The Albanese government is preparing to assist embattled producers of clean tech materials. 

Reports say the government plans to fast-track the implementation of production tax credits, initially focusing on the nickel mining industry, with potential extensions to lithium miners if necessary. 

The help comes as the industry faces significant challenges, highlighted by warnings from major players like BHP regarding potential shutdowns and substantial job losses.

Prime Minister Anthony Albanese has outlined a government commitment to providing “smart, targeted, time-limited support” to navigate what he describes as a “short-term issue” for a sector deemed crucial for Australia's future, especially in the context of the global shift towards clean energy. 

Nickel plays a central role in battery production and other clean energy technologies, a sentiment reinforced by its recent addition to the government's official critical minerals list.

This policy initiative coincides with the Western Australian government's announcement of a 50 per cent royalty discount for nickel miners over the next 18 months, a response to the industry's struggle against an oversupply, particularly from Indonesia. 

The Albanese government's approach, however, seeks to balance direct financial support with the necessity of fostering a competitive and sustainable critical minerals sector, amidst global economic pressures and the lure of green technology investments by other nations like the United States.

The government will need a nuanced strategy to leverage tax credits over direct subsidies and avoid the pitfalls of excessive corporate welfare, particularly for giants like BHP. 

The Association of Mining and Exploration Companies (AMEC) and other industry stakeholders have proposed a minimum 10 percent production tax credit to alleviate costs and encourage further investment in the processing of critical minerals. 

This policy, distinct from tax deduction incentives, would directly offset production costs, offering both immediate financial relief and incentives for long-term investment.

The proposed system is estimated to cost the government $340 million up to 2028, with an additional $1.69 billion forecasted from 2028 to 2035.

Despite the significant financial commitment, the investment is projected to contribute an additional $2.4 billion to the Australian economy and create over 4,200 jobs.

Critics, including mining magnate Dr Andrew Forrest, say Australia is struggling with severe competitive disadvantages from lower-standard operations in countries like Indonesia and China, which are unlikely to be mitigated by government help.