WA’s opportunity to capitalise on the United States’ massive Inflation Reduction Act will hinge largely on its ability to keep pace with demand, according to BHP’s iron ore boss.
Western Australia’s opportunity to capitalise on the United States’ massive Inflation Reduction Act will hinge largely on its ability to keep pace with demand, according to BHP’s iron ore boss.
BHP Iron Ore asset president Brandon Craig told a panel at the WA Energy Transition Summit that speed would be the defining factor in Australia’s bid to make the most of the incentives on offer in the US under the IRA – offering $520 billion worth of programs to help the nation decarbonise.
“I think we have a real and finite opportunity here to maximise our benefits from [the IRA], by making sure that the flows happen through market mechanisms,” he said.
“But second, actually making our… industries as competitive as they can be.
“If we can get the settings right that make our industries competitive, we can ultimately maximise across the broad set of opportunities that are going to materialise.”
Mr Craig singled out the speed at which projects are approved and brought to market as a specific area where Western Australia has an opportunity to capitalise on the IRA.
“The people who move faster are going to win,” he said.
“If we want to maximise our benefit as Western Australia, making sure the speed with which we can bring our opportunities to market is going to probably be the single most important thing we have to get right.
“If we can do that into a world where markets are allocating opportunities efficiently, then the sky is the limit.”
Mr Craig said the IRA offered Australian industry huge opportunities if it played to its strengths and kept up with global demand.
“The challenge is that it’s going to put a lot of pressure on frontline resource projects, in terms of actually accelerating the pace at which we need to bring things to market,” he said.
“In a way, I think that’s a real opportunity for Australia and in Western Australia, given that… we have the know-how and infrastructure in place, and a very large percentage of the right types of commodities that we need to bring to the market.”
One of BHP’s iron ore contemporaries, Fortescue Metals Group, today announced plans to set up a manufacturing facility in the US state of Michigan, citing the IRA’s incentives as key to its decisions.
Fortescue is also in talks with the US government around the progression of a planned Pacific Northwest hydrogen hub which could receive up to $1 billion worth of government funding.
Speaking on the same panel as Mr Craig, science and innovation minister Stephen Dawson said it was unrealistic to expect Australia to try competing with incentives on the scale of the IRA, and that there were investment conflicts for the government.
“It is a challenge – they want our minerals and they’re taking some of our projects,” he said.
“Certainly there’s a lot of hydrogen interest that did exist in Australia previously, they’ve run to America – that is a challenge.
“But I do think we have to look at it as an opportunity and take advantage of it.”
Mr Stokes also re-enforced his view of gas as an important transition fuel and criticised the federal government’s emissions safeguard mechanism – labelling it a “retrospective carbon tax” and claiming it undermined the investment climate.
“[The safeguard mechanism] undermines the attractiveness of investment and creates unnecessary concern,” he said.
He called on the federal government to match its positive rhetoric with actions in supporting the industry.