The Australian government on Monday introduced legislation to Parliament for the Critical Minerals Production Tax Incentive (CMPTI), a move that industry stakeholders have hailed as a significant step toward transforming Australia’s critical minerals sector into a global leader.

The Association of Mining and Exploration Companies (Amec) applauded the government's commitment to the policy, emphasizing that it demonstrated a clear, long-term vision for an emerging industry with immense potential.

"Australia is already so much more than a ‘dig and ship’ country, and this legislation seeks to build on that principle. The opportunity is now, and the CMPTI is seizing that opportunity," said Amec CEO Warren Pearce.

He added that the incentive would not only provide confidence to the growing critical minerals sector but also send a strong message to markets and investors that Australia was committed to developing a value-added industry.

The A$7-billion commitment over ten years, covering 31 minerals on the critical minerals list, will support companies in adding value to raw materials by investing in downstream processing. In return, companies will receive a 10% tax credit.

The Bill also aims to establish a Hydrogen Production Tax Incentive worth $2/kg of renewable hydrogen produced between 2027/28 and 2039/40 for up to ten years per project.  

“This Bill needs to pass Parliament. It’s time for all parties to stand up and back Australian industries and support this incentive,” Pearce said.

“The energy transition is here. And while there are many different energy options, the fact remains that Australia will always need different strategies to power our communities and industry.

“By ensuring that products like lithium spodumene ore are refined into lithium hydroxide here in Australia, it keeps jobs in Australia and helps build a Future Made in Australia,” Pearce added.

He stressed that the policy was a zero-risk approach for the country. If companies fail to produce a value-added product, they will not receive the tax credit, meaning it would cost taxpayers nothing. However, if they invest and produce a value-added product, the economic benefits for Australia would far outweigh the cost of the incentive.

Amec anticipates that while initial uptake of the incentive may be modest, it will grow over time and help the emerging critical minerals industry gain a strong foothold on the global stage.

“This incentive will support projects across the country, and mining states like Western Australia and Queensland are likely to see the greatest benefits,” Pearce said.

Chamber of Minerals and Energy of Western Australia CEO Rebecca Tomkinson said the incentives were important but represented one part of a much broader puzzle.   

“WA is competing against jurisdictions that are rolling out the red carpet for downstream processing, including through fast-tracked project assessments, financial assistance and the provision of turnkey industrial land,” Tomkinson said. 

“Access to low-emission, reliable and internationally competitive energy prices are another important factor for businesses determining the best location for value-adding industry. 

"It is therefore vital that government support extends beyond production tax credits. 

“To capitalise on opportunities presented by the net zero transition, it is more important than ever that both state and federal policy settings are aligned in support of the resources sector," she said.