Critical Minerals Production Tax Incentive (PTI)

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Production Tax Credit (PTC) for value-add processing of Australia’s critical minerals

Commissioned by the Association of Mining and Exploration Companies (AMEC) and prepared by Mandala

Project Industry Participants


A Production Tax Credit is a refundable tax credit.  A refundable tax credit means a qualifying recipient receives a direct reduction in their tax bill.  If a qualifying proponent does not have a tax bill, they receive cash instead.

A producer that has $1 million in eligible costs would generate a tax credit of $100,000. If, at the end of the year, the company had a tax bill, it would be reduced by $100,000. If it did not have a tax bill, the company would receive a refund of $100,000.

If introduced, a Production Tax Credit as modelled by Mandala Partners for AMEC would be for the costs of the post refining stage, that facilitates down stream processing. The proposed PTC applies the United States of America’s Inflation Reduction Act (IRA) Advanced Production Tax Credit.

An Australian Production Tax Credit would require the Commonwealth Government to make changes to taxation legislative framework. This could be done in time for the upcoming 2024 Commonwealth Budget.

The report models an additional $2.4Billion of additional economic activity from Australia’s Critical Minerals sector and over 4,000 extra jobs by 2030. However, the real benefit is that Australia competes and has a downstream critical mineral sector. The world has shifted, and if Australia wants to compete, a PTC is needed – as well as a strong consideration of regulatory reform.

The modelled credit has been built off the Inflation Reduction Act (IRA), so like the USA, the proposed modelling excludes feedstock. One amendment made from the USA model is that the tax credit is not tradeable.

The modelling has been applied to Lithium, Vanadium, Rare Earths and Nickel organisations. However, the implementation of a Production Tax Credit is ultimately up to the Commonwealth Government. 

From the LEADERS...

Source: Prime Minister of Australia (2023) Press Conference – Lafayette Park –Washington DC; The Hon Madeleine King MP (2023) Speech to the ASPI Darwin Dialogue; The Hon Chris Bowen MP (2023) Speech on Australia as a Renewable Energy Superpower, Australian Embassy, Japan; The Hon Ed Husic MP (2023) Supporting Australia’s battery manufacturing industry to charge ahead; Ministers (2023) Keynote address to the Economic and Social Outlook Conference, Melbourne;