Australia to propose tax incentives for critical minerals
The proposed law will set up a tax incentive worth 10% of relevant processing and refining costs for 31 critical minerals.
Global miner BHP Group, also a major gas supplier and user, on Wednesday urged rivals to step up trading in the Australian spot gas market and back a domestic price index to help keep government from intervening in the market.
BHP is pressing for Australia’s gas market – which the country’s competition watchdog has called “dysfunctional” – to move away from opaque contract negotiations towards index-based deals. It made a similar push in the global iron ore market that led to the end of annual price-setting talks a decade ago.
Spot trade has grown to around 15% of the eastern gas market, up from 5% in 2015, while the number of participants has grown to 37 from 20, BHP’s head of energy, Sam Bartholomaeus, said at the Australian Domestic Gas Outlook conference.
“We may not be able to emulate Henry Hub or large European gas markets … but that doesn’t mean we can’t have a healthy spot market,” he said. Volumes traded on the US Henry Hub and European markets are far larger than those traded in Australia.
Reporting spot deals to an independent pricing service would create the basis of an index.
Bartholomaeus’ comments came after Australian Competition and Consumer Commission chairperson Rod Sims said big gas users were concerned producers would start limiting offers into the domestic market, as they had in the past, as liquefied natural gas (LNG) export prices recover from last year’s collapse.
“We fear that those days will return,” Sims said.
The watchdog has been monitoring domestic gas prices ever since they nearly tripled following the start up of LNG exports from eastern Australia in 2014 and has repeatedly raised concern about a lack of local supply competition.
To make pricing more competitive, Sims forced BHP and Exxon Mobil Corp in 2017 to end joint marketing from their Gippsland Basin Joint Venture, the main source of gas into the southeast.
BHP now sells between 23 and 45 terajoules of gas a day into the spot market.
“BHP will be in the spot market every day regardless of price … So we need your demand, we need your competition,” Bartholomaeus said.
(By Sonali Paul; Editing by Tom Hogue)
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