WA lithium miners given tax reprieve

1st December 2020 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) – The resources sector has welcomed the Western Australian government’s temporary assistance to three lithium mineral producers in the state, to support spodumene concentrate production and to protect jobs in the region.

Mines, Petroleum and Energy Minister Bill Johnston has announced that Galaxy Resources' Mt Cattlin operations, Pilbara Minerals' Pilgangoora operations and Altura Mining's Pilgangoora operations will receive a 50% royalty rebate on spodumene concentrate for up to 12 months. 

The rebate is only available where the companies have an operating spodumene concentrate project and the employee count does not drop significantly from current numbers. 

It will not be provided, and royalties will be required to be paid in full, if the average price of spodumene concentrate is equal to or greater than $550/t for a given quarter. 

"Over the past two years the fall in the price of spodumene concentrate has put these companies' operations at risk and their finances under pressure; this is why the government is offering assistance,” Johnston said this week.

"The government's support is consistent with our Future Battery Industry Strategy and our goal to increase battery minerals production and reduce project costs across Western Australia.

"Supporting these producers could prevent the loss of more than 600 jobs and save more than A$20-million in annual royalty revenue over the coming years.

"Experts predict prices for spodumene concentrate will rise due to the growing demand for lithium used to manufacture electric vehicles and energy storage systems,” the Minister added.

At the conclusion of the assistance period, the rebates will be fully repaid over a period of two years, meaning there will be no cost to the state government. 

The Association of Mining and Exploration Companies (Amec) and the Chamber of Minerals and Energy of Western Australia (CME) have both welcomed the royalty relief, with Amec CEO Warren Pearce saying the assistance package comes as welcome relief for these operations as they work though this challenging period and will help stem further job losses and mine closures in the lithium industry.

“Over the last several years the Western Australian mining industry have been developing new lithium mines to meet the oncoming wave of demand. These efforts have been ably supported by the Western Australian government’s Future Battery Industry Strategy, which aims to capitalise on this major economic opportunity for the state.

“A volatile global market, the currently low hard rock lithium price and the impact of Covid-19 on demand, have impacted the competitiveness of Western Australia’s upstream lithium sector, requiring short term government assistance.

“Industry is very appreciative of this support from the state government,” Pearce said.

CME CEO Paul Everingham said the assistance package would help Western Australia retain its place as a global strategic player in the lithium-ion battery supply chain.

“Local lithium producers have come under significant price pressure in recent times, despite strong optimism for market demand in the medium term driven largely by electric vehicle (EV) batteries,” Everingham said.

“Eligible local producers can breathe a sigh of relief with today’s announced royalty relief, along with the around 4 000 workers employed across the lithium supply chain in Western Australia.”