Union Pushes Australian Government to Tax Critical Mineral Exports to China

Worker with car batteries in Nanjing, China, on March 12, 2021. STR/AFP via Getty Images

One of Australia’s largest unions is calling on the federal government to impose a “punitive tax” on exports of unprocessed critical minerals to China to protect the country’s national interest.

On May 16, Daniel Walton, the national secretary of the Australian Workers Union (AWU), warned of the risks of exporting raw materials to China without a plan to build up domestic processing capacity.

“Australia has been blessed with the world’s most enviable supply of critical minerals, but simply digging these precious materials up and loading them on ships is an incredibly limited way to view the opportunity,” he said.

“We lack a substantial national capacity to turn our critical minerals, like lithium, into anything useful. We are relying on the idea that we can just export these raw minerals to China, and they will send us back the components and goods we need.”

The union secretary argued that it was risky to believe that the Chinese regime would be happy to ship processed minerals back to Australia if the country wanted to compete with China in battery manufacturing.

“Do we really want to assume that we can keep digging up critical minerals, shipping them to China for processing, and China will just keep shipping them back to us to manufacture batteries? It’s not a bet I'd feel confident about,” Walton said.

“If we continue to just ‘let the market rule’, it will mean only one thing: Australia’s raw materials will be shipped off to China, and China will be the only player in our region with the sovereign capacity to turn them into anything useful.”

Australia is one of the world’s top exporters of lithium and rare earth minerals, which are crucial for battery production.

However, the country lacks the industrial capacity to convert raw materials into higher-value products.

Meanwhile, China controls nearly 60 percent of the world’s lithium chemical supply chain, according to the International Energy Agency’s World Energy Outlook 2022 report.

AWU’s Push for A Punitive Tax

As Walton pointed out the risks of Australia’s current approach to its critical mineral reserves, the union secretary announced that the AWU would push for a tax on exports of raw critical minerals.

He also recommended the government establish a subsidy scheme to support the local processing industry.

“We need to apply a significant, punitive tax on the export of raw critical minerals from Australia,” Walton said.

“And we need the revenue raised to be pumped directly back into subsidies for the manufacturing and processing of critical minerals onshore.”

Lithium batteries displayed in the workshop of a lithium battery manufacturing company in Huaibei, eastern China's Anhui Province, on Nov. 14, 2020. STR/AFP via Getty Images

As Walton acknowledged that Australia lacks the financial means to subsidise the local industry, he said the government should adopt the “stick” approach.

“We know the demand from the world for our critical minerals is astronomical,” he said.

“We have the power to create the rules under which they can have them.

“Treasury doesn’t have access to enough carrots to encourage the change we need here. We need to get out the stick.”

The AWU is expected to move a resolution at the Labor Party’s national conference in August to push the government to introduce the tax.

The government said it was developing a strategy for the critical mineral sector, which would be announced later this year.

“The strategy will outline the government’s priorities for the development of the critical minerals sector, including how Australia can create economic opportunities across the nation, seize the opportunities of the net zero transformation and establish robust, sustainable and diverse supply chains,” the discussion paper on critical minerals strategy 2023 said.

The Epoch Times has reached out to Shadow Resources Minister Susan McDonald for comment but has yet to receive a reply in time for publication.

Walton’s remarks come after Allkem, one of Australia’s largest lithium producers, has agreed to enter into a US$10.6 billion ($15.7 billion) merger of equals with U.S.-based Livent.

The merger will result in an entity that ranks third in the world’s lithium supply chain and is expected to be finalised by the end of 2023.