The Federal Government has added an additional $2 billion in subsidies, creating a $4 billion fund for Australian miners and exporters of critical renewable minerals, particularly battery materials. This fund will support both large and small miners, as well as those developing specialized devices for renewable technologies.
Prime Minister Anthony Albanese unveiled this plan during his visit to the United States, aiming to further stimulate the already thriving exploration and discovery of minerals like lithium, nickel, and other vital components for batteries and renewable technologies.
This $2 billion commitment will double the capacity of the existing critical minerals facility to $4 billion, coinciding with negotiations between Australia and the US to enhance resource supply and reduce dependency on China, aligning economic and security objectives.
Resources Minister Madeleine King recently met with US Commerce Secretary Gina Raimondo and industry leaders to discuss the financing plan. There is hope that Australian supplies can help alleviate shortages in American companies producing batteries, wind turbines, and other technologies.
Prime Minister Albanese stated, "Australia is committed to building sustainable and secure critical minerals supply chains with the United States. This is central to building a clean energy future and delivering economic growth."
Ms. King emphasized that finding and exporting more critical minerals will be crucial in achieving the national goal of increasing renewable energy and achieving net-zero carbon emissions by 2050, stating, "The road to net zero runs through Australia's resources sector."
The critical minerals facility, established by the Morrison government in 2021, has already made significant deals, including a $1.25 billion loan to Iluka Resources to develop a rare earths refinery in Western Australia. The facility, managed by Export Finance Australia, also invested $220 million in a project by Liontown to produce lithium ore for customers such as LG and Tesla.
This initiative has attracted investments from various sources, including the North Australia Infrastructure Fund, supporting projects related to solar energy, salt and potash production, gold and copper mining, lithium expansion, and rare earths projects.
More than a dozen Australian companies have secured US financing for their projects or ideas, with Lynas, a rare earths company, being a prominent recipient with loans exceeding $US300 million for its US-based operations.
This financing scheme will underpin the formal Climate, Critical Minerals, and Clean Energy Transformation Compact between Australia and the US, announced by Albanese and Biden earlier this year during a meeting in Japan.
While Treasurer Jim Chalmers and Energy Minister Chris Bowen have announced a $2 billion fund for renewable fuel in the May budget called "Hydrogen Headstart," the specific subsidy for hydrogen produced from renewable sources such as wind and solar power has yet to be determined.
Some Australian executives express concerns about their ability to compete with the substantial US subsidies, which amount to approximately $A581 billion ($US369 billion) under the Inflation Reduction Act of 2022. These subsidies are prompting significant restructuring in the global mining, automotive, minerals processing, and battery manufacturing sectors.