Australia proposes tax incentives for critical mineral deposits

The Australian government will introduce legislation on Monday to implement production tax incentive for renewable hydrogen and essential minerals. This could help boost investment in this sector, which can play a key role in energy transformation plans.

The government announced that the proposed law would establish a tax incentive of 10% on the relevant processing and refinement costs for 31 essential minerals, from the fiscal years ending in June 2028 until the fiscal years 2039-40, up to ten year per project.

The planned legislation for renewable hydrogen will provide a tax incentive of A$2 ($1.31) for each kilogram of renewable hydrogen produced in the same time period.

The legislation will provide investors with clarity and certainty, allowing them to make investments in Australia's ability to add value to its resources and deliver cleaner and cheaper energy.

Chalmers stated that incentives would be offered once the projects were up and running and producing hydrogen, or processing minerals critical to products such as wind turbines, solar panel and electric cars.

The major economies want to compete with China to manufacture electric vehicles and semiconductors and invest billions in clean energy projects.

In its May budget, Australia's center-left Labor Government pledged to introduce tax incentive worth A$7 Billion for the refining and processing of critical minerals as well as A$6.7 Billion for the production of renewable hydrogen from 2027/2028 until 2039/40.

(source: Reuters)