Calls for a Production Tax Credit (PTC) for critical minerals industry
AMEC commissioned Mandala Consulting to work with 10 companies that are developing lithium, nickel, rare earth, and vanadium projects in Western Australia to prepare a report that details what Production Tax Credit (10%) is necessary to offset some of the market distortionary impact of the United States Inflation Reduction Act.
The USA’s Inflation Reduction Act (IRA) has globally shifted investment in downstream processing of critical minerals to the US and away from Australia. The 10% Production Tax Credit (PTC) component of the IRA reduces operating costs in the US for eligible projects.
The AMEC Mandala PTC report quantifies that a 10% Australian PTC will reduce the production cost disadvantage faced by Australian projects. Unfortunately, a PTC is not a “silver bullet” or panacea: Australia has long approvals timeframes, land access issues and high construction costs. However, an Australian PTC would make the cost of doing business, once in production, more competitive.
If Australia wants to diversify and achieve its aspirations to further downstream critical minerals, an Australian PTC will make us more competitive. Furthermore, a PTC delivers on the Commonwealth Government commitments and aspirations outlined in the Critical Minerals Strategy.
While in Canberra in the week of 13 November, AMEC briefed the Government, Opposition and crossbench of the report. AMEC worked with members to launch the report, with coverage in both National and State based media publications. AMEC are also briefing key Treasury staff and the Government ahead of the upcoming 2024-25 Commonwealth Budget.
AMEC also met with Cabinet Ministers, Government departments and the Opposition during a recent sitting week to discuss a range of issues including the migration reforms, the Junior Mineral Exploration Incentive and the raft of environmental and climate change reforms underway.
Environment Protection Biodiversity Conservation Act Reform
The Commonwealth Government continues to move towards delivering legislative reform to the Environment Protection Biodiversity Conservation Act 1999 in 2024. AMEC was in Canberra twice in November to consult on the proposed reforms and speak with decision makers regarding the concepts being discussed. AMEC returns to Canberra in December to further consult on the next steps. AMEC has persisted with reiterating our key concerns regarding the lack of open, public consultation and the inevitability of State and Commonwealth duplication and excessive timeframes. The Standard for Data particularly has been highlighted as difficult to achieve and retrospectively will invalidate much of the data already relied upon. AMEC also continues to discuss these reforms with a range of State and Territory governments.
The Government maintains that the legislation will likely be introduced in the winter sitting of 2024. AMEC is forming a National EPBC Working Group to continue supporting our advocacy efforts on behalf of members and industry.
Climate Change Reform
The Commonwealth Government continues to drive a substantial and wide-ranging climate change reform agenda with both DCCEEW and the Treasury recently consulting on measures. The Treasury concluded a consultation on an expansive discussion paper on multiple aspects of Sustainable Finance, including climate change data taxonomy which AMEC has called for in the past, green bonds and establishing a market for environmental financial instruments. The Australian Accounting Standards Board is also consulting on the inclusion of Accounting Standards for Sustainable Finance, concerningly Scope 3 emissions measurement features heavily. Minister for Climate Change, the Hon Chris Bowen MP used a speech to launch Australia’s response to the Carbon Border Adjustment Mechanism, which is simultaneously out for consultation via the Carbon Leakage Review and closed on 12 December. The Commonwealth reform agenda for Climate Change remains a Commonwealth advocacy priority for AMEC.
To learn more please contact Neil van Drunen on 0407 057 443.