The New South Wales (NSW) government has announced plans to defer $250 million in royalties for critical minerals as part of a wider plan to position the state as a significant player in the sector.
The deferral is part of the NSW Critical Minerals and High-Tech Metals Strategy, which aims to provide the framework for the mining industry.
The state has deposits of 21 of the 31 minerals considered critical in Australia. Scandium, copper, silver, and cobalt are named the state’s five priority metals since all have important uses in electrifying the economy and manufacturing clean energy products like solar panels and batteries.
The International Energy Agency estimates that over the next 20 years, the world will need six times the amount of critical minerals currently mined to reach global net-zero carbon emissions. The transition will need double the current production of copper, three times the current level of rare earth elements and cobalt production, and 30 times more nickel.
State’s Miners Need $7.6 Billion Investment
Currently, 12 critical minerals projects across the state are ready for investment and require approximately $7.6 billion in capital. The state government estimates that launching the new projects would create more than 2,700 jobs, 4,600 construction jobs in regional areas, and ongoing royalty payments to the state’s coffers.High initial investment costs for critical minerals projects are a barrier, so the $250 million deferral aims to allow miners to reduce their need for other sources of investment, such as offshore banks and retail investors.
“NSW critical minerals projects typically have long lead times for development, and higher capital investment. The new royalty deferral scheme will assist mine proponents to attract investment and move faster to production,” explained Minister for Natural Resources Courtney Houssos.
The new strategy focuses on five key pillars: encouraging exploration by minimising investment risk in greenfield exploration; incentivising production by removing barriers; providing training and education pathways to encourage critical minerals mining careers; establishing resilient supply chains by examining local processing facilities, driving research and development, and investigating critical minerals recycling; and engaging local communities by ensuring responsible mining.
In addition to deferring royalties, the government intends to examine ways it could support the entire supply chain, such as piloting common-user refineries and supporting investment in domestic manufacturing.
“We want NSW to be moving further down the supply chain. Extracting minerals is a critical first step, but we can generate strong economic returns and support more jobs by getting into processing and advanced manufacturing,” Houssos said.
The royalty initiative will be an opt-in scheme for deferring the first five years of payments. It will apply to critical minerals projects that can start production between July 1, 2025, and June 30, 2030, and where the proponent’s market capitalisation is under $5 billion.
