Nine months after it was introduced, one Australian mining executive believes the Inflation Reduction Act (IRA) is starting to have an impact on global markets.
“One of the things that’s happened really in the last five weeks, the Inflation Reduction Act … we’re really seeing it biting now,” VHM managing director Graham Howard told Australian Resources & Investment.
“What’s really happening is if corporations wish to sell their products into the US, it’s very difficult to source the products from China.
“So they’re looking for new supply areas, and that’s why they’re pivoting to new supply chains, particularly through Canada and Australia – two key nations that have importance.”
VHM is advancing its Goschen rare earths and mineral sands project in Victoria towards first production in 2025, and as Howard looks to solidify offtake partnerships before operations commence, he has spent plenty of time on the road.
His time away has also helped him understand VHM’s unique marketplace and the projected rare earths shortfall in the years to come.
“The world is very focused on supply issues for rare earths in the timeframe of 2025–26 just as our Goschen flagship project is being commissioned and coming on stream,” Howard said. “So we’re entering a perfect time to be producing zircon and titania and most importantly, rare earths, which will generate around 75 per cent of our revenue.”
The IRA enables US electric vehicle (EV) manufacturers to receive a tax credit if they source their critical minerals from the US or a country with which the US has a free-trade agreement.
And with Australia a free-trade partner of the US, VHM could be a beneficiary of the IRA given its rare earth minerals are key to the manufacturing of permanent magnets used in EV batteries.
In fact, VHM is set to produce “the big four” that are used in permanent magnets – neodymium, praseodymium, dysprosium, and terbium – each of which are listed on the US critical minerals list.
As the IRA gains momentum, plenty more announcements can be expected regarding new partnerships, agreements and joint ventures in the critical minerals space, with Australian companies set to be keen participants.
Subscribe to Australian Resources & Investment and receive the latest news on commodity prices, resource developments, executive movements and more.