The recent 2023-24 Federal Budget announcement has attracted mixed reactions from across the mining sector, with new funding initiatives for critical minerals and decarbonisation largely welcomed, but some questioning whether the measures go far enough, particularly in light of challenging policy settings. In this article we break down the key budget measures affecting the mining industry, the implications for sector players, and what we'll be looking for in the coming months.

Setting the stage

Critical minerals are the key to net zero

Mining supports decarbonisation, electrification and the uptake of renewables by providing the natural resources on which these will rely. Critical minerals like copper, lithium, nickel, cobalt and rare earths are crucial components of low-emission technologies such as batteries, electric vehicles and solar panels – in the words of Resources Minister, Madeleine King, "The road to net zero runs through the resources sector".

With demand for critical minerals – of which Australia has vast reserves – set to skyrocket in the coming years, and governments around the world scrambling to secure their supply chains, expectations were high coming into the 2023-24 Federal Budget.

Overall sector investment outlook

The Federal Government has delivered its first budget surplus in 15 years, with key industry bodies like the Minerals Council of Australia (MCA) and Queensland Resources Council attributing this largely to the record c. $40 billion in tax paid by Australian mineral companies in 2021-22 (up from $26 billion in 2020-21).

However, total business investment in the mining sector is forecast to remain flat in 2022-23 before growing modestly, by 2% in 2023-24, and 1.5% in 2024-25.

The MCA argues that more needs to be done at a federal level to foster investment in the mining sector, or Australia risks becoming more vulnerable to competition from other resource-rich economies. So – what's on offer in the budget, and what opportunities and challenges does it present for mining?

Budget breakdown

Critical Minerals

The Government has committed to investing:

  • $57.1 million – over four years – to further develop the Critical Minerals International Partnerships Program, to secure strategic and commercial partnerships with like-minded partners. This investment builds on the $2 billion Critical Minerals Facility and $1 billion targeted to value-adding in resources, under the National Reconstruction Fund (NRF). It remains to be seen how these partnerships will function in practice, and whether there will be any eligibility requirements or other limitations;
  • $21.2 million to ensure the ongoing operations of the Critical Minerals Office, responsible for policies, programs and international engagement; and
  • $2.2 million to the Treasury, to establish data analysis capabilities to track foreign investment patterns and compliance in the critical minerals sector.

Questions remain around how far the hotly anticipated 2023 Critical Minerals Strategy will go to bolster these commitments, open up new economic opportunities, and set the stage for positioning Australia as a leader in critical minerals.


In an effort to achieve Australia's net zero emission goals, the Budget has also introduced a number of initiatives to decarbonise the resources industry, including:

  • $6.7 million towards developing a Future Gas Strategy. This strategy will support the energy sector in reaching 82% renewables by 2030, and becoming cleaner, cheaper and more reliable, while maintaining its international reputation as a trusted energy supplier to the region;
  • $320.4 million towards a responsible and sustainable approach for the long-term management and permanent disposal of Commonwealth radioactive waste;
  • In partnership with the Queensland Government, $14.3 million to supporting research and development into reducing emissions in the energy resources sector;
  • $4.5 million to developing a plan for establishing an Australian decommissioning industry; and
  • $12 million towards a review of the environmental management regime for offshore petroleum and greenhouse gas storage activities.

Approximately $60 billion of offshore petroleum decommissioning activity will occur over the next 30 to 50 years. The proposed plan for a decommissioning industry will identify ways Australia can benefit from the $60 billion projected expenditure, any repurposing, recycling and waste disposal pathways for decommissioned infrastructure, and opportunities to re-skill oil and gas workers for an emerging decommissioning industry.

The Federal Government will also legislate a national Net Zero Authority, which will help investors and companies to engage with net zero transformation opportunities. Further, the authority will examine opportunities for regulatory and administrative certainty and efficiency for carbon capture and storage projects.

Powering the future of the resources sector

  • The $2 billion investment into Hydrogen Headstart, a new program to support hydrogen production, is set to drive innovation in this area and position Australia as a world leader in hydrogen production. Further, this initiative will provide revenue support for investment in renewable hydrogen production through competitive production contracts and will cover the commercial gap between the cost of hydrogen production from renewables and its current market price.
  • The Government will provide $38.2 million to establish a Guarantee of Origin scheme to underpin markets for green energy, including hydrogen and other low emissions products.
  • The Government has committed $15 billion towards the NRF, a manufacturing initiative with the aim to assist in the transition to net zero. Through loans, guarantees and equity investments, the NRF will partner with the private sector to invest in priority areas that leverage Australia's natural and competitive strengths in renewables and low emissions technologies, amongst other areas.
  • Additionally, $14.8 million has been committed to establish the Powering Australia Industry Growth Centre, which will support Australian businesses looking to manufacture, commercialise and adopt renewable technologies. This is in addition to the up to $3 billion allocated to investment in low emissions technologies including green metals under the NRF.

Tax implications

The Budget extends the instant asset write-off scheme, allowing business to immediately deduct the full cost of eligible depreciable assets that are installed and ready for use until 30 June 2023.

This is a significant development for the mining sector, as companies can receive an immediate tax deduction for investments into new equipment and technology. Not only does this reduce the tax burden faced by companies, but it also reduces the cost of investment. Further, this initiative will encourage investment into the sector, and promote economic growth. Extending the asset write-off scheme will also make it easier for companies to invest in new projects and expand their operations. Additionally, reducing the cost of investment will allow mining companies to improve their profitability, and create new job opportunities within the sector. The extension of the instant-asset will also benefit the manufacturing sector, incentivising mining companies to invest in locally procured equipment and technology.

The Government has also proposed measures aimed at preventing multinational companies (MNCs) from avoiding taxes in Australia. Specifically, proposed changes include the implementation of a 15% global minimum tax rate for large MNCs, and a 15% global domestic tax. Each of these taxes would come into effect on 1 January 2024. The global minimum tax rules would allow Australia to apply a top-up tax on a resident multinational parent or subsidiary company, where the group's income is taxed below 15% overseas. In instances where a large MNCs' effective tax rate falls below 15%, the domestic minimum tax applies so that Australia collects the revenue that would otherwise have been collected by another country's global minimum tax. These propositions are not yet law.

But wait, there's more

On 18 May 2023, the Australian Government announced the approval of c. $50m in grants to accelerate the development of critical minerals projects, which forms Tranche 2 of the Critical Minerals Development Program, designed for "Australian critical minerals industry entities and/or State or Territory government agencies who are undertaking projects that support Australia's Critical Minerals Strategy and long term sustainable growth".

The funding is spread across 13 projects in Western Australia, New South Wales and Queensland, and is expected to help diversify supply chains, build domestic downstream processing, and open up new jobs.

Industry response – good, but not enough

Industry pundits have expressed mixed reactions to the budget.

On the one hand, it demonstrates the Federal Government's commitment to bolstering the mining and resources sector. The above measures have the potential to address the increasingly intense competition for global capital, stagnant productivity growth, and the increased costs and uncertainty flowing from cumulative impact of regulatory changes and persistent regulatory and administrative inefficiencies. The Hydrogen Headstart program has received widespread support, as some believe the program will catalyse Australia's hydrogen industry and other clean energy industries, and help position Australia as a global hydrogen leader.

On the flip side, other commentary indicates the budget doesn't go far enough to ensure Australia is competitive with the US and Europe in attracting critical minerals investment. Those adopting this stance fear that Australian projects may fail to attract the necessary capital without support from the Government and international partners. Further, going forward, Australia's vulnerability to competition from resource-rich economies will only grow as they seek to seize the opportunity to supply the minerals and metals needed to achieve global net zero emissions.

Many seem to be withholding judgement until the new Critical Minerals Strategy is released later this year.

Where to from here?

The measures introduced in the 2023-24 budget, and in the weeks since, offer a promising start for Australia's mining industry, but will not alone be enough to ensure a thriving, profitable sector positioned for long-term opportunities, particularly in the critical minerals space.

In the coming months, we will be watching for a refreshed, fit-for-purpose Critical Minerals Strategy that accurately reflects the scale of opportunity for Australia, supported by effective international partnerships and trade agreements.

High expectations for the 2023 Critical Minerals Strategy

In light of the limited support offered to critical minerals in this year's budget, what can we expect in the upcoming 2023 Critical Minerals Strategy? What should we hope for?

A key hope within the sector is the simplification of approvals processes for critical minerals projects, akin to that contained in the US Inflation Reduction Act. Whilst fast-tracking the procedure is of great importance, it appears as though the industry is hoping for a more transparent, predictable, and defined federal permitting process.

The desire for this streamlined process is largely due to the states introducing indigenous cultural heritage legislation and reviewing federal environment protection and biodiversity laws. It is a commonly held view throughout the industry, that these state initiatives risk adding extra layers to obtaining approval.

Resources Minister Madeleine King has indicated that the strategy will have an increased focus on the domestic processing of Australian minerals and a desire for foreign investment, so long as foreign investors are "like-minded". The Prime Minister also shares this view, recently expressing a desire for Australia to retain more of its critical minerals and make batteries and other renewable technologies domestically. Evidently, ensuring foreign investment from "like-minded" investors, is of great importance to the Government. However, it is important to strike a balance between this and encouraging general foreign investment.

As such, sector participants have suggested the Government retain a portion of offtake from any critical minerals developed domestically. In doing this, Australia is both accepting foreign investment from countries that aren't "like-minded", whilst retaining the right to first access of the mineral. Therefore, we may expect to see a structure akin to this appear in the Critical Minerals Strategy.

Australia-US Climate, Critical Minerals and Clean Energy Transformation Compact (the Compact)

Announced on 20 May 2023, the Compact is described as a "central pillar of the Australia-United States Alliance" and aims to "advance ambitious climate and clean energy action this decade" by coordinating policies and investment.

A key focus of the Compact is expanding and diversifying responsible clean energy and critical minerals supply chains – and of particular significance to the mining sector is that it positions Australia as a "partner of choice" in the battery minerals supply chain and technology investment. Australian suppliers of both critical minerals and renewable energy would be treated as domestic suppliers under the US Defence Production Act, potentially opening up access for these companies to a pool of US$1 billion under the US Inflation Reduction Act.

The Australia-India Economic Cooperation and Trade Agreement (ECTA)

The Australia-India ECTA will support further growth and investment in Australia's critical minerals and resources sectors by eliminating and reducing customs duties on key products, improving access to a growing and diversified market for the Australian critical minerals sector. ETCA will assist in realising the potential of the Australia-India economic relationship and provide certainty in the supply of high quality and competitively priced critical minerals. Further, ECTA will build on existing partnerships and investment streams that already exist between Australia and India in critical minerals and will support India's ambition to take a major role in global advanced manufacturing. ECTA will also strengthen our supply chain resilience and trade diversification and address supply chain risks. Having diverse, competitive and resilient clean energy supply chains, underpinned by stable markets, will be critical to meeting future demand for clean energy and for the region's economic prosperity and security. Australia has reserves of at least 21 of the 49 critical minerals identified by the Indian Government and can play an integral role in strengthening India's supply chains. The recently signed Australia-India Critical Minerals Investment Partnership will support further Indian investment in Australian critical minerals projects.

Australia's Collaborative Critical Minerals Projects

In recent months, we have seen an increase in international partnerships to support the development of Australia's critical minerals sector and broader decarbonisation efforts, including:

  • On 6 April 2023, Australia announced a Joint Declaration of Intent with Germany, aiming to create new critical minerals opportunities to support Australia and Germany in reaching their net zero commitments. The study will assess how raw and processed critical minerals can contribute to clean energy technology, the expansion of Australia's critical minerals extraction, refinement, and recycling capability, and the application of high environment, social and governance standards. Overall, this study will help Australia develop elements of its critical minerals industry, such as extraction, refinement, and recycling. As for Germany, this study will secure reliable supplies of critical minerals, to support its own manufacturing and recycling industries.
  • On 4 April 2023, Australia entered into a similar arrangement with the United Kingdom, signing a Statement of Intent to support the critical minerals sector. The statement will help both nations to increase and diversify critical minerals supply chains, build downstream processing and manufacturing capabilities, and create skilled and high-paying jobs in regional communities. Australia and the UK intend to identify and promote investment opportunities in clean energy technologies and upstream extraction, promote high environmental, social and governance standards in critical minerals processing, and encourage the exchange of skills and expertise between Australian and UK firms. The statement is coordinated by the Australia-United Kingdom Joint Working Group on Critical Minerals, who will identify an initial set of priorities for collaboration.
  • On 15 March 2023, the Western Australian government announced a Memorandum of Understanding (MoU) with a South Korean government-backed research group to exchange specific and technical knowledge around the development of critical minerals. This is the second agreement between the nations focused on the net zero commitments. Earlier this year, the State government entered into a deal with South Korea's trade industry to look at joint development opportunities in energy transition industries. This MoU will allow for cooperation on research and the exchange of information with our Korean trading partners, to build capability and reaffirm the importance of Western Australia in the global supply of critical minerals.
  • In October 2022, Australia and Japan entered into a partnership on critical minerals to help build secure supply chains for critical minerals, which are crucial elements of clean energy technologies needed to help both countries meet net-zero commitments. The partnership will establish a framework for building secure critical minerals supply chains between Australia and Japan, and promote opportunities for information sharing and collaboration, including research, investment and commercial arrangements between Japan and Australian projects. As such, this arrangement will support the development of Australia's critical minerals sector, whilst ensuring Japan has the supply of critical minerals required for its advanced manufacturing sector.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.