Good News & Bad News, page-43621

Australia won’t bowto China on critical minerals

The Albanese government is refusing to bow to pressure fromChina as it looks to grow onshore downstream processing of critical mineralsand support US efforts to develop Western supply chains.

The government said it would not rush a call on whether entitieswholly or part-owned by Chinese interests would qualify for billions of dollarsin tax and other incentives unveiled as part of the May budget.

Canberra stuck to its guns as Chinese Premier Li Qiang backedcalls from Tianqi, the Chinese company that pioneered lithium processing inAustralia, for a “fair go” in critical minerals

Mr Li told the state-run Xinhua News Agency that he hoped for a“fair and non-discriminatory” business environment for Chinese companies withassets in Australia.

Prime Minister Anthony Albanese and Mr Li visited the Tianqilithium hydroxide plant in Kwinana – the first built outside China – on Tuesdayin what some industry observers regarded as a strategic move by Beijing to pushits case for access to a 10 per cent production tax credit and other incentives

Speaking to TheAustralian Financial Review on the sidelines of an Australia-China CEO roundtable on Tuesday, Resources Minister Madeleine King maintained the issue was up in the air and could be influenced by the government’s review of foreign ownership rules.

“We have to go through a process of design and that will involvea lot of consultation, and Tianqi, as well as others, will put their viewsforward on it,” she said.

“The main point of the production tax credit incentive is toencourage processing here in Australia.”

Ms King acknowledged that Tianqi was doing that at the company’srefinery in Kwinana, south of Perth, in partnership with ASX-listed IGO, andemploying hundreds of people in her electorate of Brand.

Tianqi chief executive Frank Ha has said the company deservesaccess to tax credits and expects a level playing field with other overseasinvestors when it comes to Foreign Investment Review Board assessments.

Ms King said Australia had rules around foreign investmentfor a reason. Asked about the recent decision to force Chinese interests to divest shares in rare earths company Northern Minerals, Ms King said that was work the government had to do in the national interest.

Association of Mining and Exploration Companies president WarrenPearce, whose lobbying helped convincethe government to introduce the tax credits, backed Tianqi and Chinese investors more broadly.

He said Mr Li’s visit to Western Australia showed how importantthe state and its mining industry were to China, and warned the relationshipshould not be taken for granted.

“AMEC believes that anyone prepared to make investments inAustralia and shoulder the risk to develop downstream processing of criticalminerals should have access to the tax incentive,” he said.

“We believe it should be a level playing field for those whoreceive government incentives. If not, we’ll exclude ourselves from significantinvestment opportunities

The massive investment in Australia from companies like Tianqifar outweighs the incentives being offered by the federal government.”

WA Premier Roger Cook also spoke out in support of Tianqi. “Theproduction tax credits are about processing more critical minerals here inAustralia and investing in WA jobs and opportunities. Tianqi and its Australianpartner IGO are doing exactly that,” he said.

“Their lithium hydroxide plant in Kwinana was the first of itskind in WA, adding value to WA minerals and helping to establish this state asa downstream player in the processing of critical minerals.”

It is understood New York-listed Albemarle, which built thesecond lithium hydroxide plant in WA and co-owns the Greenbushes lithium minealongside Tianqi and IGO, expects to be eligible for the tax credits.

Talks between the Australian Tax Office and Albemarle – alongwith other players moving into onshore critical minerals processing, includingWesfarmers and its Chilean partner SQM – on the incentives are expected withinweeks.

Wesfarmers boss Rob Scott, Tianqi chairwoman Jiang Anqi and MrHa talked on the sidelines of the CEO roundtable meeting.

Mr Scott did not comment on the incentives, but told the FinancialReview that Mr Li’s visit was important for building business ties and that he was pleased to see the bilateral relationship on a better footing.

Mr Li told the roundtable that Australians should view China’sdevelopment as an opportunity and not as a challenge or threat.

He said China’s business interests fitted in with the federalgovernment’s “made in Australia” push and greater co-operation could strengthenand stabilise global supply chains in critical minerals and other sectors.

Mr Li also talked up opportunities in agriculture and otherindustries, describing the size of the Chinese market as irreplaceable toAustralia

The audience at the Business Council of Australia-hostedroundtable also included Rio Tinto chief executive for Australia, KellieParker, BHP chief financial officer, Vandita Pant, Fortescue executive chairmanAndrew Forrest, ANZ group executive Mark Whelan, BlueScope boss Mark Vassella,and GrainCorp chief executive Robert Spurway.

Mr Spurway said the roundtable was a great opportunity forGrainCorp to promote the importance of agricultural trade between Australia andChina.

GrainCorp is one of the companies that has benefited from athawing in relations between the two countries, after a ban on Australianbarley exports lifted last year.

“Agricultural tradeis critical for China’s food security and nutrition needs and, of course, avital economic contribution from regional and rural communities in Australia,”he said.