Introducing production tax credits would revitalise Australia’s mining sector says AMEC

Leading resources industry lobby group the Association of Mining and Exploration Companies (AMEC) believes the introduction of a tax credit could help the critical minerals sector rebound from its current struggles.

AMEC chief executive Warren Pearce has taken a delegation of miners to Canberra to discuss the option of a production tax credit (PTC).

The delegation included companies crucial to the critical minerals sector such as Wyloo Metals, IGO (ASX: IGO), Australian Vanadium (ASX: AVL), QEM (ASX: QEM) and Pilbara Minerals (ASX: PLS).

“Today’s meetings provided an opportunity to relay the real struggles facing the industry at the moment,” Mr Pearce said.

“It also sends a strong message to the federal government that the time for action is now.”

Nickel issues raised

In mid-February, the federal and Western Australian governments introduced new measures which they hoped would halt the potential shutdown of Australia’s nickel industry.

While the moves were welcomed by the industry, there was a suggestion that not enough had been done.

AMEC has now grabbed the bull by the horns and confronted the federal decision-makers in Canberra.

A lever to pull

“The upcoming federal budget provides [the] treasury with a lever to pull that will reinvigorate the critical minerals sector and help Australia compete further downstream,” Mr Pearce said.

“If Australia wants to be more than a dig and ship country, now is the time to provide [the] incentives required for the energy transition vision.”

Mr Pearce said AMEC was able to present an economic model that reflects the introduction of PTC into Australia in the style of the US Inflation Reduction Act (IRA).

The strategy was developed by the economic strategy and policy consulting firm Mandala Partners after they were contracted by AMEC in 2023.

The study concluded that a 10% tax credit for downstream materials producers would reduce the production cost disadvantage faced by Australian projects compared to the USA.

Mr Pearce said the implementation of a PTC is part of a future where Australia goes from having critical minerals strategies to delivering on them, creating thousands of new jobs and a new high-value industry for Australia.

He said there have been over 1,500 different incentive programs aimed at securing a piece of the critical minerals supply chain introduced across the globe.

No monopoly on success

“Australia has no monopoly on success,” Mr Pearce said.

“Just because we have the minerals in the ground doesn’t mean we are guaranteed to get the investment needed to find, mine and add value to them. It provides us with an opportunity, but that is all.”

“Right now, these are some of the hard truths that need to be recognised.”

“Australia has lengthy approvals timeframes, is an expensive place to do business and is seeing investment lured overseas by global incentives such as the IRA.”

“The PTC report focuses on what Australia can do to compete with nations that are moving the dial on incentives. Nickel is a canary for the critical mineral sector.”

“Beyond the thousands of local jobs already lost, we now face the real risk that new critical minerals value-adding projects in Australia will simply not happen because our competitors have moved first.”