The US has redefined Australian mining companies as ‘domestic’ suppliers, with major benefits for electric vehicles built in North America with Australian battery minerals.
Australian mining companies can now be recognised as US domestic suppliers, thanks to a new deal struck between the two countries to shore up critical minerals that go into electric-car batteries.
According to a report from news outlet Reuters, Australia and the US have agreed to “coordinate policies and investment” of the critical minerals industry, in an effort to secure supply for use in electric vehicles and defence applications.
The latest agreement comes less than three months after US President Joe Biden expanded funding for projects under the US Defence Production Act – including mining projects for lithium, of which just over half of the world’s supply comes from Australia.
Under the new definition, Australian lithium mining projects could be funded under the act and treated as a US domestic materials supplier.
The US Government currently offers a US$7500 (AU$11,270) tax credit to buyers of electric vehicles – however, starting in 2023, the tax credit stipulates that the battery materials used in the vehicle have to have been supplied from the US or its allies, while the battery itself has to have been assembled in North America.
The new agreement means North American electric vehicles with batteries made with Australian ingredients will be eligible for the tax credit.
While Australia supplies an estimated 55 per cent of the world’s lithium, local suppliers are highly desired thanks to strong workplace health and safety regulations, ethical business practices, favourable taxation laws, and stable political environment.
In July 2022, Ford signed a five-year agreement with Australian mining company Liontown Resources to supply 150,000 tonnes of lithium each year.
In October 2022, Queensland Pacific Metals announced it was supplying General Motors with nickel and cobalt – while on the very same day, Western Australian nickel and cobalt mining company GME Resources announced it had partnered with Stellantis, the parent company of Chrysler, Jeep, Dodge, Ram, and others.
This week’s agreement also positions Australia as a major supplier of hydrogen and ammonia.
“The climate, critical minerals and clean energy compact is an ambitious agreement,” Australian Prime Minister Anthony Albanese told parliament earlier this week.
“It will expand and diversify our clean energy supply. It’ll promote the sustainable supply and processing of critical minerals and support the development of clean hydrogen, battery technologies and other clean energy products.”
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