia should not narrow its options for future energy sources when it was transitioning away from the use of coal.

“The Prime Minister is talking about clean energy,” she said. “There is no cleaner energy than nuclear power. We are certainly seeing that across the world.”

Australia would need more energy in the future with a growing population and demand for energy for new technologies such as artificial intelligence.

“It makes sense to get renewables on to the grid as quickly as possible and do what we can around transmission and distribution across the country. But it is very expensive to roll out transmission and distribution lines.”