Treasurer vows budget boon for critical minerals

Australia’s budget would feature a bigger boost for the nation’s critical-minerals industry, Treasurer Jim Chalmers said, describing the lucrative market as a “golden opportunity” just days ahead of releasing his annual financial blueprint.

“The critical-minerals space is one of the reasons why there is so much attention from global and domestic investors, but we need to make sure we can attract and deploy that,” Chalmers yesterday said.

The treasurer will release the budget tomorrow night, when he is aiming to strike a balance between containing stubbornly high inflation in the near term and investing in Australia’s economic future over the years ahead.

Australia’s critical-minerals industry is a major part of the government’s push to capitalise on the worldwide green-energy revolution. Major powers, including the US are keen to use

Australian battery minerals as part of an effort to break reliance on Chinese supply for the materials, which are used in the production of solar panels, electric vehicles and lithium-ion batteries.

One of the central pillars of the budget will be the centre-left Labor government’s “Future Made in Australia” programme, a suite of measures designed to spark hi-tech and green manufacturing in a manner similar to the US Inflation Reduction Act.

Although details are not yet public, Chalmers said the policy would feature a combination of “tax incentives, targeted grants, making sure that we’ve got the architecture to attract and absorb and deploy all of this private investment”.

Compared with the massive government expenditure of the United States policy, Chalmers said Australia’s plan would focus on “not replacing private investment” but attracting more of it.

“We’ve got some huge advantages. We’ve been dealt some incredible cards – our resources base, our industrial base, energy, our human capital base, our attractiveness as an investment destination,” he said.

The government has already revealed an investment of A$566 million (HK$2.9 billion) in boosting exploration for resources, with a particular focus on critical minerals. However, Chalmers said there would be more support to come. Australia is expected to announce a second consecutive surplus in the budget, with a Bloomberg survey tipping a A$11 billion windfall, a global rarity reflecting the nation’s ultratight labour market and still elevated commodity prices.

Still, a weaker outlook in China – the nation’s largest trading partner – threatens to weigh on economic growth going forward. Chalmers said the budget would forecast China’s GDP growth to remain between 4 and 5 per cent but added there was prospects for stimulus in the world’s second-largest economy.

“We are very reliant on prospects for the Chinese economy,” Chalmers said, while adding he could see a time when Australia would be less dependent on it for trade and growth.