The critical minerals and resources funding announced in the 2023-24 Federal Budget highlights the importance of Australia’s critical minerals industry in green technologies and the renewable energy transition.
Federal Minister for Resources and the Northern Territory, Madeleine King, said the 2023-24 Budget provides the foundations for a stronger future by taking further steps to help Australia capitalise on the transformation to cleaner, cheaper energy and promote energy security
Critical minerals, including rare earths, are crucial components of low-emissions technologies such as batteries, electric vehicles and solar panels. These minerals and technologies will be increasingly important to the global efforts to decarbonise and reach net zero by 2050.
2023-24 Budget funding towards the critical minerals industry includes:
- $57.1 million for the established Critical Minerals International Partnerships Program, aimed at stepping up international engagement, to attract investment from like-minded partners and accelerate projects of strategic interest
- $21.2 million to ensure the ongoing operations of the Critical Minerals Office – driving policies, programs and international engagement
- $2.2 million for the Treasury to establish data analysis capabilities to track foreign investment patterns and compliance in the critical minerals sector
Ms King is due to release Australia’s new critical minerals strategy soon, which will outline how Australia can seize the significant opportunity to leverage critical minerals to feed global demand for clean energy, while creating new industries and jobs in Australia.
Decarbonising the resources industry
The budget also pledged significant funding towards decarbonising the resources industry as Australia works towards its net zero emissions goals.
Funding to decarbonise the resources industry includes:
- $6.7 million towards developing a Future Gas Strategy to support Australia’s energy system to reach 82 per cent renewables by 2030 and become cleaner, cheaper and more reliable while maintaining its international reputation as a trusted energy supplier to the region
- $320.4 million towards a responsible and sustainable approach for the long-term management and permanent disposal of the Commonwealth’s radioactive waste – providing ongoing funding for the Australian Radioactive Waste Agency (ARWA)
- $14.3 million to partner with the Queensland Government, supporting research and development into reducing emissions in Australia’s energy resources sector
- $4.5 million to develop a roadmap for establishing a decommissioning industry in Australia
- $12 million for a review of the environmental management regime for offshore petroleum and greenhouse gas storage activities, with a particular focus on consultation, including with First Nations Australians
Australia expects an estimated $60 billion of offshore petroleum decommissioning activity to occur over the next 30 to 50 years. The proposed roadmap for a decommissioning industry will identify ways Australia can benefit from the $60 billion projected expenditure, any repurposing, recycling and waste disposal pathways for decommissioned infrastructure, and opportunities to re-skill oil and gas workers for an emerging decommissioning industry.
Further supporting the transition to net zero, the Federal Government will legislate a national Net Zero Authority to ensure the workers, industries and communities that have powered Australia for generations can seize the opportunities of Australia’s net zero transformation. The Authority will have responsibility for promoting the orderly and positive economic transformation associated with achieving net zero emissions.
The new, legislated Net Zero Authority will:
- Support workers in emissions-intensive sectors to access new employment, skills and support as the net zero transformation continues
- Coordinate programs and policies across government to support regions and communities to attract and take advantage of new clean energy industries and set those industries up for success
- Help investors and companies to engage with net zero transformation opportunities
The review will examine opportunities for regulatory and administrative certainty and efficiency for carbon capture and storage projects.
As the world transitions towards net zero, renewable and clean energy production will need to increase significantly to meet growing demand.
The 2023-24 Federal Budget included the establishment of the $2 billion Hydrogen Headstart initiative to support the biggest green hydrogen projects to be built in Australia.
Funding will provide revenue support for investment in renewable hydrogen production through competitive production contracts, and will cover the commercial gap between the cost of hydrogen production from renewables and its current market price.
Hydrogen Headstart aims to support two to three flagship projects which could provide up to 1GW of hydrogen electrolyser capacity.
The Australian Renewable Energy Agency (ARENA) has been allocated $4.2 million in 2023 to support the development and operation of the program in consultation with the Department of Climate Change Energy Environment and Water (DCCEEW).
The program will be designed over the coming months in consultation with DCCEEW, industry and communities.
The Chamber of Minerals and Energy of Western Australia (CME) has welcomed the budget and the Federal Government’s commitment to bolstering the mining and resources sector.
CME’s CEO, Rebecca Tomkinson, said commodities remain crucial to the prosperity of the Australian economy and go hand-in-hand with the focus on further developing Australia’s critical minerals capabilities as the world continues to decarbonise in line with the Paris Agreement.
Ms Tomkinson said there are a range of initiatives, announced both in the lead-up to the Budget and in the Budget announcement, which are a clear recognition of the critical role Australia’s commodities would play in a low carbon future.
“While the acknowledgement of the critical role commodities will play in this is welcome, there are few budget measures which will materially address the increasingly intense competition for global capital, stagnant productivity growth, and the increased costs and uncertainty flowing from cumulative impact of regulatory changes and persistent regulatory and administrative inefficiencies.”
The 2023-24 Federal Budget will be in surplus for the first time in 15 years, with many attributing the surplus to the mining and resources industry’s increased exports, corporate taxes and investments in resources.
Chamber of Commerce and Industry Western Australia (CCIWA) Chief Economist, Aaron Morey, said the key driver of the budget surplus this year was a $51.8 billion surge in corporate tax paid by business.
Mr Morey said this serves as a reminder that the business community is vital to Australia’s fortunes.
Mr Morey commends the Federal Government for committing much of the revenue windfall to reduce debt, instead of increasing the structural deficit – this strong outcome will recede as cost pressures take over.
“Against this backdrop, it is becoming more difficult for future mining, energy and resources projects to get off the ground, with prolonged approvals processes, price caps, tax changes and regulatory interventions,” Mr Morey said.
“To return to a sustained surplus in future, the mining industry should build on its strengths, through further initiatives to facilitate critical investment, including by moving with the world and supporting carbon capture and storage, introducing productivity-enhancing reforms, and reforming environmental approvals.”
Further bolstering claims that the budget surplus is due to the mining and resources industry is Minerals Council of Australia’s CEO, Tania Constable, who said, “The Australian minerals industry’s significant contribution to the economy through exports and tax revenue has provided the foundations for this financial year’s budget surplus.
“This budget surplus does not have to be a one-off. The predicted fall in mining investment over the coming years can be reversed.
“More than ever, Australia needs an internationally competitive and productive minerals industry given the economic headwinds and the urgent need to create a net zero emissions future.
“Minerals have helped propel the economy forward, boosted economic opportunity and security, and enabled the Federal Government to invest in the things that really matter: families, communities and vital services like hospitals, schools, childcare, aged care and infrastructure.”
Ms Constable said the record tax paid by Australian mineral companies in 2021-22 ($41 billion) is the result of the massive investment by the minerals industry that occurred a decade ago. It underpins the Federal Government’s rapidly improved budget position this year.
“Going forward, Australia’s vulnerability to competition from resource-rich economies will only grow as they seek to seize the opportunity to supply the minerals and metals needed to achieve global net zero emissions,” Ms Constable said.
CEO of the Association of Mining and Exploration Companies (AMEC), Warren Pearce, attributed the budget surplus to high commodities prices for Australia’s resources and the work of the resource’s industry.
“This support has enabled the Federal Government to deliver $14.5 billion in cost-of-living measures for Australians to offset the impact of significant inflation occurring in the Australian economy,” Mr Pearce said.
“The inclusion of $57.1 million for Critical Minerals International Partnerships to secure strategic and commercial partnerships is promising. Ensuring Australia can compete internationally in attracting critical minerals investment will be important, particularly in light of the $US 370 billion in tax breaks and grants through the United States Inflation Reduction Act 2022.
“Without substantially stronger support from Australian governments and Australia’s international partners, the ability for Australian projects to attract capital for value-adding will diminish, and with it, the opportunity to realise greater value from our resources and the highly skilled and highly paid jobs that would accompany it.
Mr Pearce also commended the announcements regarding the Migration Strategy, and said it is “critical to addressing workforce issues.”
ARENA CEO, Darren Miller, has welcomed the announcement of the Hydrogen Headstart initiative, and said the initiative will catalyse Australia’s hydrogen industry and other clean energy industries, and help position Australia as a global hydrogen leader.
Mr Miller said the Hydrogen Headstart initiative will ensure large scale hydrogen projects already in development can get off the ground in Australia.
“Australia has an unparalleled opportunity to become a global green hydrogen leader, but we can’t afford to lose our momentum as other competing countries step up their ambitions and support,” Mr Miller said.
“With this funding, we are looking to incentivise green hydrogen production in Australia by backing early projects that will be among the largest in the world.
“This funding will reduce the cost of green hydrogen produced via renewable electricity and will scale up our hydrogen sector. These projects will create thousands of regional jobs and will help reduce emissions in industry in line with our climate targets.”
Fortescue Metals has also welcomed the Hydrogen Headstart Initiative announcement, and said the announcement demonstrates how seriously the Federal Government is taking the green hydrogen industry and its critical role in Australia’s future.
Fortescue also welcomes the additional critical minerals commitment of $57.1 million announced with the budget.
Further, Fortescue welcomed the greater definition around the reforms of the EPBC Act including the timeframe and role of the new Environmental Protection Australia.