PM Albanese unveils $4bn critical minerals lending boost but miners want more incentives

The federal government has doubled the size of its critical minerals lending facility to $4bn but one high-profile miner says more needs to be done to build a local refining sector.

Jodie Haydon, Prime Minister of Australia Anthony Albanese, U.S. President Joe Biden and First Lady Jill Biden pose for photos after the arrival of Albanese on the South Lawn of the White House on October 24, 2023 in Washington, DC. (Photo by Anna Moneymaker/Getty Images)

Australia’s mining sector has given a mixed reaction to the federal government’s decision to double the size of its critical minerals lending facility to $4bn, with mining billionaire Chris Ellison lashing the decision to only offer up more debt finance.

Other major emerging critical minerals players cautiously welcomed the decision, however - but many noted more support, particularly around project approval timelines, was needed to help make Australia’s mining and processing sector more competitive in the face of the vast wave of government cash on offer in Austalia’s major allies.

Prime Minister Anthony Albanese made the announcement on his US visit overnight on Tuesday, saying the government would top up the Critical Minerals Facility established by its predecessor by making another $2bn available in government loans.

The bulk of the initial $2bn facility established by the Morrison government has already been allocated, with the majority going to back Iluka Resources’ rare earth refinery in WA.

Resources minister Madeleine King said on Wednesday the government was talking to US officials to help win additional support for Australian companies looking to establish non-Chinese critical minerals processing facilities that would help both Australia and key allies build domestic capability in the sector.

Mineral Resources managing director Chris Ellison.

“It will be a lot of different mines in a lot of different places and a concentration of processing facilities to make sure we make more of these things here and do more of the processing in Australia and then exporting that as opposed to the raw ores. And that’s an important part of the value-adding this government wants to achieve,” she said.

“But also our partners in the US that we’ve been speaking to, they also want us to make sure we lean into that as well. Because the demand for lithium and battery-based – the minerals needed for batteries, the demand around the world is so high we’ll all need to work together to make it happen and make sure there’s a diversified supply chain for every country around the world.”

But Mr Ellison, whose Mineral Resources is one of only a handful of Australian lithium producers, reiterated the company’s position that establishing debt facilities was not enough to help build a local refining sector.

“Other jurisdictions are offering significant grants and tax incentives for the same investment, in addition to often having a lower cost base and faster project approval timelines. We remain hopeful the federal government will seize the opportunity and help create more value in Australia from our raw materials,” he said.

“In the absence of further urgent action from government, it’s unlikely MinRes can justify the expense of building a downstream processing facility in Australia.”

MinRes has argued that production credits, and accelerated tax depreciation measures - and other direct grants and subsidies - will be needed to help Australia build a processing sector in the face of the trillions of dollars on offer in President Joe Biden’s Inflation Reduction Act.

Liontown Resources last week announced the federal government’s Export Finance Australia and Clean Energy Finance Corporation would back the company’s Kathleen Valley lithium project with $650m in lending facilities.

Chief executive Tony Ottoviano told The Australian the company’s discussions with the federal government indicated it was still looking for ways to extend further help to the sector, potentially including production credits, and he was hopeful offers of further support could still arrive.

“I think it‘s worth noting that the government has gone in and supported Iluka, it supported Pilbara Minerals, it’s supported us, it’s supported Lynas. Whilst they don’t have the size of wallet as the US, they haven’t done too badly and actually supporting projects that have gone off the ground.”

But Mr Ottoviano said there was additional support that could be extended by state and federal governments - even through simple measures such as opening up new land allocations in major industrial estates.

“It would be helpful just to be able to get land to be able to build processing plants, because industrial scale land in WA is at a premium,” he said.

Core Lithium boss Gareth Manderson also welcomed the federal government’s announcement, but also identified streamlined approvals processes as a key to helping the sector grow.

““Meeting global emissions targets requires government assistance including financial support and an enabling regulatory framework to bring critical minerals projects online and satisfy global supply demands.,” he said.

Originally published as PM Albanese unveils $4bn critical minerals lending boost but miners want more incentives