Labor picks a $400m energy transition ‘winner’

Labor will inject $400m to help develop a green alumina processing facility in Queensland in its first cash-splash under the Future Made in Australia policy banner.

Federal Treasurer Jim Chalmers. Picture: NCA NewsWire / Martin Ollman

Labor will inject $400m to help develop a green alumina processing facility in Queensland in its first cash-splash under the Future Made in Australia policy banner, as Jim Chalmers sought to downplay the fiscal impact of the policy in declaring it would not be a “free-for-all of taxpayer funds”.

The new loans to Australian firm Alpha HPA would create hundreds of jobs in the regional town of Gladstone, and comes as the government also recommitted to a $185m loan to fast-track a graphite mine project on the Eyre Peninsula in South Australia.

Anthony Albanese, who will make the announcements on Wednesday just days after ­unveiling Labor’s flagship economic policy to take to the next election, said: “We are building a future made in Australia with secure jobs in our regions. The global race for new jobs and new opportunities is on. Our government wants Australia to be in it to win it.”

The latest taxpayer-backed funding comes barely a month after the government announced it would underwrite almost $1.1bn in loans and grants to build a rare earths mine and refinery in the Northern Territory and support a major West Australian lithium mine.

Writing for The Australian, the Treasurer mounted a robust defence of the Future Made In Australia bill against the “naysayers” who have warned it risked wasting taxpayer money on propping up uncompetitive industries, saying the aim was to “incentivise the private sector, not replace it”.

While Mr Albanese last week talked up heavy-handed government intervention, Dr Chalmers wrote that governments would pay for only “a sliver” of the $225bn in new investment needed to turn the nation into a global leader in renewable energy and green industries by the middle of the century. “This is a huge challenge but not unprecedented. During the formation of Australia’s gas industry, more than $300bn was ­invested in LNG projects over a much shorter period,” the Treasurer said.

Ahead of a budget set to include a package of tax and spending measures to boost investment and aimed at lifting the country’s economic speed limit over coming years, Dr Chalmers promised that the Future Made in Australia Act would “impose very strict policy frameworks and institutional arrangements … focused on where we have genuine economic advantages and compelling national security imperatives”.

“This is how we align our national and economic security interests and deliver another generation of prosperity, by making ourselves an indispensable part of the global net-zero economy,” the Treasurer said.

Labor’s new industrial policy has raised serious concerns among a range of experts – including Productivity Commission chair Danielle Wood – that taxpayer-funded subsidies would divert increasingly scarce resources away from more competitive sectors at a time of low productivity and mounting budgetary pressures.

But Dr Chalmers, who leaves for Washington DC on Wednesday morning for meetings with G20 ministerial counterparts and central bank governors, argued that a new approach was required in a changing world.

“It’s not a return to the approaches of the distant past, it’s about giving ourselves the right tools and the right settings to meet future challenges,” he said.

“Protectionism was about building walls, this is about building foundations. We want to build competitiveness and productivity, not underwrite profits.

“We want to position ourselves as an indispensable part of the global economy of the future, not shut ourselves off from the world. That’s why a Future Made in Australia is a defining motivation of the Albanese government and a key part of the third budget we’ll hand down next month.”

Alpha HPA, whose shares were suspended on the ASX on Tuesday pending the announcement of the new government funding, boasts it uses an innovative process to create a wide range of alumina products with substantially lower emissions and less waste. Alumina is considered a critical mineral for the green economy and is used in making LED lighting, semiconductors and lithium-ion batteries. The government expects the project will create around 490 jobs in building the facility, and more than 200 jobs once it becomes operational.

The loans will be provided by Export Finance Australia, and jointly funded through the EFA’s commercial account, the government’s $4bn Critical Minerals ­Facility, and the Northern Australia Infrastructure Facility.

Resources Minister Madeleine King said “the road to net zero runs through Australia’s resources sector”.

“Gladstone is a city of great importance to the economic strength of northern Queensland and to the country and this project will put the city at the forefront of Australia’s critical minerals industry,” she said.

The government also conditionally approved $185m in loans for Renascor Resources to fast-track the first stage of its graphite mining and export project in the Arno Bay on the Eyre Peninsula.

Stage one will create 150 construction jobs, and 125 jobs once operational, the government said.

Renascor aims to eventually produce Australian-made purified graphite for use in the lithium-ion batteries that power electric vehicles and renewable technologies.