Despite the resource-rich country’s ambition to become a global battery minerals processing hub, the local mining industry has been hit by the surge in supply from Indonesia that caused nickel prices to fall more than 40% in the last year.
“The Cook government will offer royalty relief to Western Australia’s crucial nickel industry, supporting thousands of local jobs as well as the state’s vision of becoming a global battery minerals processing hub,” Western Australia premier Roger Cook said in a statement on Saturday.
Under the tax rebate program, local producers would receive a 50% royalty rebate whenever the average nickel prices are below $20,000 per tonne for a given quarter.
The program will start from March 2024 and be available for 18 months, and the rebate will be repayable over the following 24 months, according to the statement.
The benchmark nickel price on the London Metal Exchange was recently $16,340-16,360 per tonne on February 20, in stark contrast to its high above $30,000 per tonne early last year.
Nickel price challenges are wide ranging
As a result of the boom and bust cycle in nickel prices, casualties in the Australian mining industry have already included IGO’s Cosmos nickel mine, First Quantum Minerals’ Ravensthorpe nickel and cobalt mine, Andrew Forrest’s Wyloo Metals’ nickel operations and BHP’s Kambalda nickel processing operations.
Mining giant BHP was also reportedly considering mothballing its Nickel West business.
The tax rebate would mean a funding lifeline for struggling nickel producers.
The program was announced a day after federal resources minister Madeleine King placed nickel on the critical minerals list, on February 16.
The $2.6 billion Critical Minerals Facility will allow nickel companies to obtain financing from low-interest loans and grant programs.
On the same day, Australian prime minister Anthony Albanese said that the government was planning to launch an incentive package to drive clean energy investment for the country to become a superpower in the sector.
The incentive package also aims to counter the US Inflation Reduction Act (IRA) and the EU Green Deal.
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