Australia Unveils $4.5 Billion Tax Incentive to Boost Critical Minerals Sector

the Critical Minerals Production Tax Incentive (CMPTI)

CMPTI Targets Lithium, Rare Earths, and Other Strategic Metals to Secure Global Supply Chains

Australia has passed a landmark law — the Critical Minerals Production Tax Incentive (CMPTI) — aimed at increasing domestic processing of critical minerals essential for the global energy transition. This A$7 billion ($4.5 billion) policy will grant eligible producers a 10% tax offset on processing and refining costs over a 10-year project lifespan, starting from July 2027 to June 2040.

The legislation stands as one of the most significant government-backed resource incentives in Australia's history. It is expected to attract international investment, enhance supply chain security, and cement Australia's role as a global powerhouse in the critical minerals market. Federal Resources Minister Madeleine King described the policy as a “game changer” for the nation’s mining and refining sector.

Critical Minerals in Focus: Lithium, Cobalt, and Rare Earths Lead the Pack

The CMPTI applies to all 31 minerals listed on Australia’s official critical minerals list, which includes high-demand metals such as lithium, cobalt, vanadium, tantalum, gallium, rare earth elements, and tungsten. These metals are essential for producing electric vehicles, solar panels, wind turbines, semiconductors, and advanced defense systems.

Notably, these same minerals are also recognized as critical by strategic global partners, including the United States, European Union, India, Japan, South Korea, and the United Kingdom. This alignment underscores the importance of Australia’s role in creating reliable, ethical, and diversified sources of supply.

Hydrogen Production Incentive Complements Clean Energy Push

In tandem with the CMPTI, the legislation also introduces a hydrogen production tax incentive of A$2 per kilogram for renewable hydrogen. This dual-incentive framework positions Australia to lead not just in raw material extraction but in the green energy revolution, promoting cleaner technologies and reducing reliance on carbon-intensive imports.

With the global demand for low-emission technologies surging, Australia’s tax incentive scheme enhances its appeal as a long-term partner in securing clean energy infrastructure.