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Critical minerals billionaire says taxpayer loans not enough

Billionaire Chris Ellison says governments must do more than offer debt finance to critical minerals projects, while pre-revenue explorers urged the Albanese government to avoid funnelling the $2 billion of new critical minerals funding to established miners who are already “printing money”.

The critical minerals facility managed by Export Finance Australia is expected to swell from $2 billion to $4 billion on the back of Wednesday’s pledge, which is designed to boost supply of minerals that are prone to oligopolistic supply chains in nations such as China.

Global Lithium managing director Ron Mitchell inspects diamond drill cores at the company’s Manna project in WA. 

It is also expected to help bankroll Prime Minister Anthony Albanese’s dream of leveraging the mining industry to create a battery manufacturing industry in Australia.

“We absolutely see a future in Australia for us making batteries,” Mr Albanese said on Wednesday.

China has this year restricted exports of minerals like gallium, graphite and germanium, continuing a trend of the Asian superpower using trade as a tool of geopolitical coercion as far back as 2010 when it limited rare earths exports to manufacturers in Japan and South Korea.


The Albanese government is understood to want the new money to flow to projects that can swiftly boost supply of minerals to defence allies including Japan, South Korea and the US, and that means billions of taxpayer dollars will probably flow to established miners.

About $1.25 billion of the original $2 billion critical minerals facility was loaned to profitable mineral sands exporter Iluka Resources to build Australia’s first rare earths refinery.

Biggest challenges

The $2 billion facility has also enabled pre-revenue graphite aspirants Ecograf and Renascor Resources to get loans of up to $40 million and up to $185 million respectively.

Global Lithium managing director Ron Mitchell said it was not right to give so much of the taxpayer-funded support to “existing producers who are printing money”.

“The companies facing the biggest challenges are the next wave of producers or developers and they should at least be getting a pro rata share of that fund because they are the ones that are most vulnerable in terms of project delivery,” he said.


“If you keep propping up the big guys, that just doesn’t make any sense to me. It just creates an oligopoly, which is counterintuitive to our ambition of creating more jobs and getting more critical minerals projects developed.”

Mr Ellison’s company, Mineral Resources, is one of the biggest exporters of Australian lithium but has so far declined to build a domestic processing plant that would upgrade lithium rich spodumene into battery-grade lithium hydroxide.

He pointed to the tax breaks, faster approvals and grants offered in places such as the US as the sort of thing Australian miners needed.

“We’ve been upfront that debt finance alone is not enough to make Australian downstream processing cost-competitive,” Mr Ellison said.

“In the absence of further urgent action from government, it’s unlikely MinRes can justify the expense of building a downstream processing facility in Australia.”

Liontown chief Tony Ottaviano said Australia should look at the type of tax credits being offered in the US.


Former OZ Minerals executive Luke McFadyen is now managing director of Rich Lister Tim Goyder’s new exploration company Minerals 260.

Mr McFadyen said support for those hunting for new deposits of critical minerals was “paramount”.

Years of investment

“New mines don’t just happen within an election cycle timeline, but they often need many years of exploration and investment to occur first. We would encourage the government to take a longer-term view on supporting the critical mineral exploration companies, who are the enablers of long term economic growth and supporters of decarbonisation,” he said.

Group 6 Metals has recently resumed extraction of tungsten from Tasmania’s King Island, and chief executive Keith McKnight said the new funding was a positive boost but needed to be spread widely.

“I don’t think we can neglect the pipeline of projects,” he said.


“Projects that are showing a pathway to development, those projects I believe should be supported as well; we were one of those projects only a short couple of years ago.”

The Albanese government wants Australia to add more value to its critical minerals rather than export raw commodities.

Mr McKnight said it would be feasible and affordable for Australia to invest in projects that would upgrade Group 6’s tungsten concentrate into higher value products such as “ammonium paratungstate” or “tungsten carbide”.

“Tungsten carbide is the main form in which tungsten is consumed in Australia,” he said.

Tungsten is a hardening agent and Mr McKnight said the main use in Australia was in cutting tools.

Poseidon nickel chairman-elect Peter Harold was announced as the next managing director of zinc explorer Rumble Resources this week. He said $4 billion might sound like a lot, but it would not go far in the resources industry.


“It is good to see, but it is nowhere near enough because the cost of building projects now has just skyrocketed,” he said.

“Four billion dollars is not a large amount of money when you talk about new projects.”

Mr Harold said the definition of “critical minerals” needed to be expanded to include metals like zinc and the government should consider tax holidays for critical minerals projects such as those given to Indonesian producers.

Energy security

Australian Rare Earths is exploring between the South Australian towns of Naracoorte and Bordertown for rare earths, and chairman-elect Angus Barker said the shortage of rare earths producers outside China meant the Albanese government’s funding was “a positive step”.

“To meet our decarbonisation goals and maintain energy security, we’re going to need a lot more rare earths explorers and developers to graduate into production, and that’s just what today’s announcements aim to achieve,” he said.


VHM Limited is exploring for rare earths in Victoria, and interim chief Ron Douglas said several Australian rare earths projects had to get into production if the world was to meet its decarbonisation goals.

“Any government funding which can be steered toward getting new and advanced-stage development projects into production will be welcomed, as this adds capacity to existing supply,” he said.

“An approvals framework which is transparent and encourages timely participation by all stakeholders will be key to getting Australian critical minerals faster to market.”

Association of Mining and Exploration Companies chief executive Warren Pearce expressed strong support for the new funding but said exploration needed to be a higher priority.

“You can’t develop what has not been found. Australia’s explorers are currently experiencing a major slowdown in investment support impacting their ability to find these critical minerals,” he said.

Data published by BDO showed the average cash balance in the ASX exploration sector was about $10 million at June 30.


Average cash balances peaked at more than $13 million in late 2021 but were closer to $6 million in 2019.

“Finding ways of getting more investment into exploration will be required if Australia and the United States are to be successful in developing a reliable critical minerals supply chain, and exploration must become a major focus for the Australia and United States critical minerals partnership,” Mr Pearce said.

Hastings Technology Metals boss Paul Brown said he looked forward to speaking with government about the funding.

“Australia has world-class mineral deposits but in the face of huge subsidies being offered by other governments, we need a range of initiatives and policy settings to remain competitive,” he said.

“This is particularly true for companies like Hastings which are ready to bring new projects online, and we look forward to engaging further with government to discuss additional incentives beyond funding needed to support downstream processing domestically.”

Peter Ker covers resource companies for The Australian Financial Review, based in Melbourne. Connect with Peter on Twitter. Email Peter at
Brad Thompson writes across business and politics from Western Australia for The Australian Financial Review. Brad is based in our Perth bureau. Connect with Brad on Twitter. Email Brad at

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