Australian ambassador to the US Kevin Rudd and Prime Minister Anthony Albanese in Washington on Monday.Credit:Alex Ellinghausen
The critical minerals facility was set up by the Morrison government in 2021 and has made a series of deals including a $1.25 billion loan to Iluka Resources last year to develop a refinery in Western Australia to produce neodymium,terbium and other materials for magnets.
The facility,run by Export Finance Australia,has also put $220 million towards a project run byLiontown Resources to produce about 500,000 tonnes of lithium each year for customers including LG in South Korea and Tesla in the US.
Global demand for lithium grew by 300 per cent in the past five years,according to the International Energy Agency,which estimated a 70 per cent increase for cobalt and 40 per cent rise for nickel over the same period. The International Energy Agency said the market for “energy transition minerals” grew to $503 billion last year.
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The finance scheme will underpin a formal agreement between Australia and the US called the Climate,Critical Minerals and Clean Energy Transformation Compact,which Albanese and Biden announced at a meeting in Japan earlier this year.
Tensions have emerged,however,over mammoth US subsidies for renewable energy under the Inflation Reduction Act,prompting warnings from some business leaders about the damage to investment in Australiawhen the subsidies are so large in the US.
Treasurer Jim Chalmers and Energy Minister Chris Bowen unveiled a $2 billion fund for renewable fuel in the May budget,called the Hydrogen Headstart,but the specific subsidy is yet to be set for hydrogen produced from renewable energy such as wind and solar power.
Some Australian executives fear that the Australian plan cannot compete with the US subsidies,worth about $581 billion.
Mining magnate Andrew Forrest,whose company Fortescue has a green hydrogen project in Centralia,in the state of Washington,has described the Inflation Reduction Act as a “really serious economic multiplier” for new industries such as green hydrogen.
The Centralia project will use a remediated coal mine adjacent to Washington’s last coal-fired power plant,which is scheduled to be retired permanently in 2025.
The company also announced this month that it is on track to receive up to $US150 million ($235 million) in subsidies after the collective it belongs to progressed to a final round of funding negotiations with the Biden administration,through a funding scheme called the Bipartisan Infrastructure Law.
Asked about the benefits of the Inflation Reduction Act,Forrest said:“It’s just a lesson to other economies – including Australia – that if you back a new industry like renewable energy,then you’re creating an economic multiplier and economic growth engine within your economy,which gets to pay for taxes,or increases in education,hospitals,and the whole box and dice.”
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