Correct, the AVL ASX announcement has 3 points referencing the...

Correct, the AVL ASX announcement has 3 points referencing the specific reasons for the grant.
1 of them mentions steel and batteries.
1 mentions batteries
1 mentions Nickel Cobalt and Copper.

As a country we already produce Nickel, Copper and a small amount of Cobalt.
73% of the worlds current production of Vanadium comes from China and Russia.

Vanadium is listed as number 12 in the High Criticality list by the Government.
Critical Minerals | Geoscience Australia (ga.gov.au)
Here is another article describing how the US see the problem of mineral security.
Securing the Critical Mineral Supply Chain is Vital to the Future of the U.S. Military | ASP American Security Project

Here is the Govt press release about the $49 million grant.
Supercharging critical minerals manufacturing | Ministers for the Department of Industry, Science, Energy and Resources
The AVL section mentions batteries, but I believe the Govt really see batteries as a secondary importance to the mining of Vanadium all its purposes.

If the Australian Govt wanted sovereign battery manufacturing then they only needed to knock on Redflow's door to suggest Redflow apply for the grant, because Redflow own all the IP for their batteries, and already have a manufacturing facility in Thailand that they could duplicate here if it was financially compelling to do so. Redflow have already secured Fed Govt contracts to supply Flow batteries as part of the bushfire resiliance of mobile phone towers. There are press releases with Minister Paul Fletcher pictured with Redflow batteries.
Also the former chief scientist Alan Finkle has toured Redflow installations. Pictures on the internet.

Compare the Redflow situation to AVL.
AVL doesn't own the IP for the batteries it sells.
AVL doesn't have the inhouse expertise to design and manufacture a battery from start to finish.
AVL has mining rights and a plan to begin mining. Redflow doesn't.

The grant is a great decision, and I don't often agree with many of the grants that this govt gives out.
I'm comfortable that we can disagree on this, but to me the grant looks to me more like it would have happened even if VSun didn't exist.