Nickel crisis: Miners demand tax credits as cheap metal from Indonesia floods critical minerals market

More nickel mines will close and Australia’s hopes of becoming a critical minerals processing powerhouse will soon evaporate if the Federal Government doesn’t urgently roll out targeted subsidies for the sector.

Association of Mining and Exploration Companies (AMEC) chief executive Warren Pearce issued the warning on Wednesday as he led a delegation of miners and electric car giant Tesla to Canberra to lobby for tax production credits.

The peak body wants the Federal Government to match the 10 per cent production subsidy offered under the US’ ground-breaking Inflation Reduction Act, both to save the ailing nickel industry and help make downstream processing more competitive in Australia.

Emerging from a meeting with Resource Minister Madeleine King, Mr Pearce was “optimistic” the Government would adopt the idea as it prepares a response to WA’s nickel crisis.

Prime Minister Anthony Albanese has said the Federal Government was considering “smart, targeted and time-limited” support for nickel miners as a flood of cheap supply from Indonesia puts the local industry on the brink.

BHP is mulling the closure of its Nickel West operation while Andrew Forrest’s Wyloo – whose chief executive Luca Giacovazzi was part of the delegation to Canberra – is planning to mothball its mine near Kambalda.

Mr Forrest bought the mine just seven months ago for $760 million.

Asked if the Federal Budget in May represented the last chance to rescue the sector, Mr Pearce said: “Yes, I think it does”.

“The reality for the nickel industry is that without Government assistance, we’re going to see more mines close,” he said.

“There is a role for the Commonwealth to step into that space and provide some temporary assistance.

“When it comes to the rest of the critical minerals industry, there is more time for us to secure our place – but it’s evaporating pretty quickly.”

The delegation included representatives from Pilbara Minerals, Ardea Resources, Australian Vanadium, Atlantic Vanadium, IGO, QEM along with Tesla chairwoman Robyn Denholm.

Mr Pearce would not speculate on whether tax credits could have saved Wyloo’s Kambalda operation, but insisted it would have been in a “much more competitive and commercial position”.

AMEC-commissioned analysis found a 10 per cent tax production credit would inject $2.4 billion each year into the economy by 2035, supporting 4220 jobs.

The subsidies would cost the budget around $1.7 billion between now and then, according to the analysis from consultants Mandala.

WA’s nickel miners will receive a 50 per cent royalty deferral for 18 months under a State Government lifeline for the embattled industry.

Nickel has also been placed on the Commonwealth’s critical minerals list, giving companies access to loans under its $4 billion fund.