U.S. draft rules could exclude Aussie critical minerals from IRA subsidies
The US government has drafted rules that prevent businesses with stakes held by Chinese investors from receiving subsidies under the U.S. Inflation Reduction Act (IRA). The rules apply to enterprises “owned by, controlled by, or subject to the jurisdiction or direction” of China, Russia, North Korea, or Iran, with the upper limit for both direct stakes or “cumulative” investment set at 25%. This will affect a number of Australian projects in the critical minerals sector, including lithium, which have substantial Chinese ties in the form of project ownership, investment, and off-take agreements.
US Government Restricts IRA Subsidies for Mineral Producers with Chinese Ties
Several key mineral producers might not qualify for U.S. Inflation Reduction Act (IRA) benefits, as the US government’s proposed rules bar companies with Chinese-held stakes from getting support.
Source: pv magazine Australia
The U.S. Department of Energy’s draft rules indicate that businesses “owned by, controlled by, or subject to the jurisdiction or direction” of China, Russia, North Korea, or Iran, will be ineligible for subsidies under the nation’s USD 369 billion ($550 billion) IRA and the USD 550 billion Infrastructure and Jobs Act.
Draft guidelines suggest the maximum limit for both direct stakes or “cumulative” investment is set at 25%.
China is Australia’s largest trade partner, particularly for lithium and other essential minerals. The Chinese influence in this industry means many Australian projects have extensive Chinese affiliations, including project ownership, investment, and off-take agreements.
For example, the Western Australian project Greenbushes, which accounts for most of Australia’s lithium, is co-owned by China’s Tianqi and US behemoth Albermarle. Tianqi also owns the majority of the Kwinana lithium hydroxide refinery, producing Australia’s initial commercial quantities of battery-grade lithium hydroxide in 2022.
To learn more, check out the original article on our pv magazine Australia website.
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