Australia's nickel industry needs assistance as BHP smelter decision approaches

A significant supply glut is forcing BHP to consider closing Australia's sole nickel smelter, adding to the pressure on the government to assist struggling battery metal manufacturers.

The goal of the leaders of resource-rich Australia is to increase the country's role in processing and manufacturing while also making it a major supplier of materials for green technology, such as batteries for electric vehicles.

However, competition from larger countries like the U.S. and lower-cost suppliers like China and Indonesia is jeopardizing such hopes.

With significant Chinese investment and government support, Indonesian producers currently account for over 60% of the world's nickel market, which experts predict will be oversupplied until at least the end of the decade.

In the meantime, the United States' industry has received about $400 billion in support from Washington's Inflation Reduction Act (IRA).

A number of lithium and nickel operations in Australia have recently reduced or stopped operations.

The Association of Mining and Exploration Companies (AMEC) traveled to Canberra last week in an effort to persuade the government to grant a 10% production tax credit.

According to research commissioned by AMEC, Australia's proposed "IRA-style" tax credit for key minerals might potentially offset the benefits received by American players under their incentive program.

The authors estimate that through 2035, it would cost the government 3.48 billion Australian dollars ($2.2 billion), but it would also bring in an additional AU$1.79 billion in tax income. They also predicted that it will bring about 4,220 jobs in critical battery metals, including nickel, lithium, vanadium, and rare earths, and produce an additional AU$2.4 billion in economic activity, mostly in mineral processing.