Australia plans tax relief to shield miners from nickel price slump

Western Australia plans to offer tax breaks to nickel producers in a bid to help the ailing industry amid crashing prices, the state government announced on Saturday February 17

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.

To understand the complex market conditions influencing price volatility, download our monthly base metals price forecast, including the latest copper price forecasts today. Get a free sample.

What to read next
The US Treasury Department will give automakers a two-year extension to 2027 on restrictions to some hard-to-trace minerals from China, such as graphite contained in anodes, it said in an announcement on Friday May 3
Chinese cobalt metal prices fell to an eight-year low on Wednesday May 8, amid significant market oversupply and bearish sentiment, market participants told Fastmarkets
A wave of restocking throughout the first quarter of 2024 provided some relief in the ternary battery raw materials market in China, stopping the declines in prices for various products that had been seen late last year
Here are the five things we learned from Helaina Matza on the energy transition policies in the US
The new tariffs on aluminium imports imposed by Mexico are affecting the light metal's supply chain, trade flows and premiums, sources told Fastmarkets during the week to Friday May 3.
The benchmarks set out by the European Union’s Critical Raw Materials Act (CRMA) are “not realistic” without a financial support mechanism, according to the director of a planned facility to reintroduce magnesium production to Europe