Australian Labor Party believes carbon, mining taxes likely to be repealed
Two mining sector taxes that have been controversial since their start will likely be repealed later this year. The taxes were implemented during the Labor Party’s tenure in office, while the mining boom was in full swing.
Australian legislators approved the “super profits” tax on iron ore and coal producers during the decade-long mining boom the country experienced. The tax to Australia’s two most lucrative exports and a tax on carbon emissions were met with strong dissent from top mining companies and interested lobby parties.
"This was a bad idea that reduced Australia's ability to compete with other countries," chairman of the Minerals Council of Australia, Andrew Michelmore, said. "It was growth in mining exports, principally coal and iron ore, [which] helped Australia through the worst of the global financial crisis."
Those opposed to the carbon tax have commented that cost has increased for both the industry and public because of the legislation, and little has been achieved as far as cuts to emissions go. And global mining giants with operations in Australia – like BHP and Rio Tinto – have agreed, further explaining that the taxes are out of line for this time period after the mining boom.
The recent impact on the mining industry has been widespread. A deflation of metal and coal prices has stymied much of the boom’s energy in mining, so much so that one-third of major resource projects t hat had originally been approved since October have either been shelfed or cancelled altogether.
Current Prime Minister Tony Abbott made abolishing taxes a cornerstone of his campaign to win him and the Coalition the election. However, recently many are wondering if Abbott will be able to make true on his promises. Independent lawmakers like Clive Palmer and his party are in opposition to the repeal of the taxes; with the balance of power leaning away from Abbott in the upper house come July, it will be interesting to see if the legislation will hold.
Ben Pearson, Greenpeace’s environment director, has commented that Bill Shorten, Labor Party leader, has forfeited so soon.
"There was an opportunity to tell the world that an industrialised country like Australia was not headed backwards on the environment," Pearson said. "That's now been lost."
"The mining tax, I suspect, will be repealed despite Labor's position," Shorten commented recently at a meeting of mining executives in Canberra.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.