Lithium giant says Chinese partners should have access to tax credits Brad ThompsonMay 24, 2024 – 4.59pm
IGO managing director Ivan Vella: “The nickel industry is very competitive, it’s very cyclical. It’s unlikely we’re going to see sustained increase in price.” Trevor Collensnormal
IGO is one of three companies involved in Greenbushes, the world’s largest hard-rock lithium mine, alongside China’s Tianqi and New York-listed Albemarle. Mr Vella’s comments come as the Albanese government becomes increasingly hawkish about Chinese investment in critical minerals. It has yet to decide whether companies backed by China should be allowed to access the tax credit scheme.
“It’s been a very challenging road, and they have not blinked. They have been steadfastly dedicated to making this work in WA, to building the capability in Australia and to solving technical challenges. They’ve made mistakes and had all sorts of challenges.
“For me, this is about Australian jobs, Australian assets, Australian-deployed capital, Australian capability, Australian industry, which deserves the same support as any other Australian business regardless of the ownership.”
Australia exports about 90 per cent of the critical minerals it extracts to China for processing. Labor’s model, unveiled in the budget, would provide a tax offset of 10 per cent of the eligible costs of production for processing critical minerals in Australia.
A similar scheme in the US excludes companies whose shareholder register is more than 25 per cent controlled by Chinese companies.
Mr Vella, a former Rio Tinto executive, said he did not expect a sustained rally in nickel prices as IGO reviews the future of its assets and BHP inches closer to a potential shutdown of its nickel business in WA that would result in thousands of job losses.
“My view is the nickel industry is very competitive, it’s very cyclical. It’s unlikely we’re going to see sustained increase in price. Everyone’s talked at length about just how competitive and how strong the nickel assets in Indonesia are,” he said.
“I would have a view that we’re probably in a very attractive place right now for them [Indonesia] to continue to add capacity.”
His comments came after both Resources Minister Madeleine King and Minerals Council chief executive Tania Constable spoke at The Australian Financial Review Mining Summit in Perth. Ms Constable raised concerns that the tax credit scheme ran the risk of creating “white elephants” without proper controls.
Echoing those comments, Mr Vella said: “I’m not a big believer in the government being able to cover the gap and just make it work. I think you’ve got to build competitive businesses that are sustainable in the long term.”
Mr Vella said there were inherent challenges in moving downstream without investment in shared infrastructure, faster approval and building timelines, and – in the case of lithium, rare earths and nickel-rich WA – access to gas supply at competitive prices.
Ms King told the summit that the issue of whether assets majority- or part-owned by Chinese entities would qualify for the tax credits was still up in the air and could be influenced by the government’s review of foreign ownership rules.
IGO has moved to beef up its executive team with a focus on lithium amid a review that could see it exit nickel under a worst-case scenario.
Former BHP and Rio executive Marie Bourgoin is coming on board in a lithium leadership role and Brett Salt has been appointed chief growth and commercial officer. Matt Dusci, who served as acting chief executive after the death of Peter Bradford in 2022 and was a key player in IGO’s diversification from nickel into lithium, is leaving.
Mr Vella took the reins at IGO in December and has had to manage the fallout from the disastrous $1.3 billion acquisition of Western Areas and its nickel assets. Of the assets acquired in that deal, the Cosmos operations are being put in care and maintenance after massive writedowns and the Forrestania mine is winding down to closure. The there are only two-and-a-half years of life left at IGO’s flagship Nova nickel mine.
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