Already a subscriber?Madeleine King was in her Converse All Star sneakers and jeans, recovering from a knee reconstruction.
They met in King’s office on the 38th floor of Exchange Plaza on July 25 last year to discuss suitable ways and means for the Albanese government to back the downstream processing of critical minerals. If the tens of billions of dollars are not invested in downstream processing plants and a generation of workers don’t develop the same sorts of skills and expertise that have made China so dominant in critical minerals, the money paid out in tax credits will be a fraction of $17.6 billion.Right now, no one is planning to build another lithium hydroxide plant in Australia.
AMEC looked at the 12 different types of tax concessions that have been used in Australia and decided none – including accelerated depreciation measures rolled out during the COVID-19 pandemic – were the right fit for what industry and government wanted. One of those companies was billionaire Chris Ellison’s Mineral Resources, whose tale shows the fickle and fast-moving nature of the critical mineral sector and politics.MinRes hired political wunderkind Tim Picton as executive general manager of corporate affairs in 2022.
WA-based conglomerate Wesfarmers, in partnership with Chilean company SQM, is building a third lithium hydroxide plant in WA at Kwinana and right next door to the still misfiring Tianqi plant that is now part owned by IGO Limited. A month earlier, Prime Minister Anthony Albanese had proclaimed he wanted Australia to move all the way downstream from mining to battery manufacturing.
MinRes was at the time trying to convince its New York-listed partner Albemarle to co-invest in a lithium hydroxide plant near their Wodgina mine in the Pilbara. Albemarle was in the midst of considering its next move after fielding a $5.5 billion takeover bid for Liontown Resources and its Kathleen Valley lithium project rejected.
There are now doubts about whether Albemarle will ever press ahead with trains 3 and 4, although the tax credits might help. Likewise, Tianqi and IGO have put plans to expand at Kwinana on the backburner. Wesfarmers and SQM moved last year to double production capacity at their Mount Holland lithium mine but did not match that with an increase in the size of their hydroxide plant.
The policy will provide a refundable tax offset of 10 per cent of the eligible costs of production for processing of critical minerals. The definition of eligible costs will be determined following consultations with relevant stakeholders. “It showed that unless we were prepared to get into the game and put some incentives on the table here in Australia, we were not only going to lose the opportunity for new industries, but we’d probably see some of existing industries go to the wall.”
“I think it’s important to separate those two issues, which is how do you support an industry in trouble versus how do you set up and start and support new industries,” he says.His biggest disappointment in the past few days has been the stand taken by the Liberal leader Peter Dutton and shadow treasurer Angus Taylor, and their “handouts for billionaires” commentary.